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Apple Music and anything that has content rights are where low margins are going to be. Services margin will include new areas they are investing in and losing
by weixiyen 6y ago
Apple Music and anything that has content rights are where low margins are going to be. Services margin will include new areas they are investing in and losing money as well.
There's zero percent chance the App Store is running at 50% margin. It's got to be closer to 80% than 50%, or they are doing something wrong.
- valuearb 6y agoYou are correct Apple Music has low margins (Less than 30%), but it also only has 40M subscribers, which is likely less than $5B in annualized revenues, or roughly 10% of total services revenues. So $50B in services at 68% margins equals $16B in expenses, deduct $4B in Apple Music expense and you have $12B left. Deduct $9B from revenues for Googles search engine placement, $5B more in revenues from Apple Music, and you have $36B in revenues left. That makes gross margins for the remaining services, which the App Store is 40%, 67%. You are correct in that 67% is closer to 80% than 50%, but still a long way from it.
- weixiyen 6y agoI've not done the research, but following your #s, there remains 60% of the $36b unaccounted for. Where's that coming from, and what are those margins?
- valuearb 6y agoI’m honestly not sure. There is iCloud, News, Arcade, but those three combined shouldn’t even get to $5B, let alone $22B.