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value is captured or allocated. The iPhone story isn't static, the "pivots" or change in direction are several: The App Store, a platform for collaborative innovation where millions of developers are offered the chance to improve the product. Accessories, a licensing model for third-party hardware that works with the iPhone • Distribution through multiple channels • Integration with other Apple Products • The marketing of older products alongside new ones at reduced prices • An expanded product portfolio with a broader range of prices • Trade-in and financing options Each of these initiatives contributed to the iPhone growth story but the biggest change in business model was the addition of services. Apple Services grew out of the iTunes business that pre-dates the iPhone and was established to provide content for the iPod. In 2006, the year before the iPhone launched, Apple customers spent $3.3 billion on iTunes, Software and Services. By 2018 the spending rate was $80.5 billion/yr. It's very possible that this year's spending rate will reach $100 billion/yr. This new division is simply called Services today and consists mainly of third-party apps and third-party content sales as well as licensing. Recently Apple launched a set of new services that it will offer itself. This includes television, films, financial services and news. Apple already has a music service of its own and file storage (iCloud) both of which are offered as subscriptions. Apps are also allowed to offer paid subscriptions, and that total has reached 390 million, growing at 30 million a quarter with an expected total of 500 million by 2020. That amounts to one subscription for every other iPhone in use. Some would argue that even with a $43 billion revenue rate, ($80 billion billing rate)3 Apple's business is still a hardware business and that comes with low margins, potential for disruption, non-recurring revenues and cyclicality. This is not the case. Apples's business has high margins (64% gross margin for services, 34% for products), has been resilient over 12