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They were a hardware company, but are moving into services for continued growth, which puts them at odds with an open platform. The business model is changing.

They were a hardware company, but are moving into services for continued growth, which puts them at odds with an open platform. The business model is changing. https://www.statista.com/statistics/382136/quarterly-segments-revenue-of-apple/ https://www.statista.com/statistics/382136/quarterly-segment... You can see services revenue is up to 14 billion compared to iPhone's 26 billion.

ngcc_hk 6y ago
And that is revenue. Guess margins is the main question.
- eyelidlessness 6y ago
  That’s pretty easy to ballpark. Everything Apple does targets a whole package 25-30% margin. If the services aren’t generating that margin, the hardware is making it up. Last I heard the iPhone is on that margin target, as are all or nearly all macs. So it’s pretty reasonable to assume the services are pretty close in line.
  - Dylan16807 6y ago
    > whole package margin > If the services aren’t generating that margin, the hardware is making it up. I really don't like that way of looking at profits. Going by that standard, if you sell a thousand dollar device with $260 in margin and no software, everything is great. But then if you add on $600 in software to increase your margin to $330, that's bad somehow?
    - eyelidlessness 6y ago
      Huh? I wasn’t making a value judgment at all, just observing Apple’s historical behavior. That is how they look at profit. And they move all sorts of revenue around to make certain price points more appealing. Mac mini gets cheaper at entry level, macOS is free. To the extent those are lower margin, they make it up in services or other hardware lines.
      - Dylan16807 6y ago
        Huh? I wasn't judging you at all, just insulting Apple's historical behavior, how they look at profit.
  - toyg 6y ago
    Services actually hover in the 60% gross margin, vs 30% for hardware. But they sell so much hardware that the overall profits are still 80% from that. Source: https://sec.report/Document/0000320193-19-000119/ https://sec.report/Document/0000320193-19-000119/
deleted 6y ago
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eyelidlessness 6y ago
Why would services put them at odds with an open platform? (I’m pretty sure they use that open platform for many of their services)
- wizzwizz4 6y ago
  Making it harder not to use their services permits them to profit thereby (e.g. via the Apple tax).
  - eyelidlessness 6y ago
    Why would an open platform running on their hardware impact service usage at all? Let’s be clear what an open platform on ARM Mac is: people (such as a lot of folks here) who already prefer an open platform and want M-series performance, not a significant proportion of the macOS user base developing a preference for Linux.

ngcc_hk 6y ago

And that is revenue. Guess margins is the main question.

eyelidlessness 6y ago
That’s pretty easy to ballpark. Everything Apple does targets a whole package 25-30% margin. If the services aren’t generating that margin, the hardware is making it up. Last I heard the iPhone is on that margin target, as are all or nearly all macs. So it’s pretty reasonable to assume the services are pretty close in line.
- Dylan16807 6y ago
  > whole package margin > If the services aren’t generating that margin, the hardware is making it up. I really don't like that way of looking at profits. Going by that standard, if you sell a thousand dollar device with $260 in margin and no software, everything is great. But then if you add on $600 in software to increase your margin to $330, that's bad somehow?
  - eyelidlessness 6y ago
    Huh? I wasn’t making a value judgment at all, just observing Apple’s historical behavior. That is how they look at profit. And they move all sorts of revenue around to make certain price points more appealing. Mac mini gets cheaper at entry level, macOS is free. To the extent those are lower margin, they make it up in services or other hardware lines.
    - Dylan16807 6y ago
      Huh? I wasn't judging you at all, just insulting Apple's historical behavior, how they look at profit.
- toyg 6y ago
  Services actually hover in the 60% gross margin, vs 30% for hardware. But they sell so much hardware that the overall profits are still 80% from that. Source: https://sec.report/Document/0000320193-19-000119/ https://sec.report/Document/0000320193-19-000119/

deleted 6y ago

[deleted]

eyelidlessness 6y ago

Why would services put them at odds with an open platform? (I’m pretty sure they use that open platform for many of their services)

wizzwizz4 6y ago
Making it harder not to use their services permits them to profit thereby (e.g. via the Apple tax).
- eyelidlessness 6y ago
  Why would an open platform running on their hardware impact service usage at all? Let’s be clear what an open platform on ARM Mac is: people (such as a lot of folks here) who already prefer an open platform and want M-series performance, not a significant proportion of the macOS user base developing a preference for Linux.