Apple doesn't have a paid tier for Apple Intelligence.
It's a feature and a free API developers can utilize, not a service.
Apple's services have a 75% profit margin, compared to under 40% for products (hardware).
It depends. I guess you can argue this is true purely from scale. However, we should also keep in mind there are a lot of different things that Apple and tech companies in general put under "services". So even when you see a big number under "Service Revenue" on some financial report, we should recognize that most of that was from taking a cut of some other transaction happening on their devices. Relative to the rest of their business, they don't make much from monthly/yearly subscriptions or monetizing their customers' searches/interactions. They instead serve as a middleman on purchase of apps, music, movies, TV, and now even financial transactions made with Apple Card/Pay/Cash. And in that way, they are a service company in the same way that any brick and mortar store is a service company.
Apple's services revenue is larger than Macs and iPads combined, with a 75% profit margin, compared to under 40% for products (hardware).
Yeah, they serve as a middleman...an incredibly dominant middleman in a duopoly. 80% of teenagers in the US say they have an iPhone. Guess what, all that 15-30% app store revenue is going to Apple. That's pretty much the definition of a service juggernaut.
I also don't agree with you about the lack of selling Apple services to non-Apple users. TV+ is a top-tier streaming service with huge subscriber numbers, and their app is on every crappy off-brand smart TV and streaming stick out there. Yes, there really are Android users who subscribe to Apple Music - 100 million+ downloads on the Google Play store, #4 top grossing app in the music category.
You seem to operating under the notion that anything that isn't a device sold is a service. I think that definition is too broad to have any real value and that we should look at the actual business model for a product to determine its categorization. I'm not sure what else to say if you're just going to dismiss that as "pedantic".
But either way, it should be obvious that "services" (however they are defined) are a smaller part of Apple's business than they are for Microsoft, Google, Meta, Twitter, Oracle, Open AI, Anthropic, and most other players in both the general tech and AI spaces.
HOWEVER, you would never know this though given the Apple Store experience! As I was dealing with the board swap in my phone last month, they would have these very loud/annoying 'presentations' every like half hour or so going over all the other apple intelligence features. Nobody watched, nobody in the store wanted to see this. In fact when you consider the history of how the stores have operated for years, the idea was to let customers play around with the device and figure shit out on their own. Store employee asks if they need anything explained but otherwise it's a 'discovery' thing, not this dictated dystopia.
The majority of people I heard around me in the store were bringing existing iphones in to get support with their devices because they either broke them or had issues logging into accounts (lost/compromised passwords or issues with passkeys). They do not want to be told every constantly about the same slop every other company is trying to feed them.
Where I think you are ultimately correct is that some companies seem to just assume that 100% of interactions can be monetized, and they really can't.
You need to deliver value that matches the money paid or the ad viewed.
I think Apple has generally been decent at recognizing the overall sustainability of certain business models. They've been around long enough to know that most loss-leading businesses never work out. If you can't make a profit from day one what's the point of being in business?