Tags profit

Apple made more revenue from iPhone in a single quarter than Google has ever made from Android

Tim Cook

The lawsuit between Oracle and Google is inadvertently revealing some confidential information about the companies. It has already been disclosed that Google paid Apple a $1 billion fee in 2014 to keep Google as the default search provider for iOS Safari, as well as a revenue sharing agreement where Google gives a substantial portion of the iPhone search ad revenue to Apple.

Another lawyer from Oracle has also stated that Google has generated $22 billion in profit and $31 billion in revenue from Android in its lifetime, via Bloomberg. Although any number in the billions is impressive, it pales in comparison to Apple’s mobile platform profiteering. As highlighted by Quartz, Apple made more revenue from the iPhone in one single quarter, raking in $32 billion dollars worth of iPhone sales from July – September.

Obviously, there are some qualifications which explain the huge discrepancies somewhat. Most notably, Google doesn’t really make or sell its own hardware. Almost all Android revenue is derived from the Google Play Store developer revenue share (like Apple, Google has a 70/30 split) or ads shown from Google’s phones. Apple’s highly successful hardware business is better stacked to give higher margins, and with higher margins comes higher profits.

So, whilst this figure is more symbolic than anything, it is significant in showing Apple’s success with the iPhone in general. Remember: Apple and Samsung are the only manufacturers to make money from smartphones. Everyone else consistently loses money. The risks associated with the hardware business go often overlooked, but Apple is reaping the rewards from its success.

Even looking at software sales numbers, Apple is close to Google’s numbers. Apple last announced the App Store had raked in $40 billion for developers. That means Apple generated at least $12 billion in revenue from App Store. Adding in partner deals like the $1bn Google Search arrangement, iOS’s software-only numbers are approximately half of those reported for Android, which relies on only software app sales and ads for its business model. It’s impressive however you slice it.


Filed under: AAPL Company, iOS, iOS Devices, Tech Industry Tagged: Android, Apple, Google, money, profit, Revenue

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Benjamin Mayo

January 22nd

Apple

Mac

Opinion: Is Apple getting too greedy, and could that again backfire on the company?

apple-greedy-steve-jobs

In 1995, two years before his return to the company, Steve Jobs gave a characteristically blunt answer when asked why Apple found itself struggling in the early to mid 1990s. The issue, he said, was that Apple had gotten greedy.

What ruined Apple wasn’t growth … They got very greedy. Instead of following the original trajectory of the original vision, which was to make the thing an appliance and get this out there to as many people as possible, they went for profits. They made outlandish profits for about four years… What that cost them was their future. What they should have been doing is making rational profits and going for market share.

Much has changed since then, of course. Apple has a substantial market share in both the personal computer and mobile markets, demonstrating that the two goals – growth and profitability – are not mutually exclusive. This is not an ‘Apple is doomed’ piece, nor anything like it. But I do wonder whether the company is once more putting short-term profits ahead of long-term brand loyalty … ? 

Many of us have expressed dismay at the fact that Apple still, in 2015, sells an iPhone with just 16GB of storage. Apple would, of course, argue its corner. It would point to app thinning, enabling apps to take up less storage than they used to. It would point to iCloud, suggesting that much of what we used to store on our phones can now be stored online. Why bother loading up your phone with lots of music, for example, when Apple Music allows you to stream it instead?

These arguments will one day make sense. When we have affordable, ubiquitous, high-speed Internet access, then sure, there’ll be little sense in storing much on the device itself. But we’re not there yet. Most of us aren’t on unlimited data contracts, and even if we are in theory, there are ‘fair use’ provisions in the small-print.

We often don’t have access to data connections on subway systems. There are still areas of the country where LTE is either patchy or non-existent. If planes offer Wi-Fi at all, it’s slow and expensive. I could go on, but the simple reality is that most of us need local storage, and trying to palm people off with 16GB is simply unreasonable. Apple is offering an iPhone which pretty much guarantees frustration down the line, and there’s absolutely no reason to do so when it could offer a 64GB starting point at the cost of a few bucks less profit.

ram

For years, Apple limited iPhones to 1GB RAM. It would argue that tightly integrating the hardware and software meant that it was able to make much more efficient use of that RAM than Android phones, and I don’t doubt that. But at a time when many users were complaining that lack of memory meant inactive tabs refreshing when you returned to them, Apple was risking a poor user experience for the sake of a few dollars. (It has, of course, finally bumped up the RAM to 2GB in the iPhone 6s/Plus.)

