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Markups are almost always a function of cost. BestBuy is always teetering on 'not making money' - their markups are a function of market competition. Apple is

by jariel 6y ago

Markups are almost always a function of cost. BestBuy is always teetering on 'not making money' - their markups are a function of market competition. Apple is leveraging it's market power on all sides i.e. consumers, suppliers, and 3rd party marketplace vendors. The massive margins (after markup) are basically a measure of that power.

imtringued 6y ago
That money has to subsidize free apps. If every app was a free app and the apps offered in app purchases without involving apple's payment system then Apple would get nothing. The rules and mandatory cuts have to exist to ensure the continued existence of the App Store. The alternative to an App store with a 30% cut on everything is a store without free apps and a complete ban of in app purchases. I personally have never understood the selfish HN user arguments against any particular cut because if you followed those arguments through they would want Apple to give them a negative cut because they only care about themselves with no single though about the consequences of their wishes.
- donmcronald 6y ago
  > The alternative to an App store with a 30% cut on everything is a store without free apps and a complete ban of in app purchases. Where do I sign up for this dream store? I’d be pretty happy to see all the low effort skinner box trash disappear overnight.
- sto_hristo 6y ago
  The true alternative to an app store with 30% cut is simply an open mobile standard OS that allows users to do whatever they want with their hardware and software. Just like with PCs, but on a smaller form factor. On PCs you don't have app stores or any of that kind of bullshit, yet you still have plenty of free software, lots of powerful paid software, which you pay directly to the creators. Why can't people see that mobile phones are just a different form factor of a computer?
  - ralfd 6y ago
    You also have malware on PC. I don’t have to worry that my parents install a key logger on their iPad.
    - fulafel 6y ago
      You also have malware in app stores. https://gadgets.ndtv.com/apps/news/google-play-store-main-distributor-malware-android-phones-research-nortonlifelock-imdea-software-institute-2324429 https://gadgets.ndtv.com/apps/news/google-play-store-main-di... But yes, there is a "supervision required" subset of users. Still, shouldn't calibrate the level of big brother involvement for everyone based on this.
    - sto_hristo 6y ago
      You have plenty of malware on mobile platforms. Not to mention vulnerabilities that have eclipsed any other platform in terms of potential for devastation. Like Stagefright for android, which gave attackers unlimited access without the need for any user interaction; only precursor is carrier enabled MMS service. Treating users like idiots that need to be placed in the "pillow room" and building these app platforms under the pretext of security and convenience/ease of use is the reason we're in this swamp where your awesome pocket hardware has been reduced to an ad client which you have 0 control and ownership over. Everyone's parents have survived the earliest days of computing where security was as its lowest, lack of common knowledge at its highest.
- paulgb 6y ago
  The user pays good money for the phone. The price of the phone pays for certain expectations of service: software updates, Siri, Maps, etc. (this is even reflected in the way Apple books revenue in their public filings.) There's no reason the app store couldn't work that way as well. It's not selfish to expect that if you pay $1,000 on a phone that there isn't a hidden and unavoidable tax on third party apps purchased for it.
- jariel 6y ago
  "The alternative to an App store with a 30% cut on everything is a store without free apps and a complete ban of in app purchases." No, absolutely not. "I personally have never understood the selfish HN user arguments against any particular cut because if you followed those arguments through they would want Apple to give them a negative cut because they only care about themselves with no single though about the consequences of their wishes." This is ridiculous. Apple is printing money hand over fist, the richest company in all of history. The 'alternative' to 30% cut is a 0% cut! Developers would get 30 percent increase which is might probably 2-3x their profits. Apple's profits wouldn't be hurt that much.
- hamandcheese 6y ago
  Apple more than covers their costs by the $99 annual developer fee. 30% doesn’t subsidize free apps, it’s pure profit for Apple.
lotsofpulp 6y ago
Are markups and margins not the same thing? If they aren’t, what’s the difference? If they are, then a markup isn’t a function of cost, it’s more accurately a function of pricing power, or how much your customers are willing to pay you over a competitor. Best Buy can’t markup more because people will buy from Amazon or Walmart or Costco or Target or Aliexpress. Apple can markup more because people can’t get a similar product elsewhere for cheaper.
- jariel 6y ago
  "Are markups and margins not the same thing?" 'Margin' is sometimes 'gross' and sometimes 'net'. In competitive markets, price ends up being a function of cost: it's always cost + a little bit. That little bit is profit. Anyone who marks up more, gets lost sales. The fact Apple can take 30% of a software sale, which is in many cases 80% of a companies revenue, and that it's all gravy (i.e. all net), is huge. Best Buy takes 40% margin because they have underlying costs, meaning other competitors will have similar structures. Apple takes 30% because they can and that's that.

