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Apple, at least, claims they don't make much money there. Per their latest quarterly call: "iTunes and App Store are still running 'a bit over break-even.' We

• pyre 17y ago
  Wouldn't "W're investing a lot in these stores" translate into "lots of fixed costs are being spent building ourselves a platform to profit off of this?"
  • cakesy 17y ago
    No necessarily. It could also mean they see it as a loss leader, driving more iPhone/Touch/iPad sales. So they will not directly profit from these stores, just like they don't make much money from selling music.
• electromagnetic 17y ago
  What happens when they stop needing to invest huge amounts of revenue into their stores? Major profits. Example: I buy a B&B and use the revenue from my rentals to expand the property to get more rooms (IE higher revenue) and I invest that too. 10 years down the road I could have the biggest hotel in the country, making record revenues but nearly zero profit, and then I stop expanding. I'm then raking in multi-millions from one-stop sales and my business will have operated exactly the same as iTunes and the App store. Apple has the potential to make huge amounts of money off of iTunes and the App store. They're just delaying this to expand their market hold and look benign. "How can Apple possibly be evil?" you hear people ask; "They barely profit off their stores," they say. 10 years down the line, when no one cares anymore, no one will bat an eyelid when Apple is taking in over a billion dollars from its iTunes and App store sales.