And then we have the latest Retina iMacs, where Apple reduced the SSD component of the 1TB Fusion Drive from 128GB to a miserly 24GB. That’s less than the RAM available in some configurations. Effectively, Apple has swapped out a genuine fusion drive – one that really did combine the responsiveness of an SSD with the affordability of a hard drive – for one that is, at the very least, severely compromised. One that is unlikely to deliver the snappiness expected of SSD storage. One which, we might even say, can still be marketed as a fusion drive without genuinely delivering on the promise of the technology.

apple-store-employee-with-iphone-6-12

What I am suggesting is far more modest. I’m merely suggesting that if Apple were a little less penny-pinching with its specs, were willing to sacrifice maybe $10-20 of profit on an iPhone, perhaps slightly more on a Mac, that would help it retain its premium positioning.

I am not in any way suggesting that Apple should sacrifice profit for market share. When the company takes home 92% of the entire smartphone industry’s profits, Apple could quite rightly argue that it has all the market share it needs, thanks very much. It would make no sense at all for it to drop prices significantly to put itself in a position where it has to sell more phones to make the same total profit. Its strategy of selling expensive items to the premium end of the market has proven incredibly successful, and I wouldn’t for one moment suggest changing that.

What I am suggesting is far more modest. I’m merely suggesting that if Apple were a little less penny-pinching with its specs, were willing to sacrifice maybe $10-20 of profit on an iPhone, perhaps slightly more on a Mac, that would help it retain its premium positioning.

Customers know they are paying more for an Apple product (though a smaller premium than many imagine). They are happy to do so, knowing they’re getting a premium product. Apple delivers that premium product in a great many ways, The designs are fantastic. The operating systems are great. The customer service is unrivalled. Above all, the ecosystem is way better than anything else available.

Chromebook-Pixel-2015

But the only constant in the tech industry is change. Take Windows. Microsoft has opted, in essence, to offer a single operating system for all devices, from desktops to phones. It has majored on hybrid devices, that combine tablets and laptops in one. Personally, I’m not convinced that’s the right direction, but it does have one implication. Microsoft can, for the first time, offer an integrated ecosystem. Not one that comes remotely close to rivalling that offered by Apple, but it will improve over time.

Perhaps more worryingly, look at Google. The Google ecosystem comes very close to rivalling that offered by Apple. Its one weakness is that the ecosystem is predominantly geared to mobile. At a time when most Android users have Windows PCs, neither Google nor Microsoft can offer the level of seamless integration between desktop and mobile environments delivered by Apple.

But … Chromebooks are becoming increasingly viable as laptops for the type of things most people do with them. Sure, a Chromebook is no MacBook. Most are weedy, and they have the same issue as that 16GB iPhone I complained about earlier – they are designed for an always-connected world which doesn’t yet exist.

But they have enough power and offline capability for many people, and Chromebooks no longer look like the poor relation. Some of them come close to rivalling the stylishness of a MacBook. Give Google a bit of time, and it’s going to be delivering a complete mobile/desktop ecosystem that genuinely competes with Apple in terms of performance using devices that give Apple a run for its money on the desirability front.

apple

Again, I stress: I am not arguing that Apple is doomed. Nor I am suggesting that the average Apple customer cares about how much RAM their device has, or the size of the SSD component of the fusion drive. But even non-techy Apple customers do care that the company’s products Just Work. And nickel-and-diming customers on specs that impact the degree to which products Just Work is, in my view, not a sensible path for Apple to take.

Photos: Top & bottom Hangzhou store Apple; chips iFixit; iPhone in store AP; Chromebook chromebookworld.com.


Filed under: AAPL Company, iOS Devices, Mac, Opinion, Tech Industry Tagged: AAPL, Apple, Chromebooks, Google, iPhone, Mac, Microsoft, profit, Steve Jobs, Windows

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Ben Lovejoy

October 19th

Apple

Mac

Windows

Apple again lands behind Samsung at #15 on Fortune Global 500 list, #2 by profit

gobal_500_icon-copy

Fortune is out with its latest Global 500 today ranking the world’s largest 500 companies by revenue and Apple has once again landed at #15 on the list. Apple comes in behind #1 Wal-mart, a long list of petroleum companies, Volkswagen, Toyota, and #13 Samsung.

After a bumpy start to 2014, Apple’s stock finished the year up 40%, adding nearly $200 billion to the company’s market value. A product pipeline that’s gotten Apple fanboys lining up all over again has certainly helped reenergize revenue growth: In addition to unveiling new categories like Apple Pay and Apple Watch, the company launched the iPhone 6, selling a record-breaking 10 million units in the first three days. As CEO Tim Cook recently told investors: “It’s tough to find something in the numbers not to like.” The normally low-profile Cook is breaking new ground in other ways too–in October, 2014 he came out as the first openly gay CEO of a Fortune 500 company.

