“The phones are the razors and the various subscription services that you pay for automatically are the blades,” he said. “This is why I’ve been so sanguine about Apple even when the bears were ready to give up on it — the service revenue stream is going to be huge. In fact, it really is already huge.”
Apple’s revenue for its subscription services like Apple Music and iCloud storage grew by 31 percent in the last quarter, blowing past expectations to a $9.2 billion total.
“If Apple’s subscription biz were its own company, it would already be large enough to be about a Fortune 80 company,” Cramer said.
The “Mad Money” host also touted Amazon Prime as one of the most successful renditions of the subscription economy. The service offers members free shipping, video streaming and music as well as countless deals, including at the Amazon-owned Whole Foods.
“The key here is that Prime creates legions of loyal customers who have a huge incentive to shop at Amazon first and only go to another retailer if they can’t find what they need,” he said. “That’s why Whole Foods instantly became more valuable when it was folded into Amazon one year ago. And it’s one more reason, along with the Web Services business that dominates the cloud, why I still think Amazon is worth buying right here.”
“For a long time, they tried to give away their content online and make money selling ads,” Cramer said. “Needless to say, that did not work. So they put up the paywall and it’s been a stunning success.”
“The stock’s up about 30 percent since I got behind it last summer. I bet it has more room to run,” Cramer said.