Driven by its App Stores, Apple's 'Services' business explodes with $7.17 billion in revenue

The $7.17 billion Apple generated in revenue is a new record for the company, 13% higher than last quarter, and 18% higher than the year-ago quarter. Year-over-year, Services posted the largest gain on a percentage basis of all of Apple's business segments.

Apple CEO Tim Cook noted in the earnings conference call that Apple expects services to be the size of a Fortune 100 company by the end of the year.

Additionally, regarding Services, there are now 150 million paid customer subscriptions, over 2 million small businesses are accepting Apple Pay, and the company's goal is to double the services business in the next four years.

In July, Cook said he expects services, which includes iTunes, iCloud, Apple Music, Apple Pay, Apple Care and the various App Stores, to generate revenues equivalent to that of a Fortune 500 company by 2017.

Analysts predict that services revenue is expected to grow 17 percent per year through 2021, with a growth in hardware revenue of 2.4 percent, with a continuation of about 30 percent annual growth in Apple's App Stores per year. One analyst called the App Store which is currently the prime mover of Apple's Services revenue "one of the best business models ever created."

On Tuesday, Apple reported that its holiday 2016 quarter was the company's biggest ever, soaring to new heights on sales of 78.3 million iPhones following the launch of the blockbuster iPhone 7 series, exceeding Wall Street expectations by all measures.