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Apple Having Mixed Success With Services Offerings

Apple (AAPL) has staked much of its growth prospects on its wide-ranging services business, but a new survey indicates vastly different uptake rates for the company's individual services offerings.

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Among its current offerings, iCloud online data storage has the broadest adoption, according to a survey by Consumer Intelligence Research Partners. In the first quarter, 43% of Apple customers surveyed in the U.S. reported having a paid iCloud account.

By contrast, less than 5% of iPhone and iPad owners reported having AppleCare extended-warranty service, CIRP said in a report Tuesday.

Some 16% of iPhone owners said they subscribe to the Apple Music streaming service. At the same time, 25% of iPhone owners report still using the legacy iTunes music download service.

"Apple has created a comprehensive services business, which becomes more important as hardware sales reach their limits," Josh Lowitz, CIRP partner and co-founder, said in a news release. "It seeks to sell a range of services to its considerable installed hardware customer base, with varying success."

CIRP surveyed 2,000 U.S. Apple customers for its March-quarter poll. It analyzed four services: iCloud, AppleCare, iTunes and Apple Music. It did not ask about App Store sales or Apple Pay, two other notable services.

Apple Services Momentum 'Incredibly Strong'

The company's services revenue rose 31% year over year to $9.19 billion in the March quarter. The division accounted for 15% of total company sales and is Apple's second-largest business, after the iPhone.

Chief Executive Tim Cook boasted about the company's services business during a May 1 conference call with analysts to discuss fiscal second-quarter results.

"Q2 was our best quarter ever for services, and momentum there continues to be incredibly strong," Cook said. "We had all-time record revenue from the App Store, from Apple Music, from iCloud, from Apple Pay and more, all of which are a powerful illustration of the importance of our huge active installed base of devices and the loyalty and engagement of our customers."

Apple Music Outpacing Rivals

Apple Music is outpacing other paid music streaming services among iPhone users, but more people are using free services, CIRP said.

The survey found that 47% of iPhone owners are using Pandora's (P) free service and 31% Spotify's (SPOT) free service. Apple Music doesn't offer a free tier, but provides a three-month free trial.

Among subscription streaming music services, Apple Music leads with 16% usage by iPhone owners, followed by Spotify Premium with 14% and Pandora Premium with 5%.

Apple shares rose 0.4% to 193.98 on the stock market today. In intraday trading, the stock hit an all-time high of 194.07. The company has a current market value of about $953 billion.

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