In Fortune’s calculations, which account for total revenues for the fiscal year that ended before March 31, 2015, Apple came in with almost $183 billion in revenue, compared to around $195 billion for Samsung and $485 billion for #1 on the list, Walmart. Apple, however, comes in at #2 on the list when filtering by profit with $39.5 billion compared to $44.7 billion for the #1 company by profit, Industrial & Commer. Bank of China. Other tech companies coming in behind Apple for profit include Microsoft at #8 with $22 billion and Samsung at #9 with $21.9 billion in profit.

The new Fortune 500 Global list follows Apple’s Q3 2015 earnings report yesterday where the company reported record revenue for several products, hinted at over $1 billion in Apple Watch sales, and crossed the $200 billion in cash mark for the first time.


Filed under: AAPL Company Tagged: $200 billion, 500 Global, AAPL, Apple, fortune, profit, Revenue, Samsung

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Jordan Kahn

July 22nd

Apple

Mac

Apple says it had record month in July for App Store revenue, customer transactions

appstore2-1050x584

Apple has announced that July was a record setting month for App Store revenue following its earnings report last month where the company reported strong iTunes results for the three-month period that ended June (via CNBC).

The company also told CNBC today that it saw “a record number of customers making transactions” for the App Store during the month:

Apple’s app store saw record-setting revenue numbers in July, the company told CNBC. The Cupertino-based company also said that its app store saw a record number of customers making transactions.

During its fiscal Q3 earnings call last month, Apple CEO Tim Cook noted that iTunes was its fastest growing business thanks to strong App Store results. That included a 12% increase year-over-year with$4.5 billion in revenue for iTunes during the quarter.

Cook also noted then that the company is up to 75 billion cumulative App Store downloads and around $20 billion paid to developers with almost half paid in the last 12 months.


Filed under: AAPL Company Tagged: App Store, customer transactions, iTunes, July, profit, quarter, record, Revenue, Tim Cook

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Jordan Kahn

August 5th

Apple

Mac

Apple’s ‘break-even’ iTunes business now estimated to make $2B a year

Asymco’s Horace Dediu has estimated that Apple’s iTunes business, initially intended only to cover its costs as a way of driving hardware sales, now earns the company annual profits of a cool $2 billion.

itunes

What started as just a music store now sells music, video, books, iOS software, and Mac software. Revenues have grown five-fold in 7 years, with total sales approaching $5 billion a quarter and notching up an estimated 23 billion transactions a year.

Despite these heady numbers, Asymco believes Apple’s margins on most sales are almost non-existent: just 2 percent on apps and a wafer-thin 1 percent on music. Where Dediu thinks things are different is in the blue area termed ‘Apple Software’ that covers all the Mac software the company sells.

  • iWork, which includes Pages, Numbers and Keynote ($20 each)
  • iLife, which includes iMovie, iTunes, iPhoto, GarageBand (free with new computers but otherwise $15 each)
  • OS X updates (typically $19.99)
  • OS products including downloads of iOS and OS X. These are mostly free but some OS X updates are not free (typically $19.99 for new version Professional software, including Final Cut Pro ($299.99), Logic Pro ($199.99), Aperture ($79.99), Compressor ($49.99) and Motion ($49.99)
  • Apple Remote Desktop ($79.99)

If margins here are in line with industry norms of 50 percent, that means Apple makes $1.8 billion a year. Add in the tiny margins from the much higher total sales of other categories, and that gets you to the $2 billion figure. Not bad for a break-even business.


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Ben Lovejoy

March 22nd

Apple

Mac

Apple’s ‘break-even’ iTunes business now estimated to make $2B a year

Asymco’s Horace Dediu has estimated that Apple’s iTunes business, initially intended only to cover its costs as a way of driving hardware sales, now earns the company annual profits of a cool $2 billion.

itunes

What started as just a music store now sells music, video, books, iOS software, and Mac software. Revenues have grown five-fold in 7 years, with total sales approaching $5 billion a quarter and notching up an estimated 23 billion transactions a year.

Despite these heady numbers, Asymco believes Apple’s margins on most sales are almost non-existent: just 2 percent on apps and a wafer-thin 1 percent on music. Where Dediu thinks things are different is in the blue area termed ‘Apple Software’ that covers all the Mac software the company sells.