by jariel 6y ago

imtringued 6y ago

That money has to subsidize free apps. If every app was a free app and the apps offered in app purchases without involving apple's payment system then Apple would get nothing. The rules and mandatory cuts have to exist to ensure the continued existence of the App Store. The alternative to an App store with a 30% cut on everything is a store without free apps and a complete ban of in app purchases. I personally have never understood the selfish HN user arguments against any particular cut because if you followed those arguments through they would want Apple to give them a negative cut because they only care about themselves with no single though about the consequences of their wishes.

donmcronald 6y ago
> The alternative to an App store with a 30% cut on everything is a store without free apps and a complete ban of in app purchases. Where do I sign up for this dream store? I’d be pretty happy to see all the low effort skinner box trash disappear overnight.
sto_hristo 6y ago
The true alternative to an app store with 30% cut is simply an open mobile standard OS that allows users to do whatever they want with their hardware and software. Just like with PCs, but on a smaller form factor. On PCs you don't have app stores or any of that kind of bullshit, yet you still have plenty of free software, lots of powerful paid software, which you pay directly to the creators. Why can't people see that mobile phones are just a different form factor of a computer?
- ralfd 6y ago
  You also have malware on PC. I don’t have to worry that my parents install a key logger on their iPad.
  - fulafel 6y ago
    You also have malware in app stores. https://gadgets.ndtv.com/apps/news/google-play-store-main-distributor-malware-android-phones-research-nortonlifelock-imdea-software-institute-2324429 https://gadgets.ndtv.com/apps/news/google-play-store-main-di... But yes, there is a "supervision required" subset of users. Still, shouldn't calibrate the level of big brother involvement for everyone based on this.
  - sto_hristo 6y ago
    You have plenty of malware on mobile platforms. Not to mention vulnerabilities that have eclipsed any other platform in terms of potential for devastation. Like Stagefright for android, which gave attackers unlimited access without the need for any user interaction; only precursor is carrier enabled MMS service. Treating users like idiots that need to be placed in the "pillow room" and building these app platforms under the pretext of security and convenience/ease of use is the reason we're in this swamp where your awesome pocket hardware has been reduced to an ad client which you have 0 control and ownership over. Everyone's parents have survived the earliest days of computing where security was as its lowest, lack of common knowledge at its highest.
paulgb 6y ago
The user pays good money for the phone. The price of the phone pays for certain expectations of service: software updates, Siri, Maps, etc. (this is even reflected in the way Apple books revenue in their public filings.) There's no reason the app store couldn't work that way as well. It's not selfish to expect that if you pay $1,000 on a phone that there isn't a hidden and unavoidable tax on third party apps purchased for it.
jariel 6y ago
"The alternative to an App store with a 30% cut on everything is a store without free apps and a complete ban of in app purchases." No, absolutely not. "I personally have never understood the selfish HN user arguments against any particular cut because if you followed those arguments through they would want Apple to give them a negative cut because they only care about themselves with no single though about the consequences of their wishes." This is ridiculous. Apple is printing money hand over fist, the richest company in all of history. The 'alternative' to 30% cut is a 0% cut! Developers would get 30 percent increase which is might probably 2-3x their profits. Apple's profits wouldn't be hurt that much.
hamandcheese 6y ago
Apple more than covers their costs by the $99 annual developer fee. 30% doesn’t subsidize free apps, it’s pure profit for Apple.

lotsofpulp 6y ago

Are markups and margins not the same thing? If they aren’t, what’s the difference? If they are, then a markup isn’t a function of cost, it’s more accurately a function of pricing power, or how much your customers are willing to pay you over a competitor. Best Buy can’t markup more because people will buy from Amazon or Walmart or Costco or Target or Aliexpress. Apple can markup more because people can’t get a similar product elsewhere for cheaper.

jariel 6y ago
"Are markups and margins not the same thing?" 'Margin' is sometimes 'gross' and sometimes 'net'. In competitive markets, price ends up being a function of cost: it's always cost + a little bit. That little bit is profit. Anyone who marks up more, gets lost sales. The fact Apple can take 30% of a software sale, which is in many cases 80% of a companies revenue, and that it's all gravy (i.e. all net), is huge. Best Buy takes 40% margin because they have underlying costs, meaning other competitors will have similar structures. Apple takes 30% because they can and that's that.