Online services is an underappreciated growth and margin lever for Apple. It's all the more unappreciated because music streaming services like Pandora and Spotify have been cutting into iTunes music downloads.
"At a high level," Huberty writes, "this raises concerns about Apple's ability to monetize the new base of emerging market customers."
iTunes account spent on average just $3.29 last quarter, which is down 24% year over year. However, Huberty believes Apple has many ways to utilize the 800 million iTunes accounts, most with credit cards including a music streaming service, mobile payments and iWatch.
A subscription based streaming music service surrounding iTunes and utilizing the soon-to-be announced Beats deal would make sense. Apple can also generate revenue from mobile payments via advertisements, subscription feeds and or transactions fees.