  • iWork, which includes Pages, Numbers and Keynote ($20 each)
  • iLife, which includes iMovie, iTunes, iPhoto, GarageBand (free with new computers but otherwise $15 each)
  • OS X updates (typically $19.99)
  • OS products including downloads of iOS and OS X. These are mostly free but some OS X updates are not free (typically $19.99 for new version Professional software, including Final Cut Pro ($299.99), Logic Pro ($199.99), Aperture ($79.99), Compressor ($49.99) and Motion ($49.99)
  • Apple Remote Desktop ($79.99)

If margins here are in line with industry norms of 50 percent, that means Apple makes $1.8 billion a year. Add in the tiny margins from the much higher total sales of other categories, and that gets you to the $2 billion figure. Not bad for a break-even business.


Comments Off on Apple’s ‘break-even’ iTunes business now estimated to make $2B a year

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Ben Lovejoy

March 22nd

Apple

Mac

Apple’s ‘break-even’ iTunes business now estimated to make $2B a year

Asymco’s Horace Dediu has estimated that Apple’s iTunes business, initially intended only to cover its costs as a way of driving hardware sales, now earns the company annual profits of a cool $2 billion.

itunes

What started as just a music store now sells music, video, books, iOS software, and Mac software. Revenues have grown five-fold in 7 years, with total sales approaching $5 billion a quarter and notching up an estimated 23 billion transactions a year.

Despite these heady numbers, Asymco believes Apple’s margins on most sales are almost non-existent: just 2 percent on apps and a wafer-thin 1 percent on music. Where Dediu thinks things are different is in the blue area termed ‘Apple Software’ that covers all the Mac software the company sells.

  • iWork, which includes Pages, Numbers and Keynote ($20 each)
  • iLife, which includes iMovie, iTunes, iPhoto, GarageBand (free with new computers but otherwise $15 each)
  • OS X updates (typically $19.99)
  • OS products including downloads of iOS and OS X. These are mostly free but some OS X updates are not free (typically $19.99 for new version Professional software, including Final Cut Pro ($299.99), Logic Pro ($199.99), Aperture ($79.99), Compressor ($49.99) and Motion ($49.99)
  • Apple Remote Desktop ($79.99)

If margins here are in line with industry norms of 50 percent, that means Apple makes $1.8 billion a year. Add in the tiny margins from the much higher total sales of other categories, and that gets you to the $2 billion figure. Not bad for a break-even business.


Comments Off on Apple’s ‘break-even’ iTunes business now estimated to make $2B a year

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Ben Lovejoy

March 22nd

Apple

Mac

Amazon Literally Makes No Money When You Buy a Kindle Paperwhite or Kindle Fire HD [Amazon]

Jeff Bezos revealed to the BBC that Amazon makes no profit off the Kindle Paperwhite and Kindle Fire HD. Both devices are sold at cost, which means, both devices' price is how much it costs Amazon to make them. More »


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Casey Chan

October 12th

Uncategorized

Nokia Has Sold 4 Millions Lumias—But It’s Still Making a Loss [Nokia]

Nokia has just released its financial report for the second quarter of 2012, and it's bitter-sweet. While Lumia sales are really taking off, the company continues to operate at significant loss. More »


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Jamie Condliffe

July 19th

Uncategorized

Apple owns 8.8% of cell phone market, 73% of cell phone profits

Apple owns cell phone profits

After posting the most profitable quarter in technology company history to close 2011 — and the second most profitable quarter among all companies, ever — Apple came back again in the first calendar quarter of 2012 and managed another monster quarter. The Cupertino, California-based technology giant earned $11.6 billion on $39.2 billion in sales during the second fiscal quarter of 2012, and its iPhone was responsible for an estimated 80% of all smartphone profits during the quarter. According to Apple watcher Horace Dediu, Apple’s share of all cell phone profits was nearly as overwhelming.

Market research firm IDC states that Apple’s share of the global cell phone market was flat at 8.8% last quarter. Despite accounting for such a small portion of global cell phone shipments, Apple’s share of all mobile phone profits reached 73% in the quarter.

“The new market disruption is the migration of a large number of demanding customers away from phones-as-voice-products to phones-as-computing-products,” Dediu notes as one of the driving factors behind Apple’s performance. The analyst also states that Samsung accounted for 26% of all major handset vendor profits last quarter, while Sony, Nokia, Motorola, LG and RIM all lost money and HTC was roughly even.

[Via CNNMoney]

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Zach Epstein

May 3rd

Apple
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