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Tim Cook explains how Apple will double its fastest growing business by 2020

  • Services, Apple's fastest growing business, brought in more than $7 billion in revenue
  • The App Store was up 40 percent, while the developer community increased 20 percent
  • However, Apple posted slightly lower than expected revenue, $52.9 billion vs. $53.0 estimated. Earnings per share were $2.10 vs. $2.02 estimated

Apple has said it wants to double the revenue of its services business by 2020, which is its fastest growing business segment. After earnings that disappointed Wall Street, CEO Tim Cook said how it plans to hit that target.

"In services, the App Store was up 40 percent, and our developer community is growing by over 20 percent," Cook told CNBC. "There is a lot of momentum."

"If you add up the number of subscriptions across Apple-branded services and third-party, we have over 165 million paid subscriptions," he added.

That service segment brought in more than $7 billion in revenue in the quarter. It was the highest revenue for a 13-week quarter, Cook said, adding the company feels "great" about the growth. For comparison, Facebook's revenue last quarter was $8.81 billion.

"We are on target to hit the first milestone for it to be the size of a Fortune 100 company," he said.

The company reported its quarterly earnings on Tuesday. It slightly missed revenue, posting $52.9 billion versus the Thomson Reuters estimate of $53.02 billion. Earns per share were at $2.10, compared to the estimate of $2.02. The stock dropped more than 1 percent in after hours trading.

Cook previously said during Apple's last earnings call he wanted services to double its revenue by 2020. The company has invested in content for Apple Music including a Tribeca Film Festival movie, and has plans to release original series like "Carpool Karaoke" which has been delayed until later this year. Services also includes other digital content, AppleCare, Apple Pay, licensing and other services.

However, it won't be that easy of a path for Apple. An analyst pointed out Apple has a lot of strong competitors in the space.

"Their services business has a lot of risk to it from other competitors like Netflix and Spotify and Samsung and all the other players," said Ross Gerber, president and CEO of Gerber Kawasaki Wealth and Investment Management. "And they have all this cash, and all they can come up with is the same playbook, which is buy back stock and pay dividends. It's time for Tim Cook to spend the money," Gerber said on CNBC.