As mentioned earlier, Apple's business revenue from services grew 19% in the first quarter. That was up from the 17% pace in the fourth quarter of last year, but well out of the pace that the business was operating at the beginning of last year.
In addition to the problem with game sales in China, the service business was affected by the strong dollar, which boosted the local currency price for Apple services in some markets, and by a slowdown in AppleCare's sales growth, the company guarantee, said Luca Maestri. A recent accounting change also made growth in the business seem smaller than in the past.
On the other hand, the services business is highly profitable, as the company made clear for the first time in its report. Gross margin for the services business – the difference between Apple's revenue from these offers and their direct costs to provide them – was 63% in the quarter, compared to 58% in the same period last year.