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Not trying to defend Apple but this was said by an “expert” hired by Epic and neither 9to5 or Bloomberg have any data associated with this claim. While I’m sure

Not trying to defend Apple but this was said by an “expert” hired by Epic and neither 9to5 or Bloomberg have any data associated with this claim. While I’m sure the profit is nice and cushy, I have a feeling this number is like “the average server cost is X and Apple probably needs Y of these. With their revenue, they’re making more than 78%!” Which isn’t exactly how you calculated profit margin…

rchaud 5y ago
According to this, Apple's services business had a gross margin of 63% in 2019 [0]. The 78% figure from the court testimony may not be perfectly accurate but I can't imagine its margins are lower than than something like Apple Music. [0] https://www.investopedia.com/apple-s-5-most-profitable-lines-of-business-4684130 https://www.investopedia.com/apple-s-5-most-profitable-lines...
- chrisandchris 5y ago
  At least the other site ending in *pedia has a list of sources. I don‘t know anything about investopedia, but I see a lot of numbers and not one source for any of the numbers at all. Not going to trust it.
  - rchaud 5y ago
    If you'd like to refute it, you're free to look at Apple's own financials.
- rsj_hn 5y ago
  Software companies have high gross margins because the measure excludes the cost of developing and maintaining the software. So Autodesk's gross margins are 90%, Adobe's are 86%, etc. When you see numbers like that, it should tell you that you are not capturing the expenses of the company in that metric, rather than concluding the company is earning fantatiscally high profits. With Apple, the investment is in the platform, which includes everything from designing their own chips to writing their own OS and exposing and maintaining APIs for third party apps to use, as well the development costs of the infrastructure behind the app-store itself. None of those costs appear in a gross margin calculation. Not saying that Apple should or should not fall under anti-monopoly laws or that we shouldn't change our monopoly laws away from the current consumer harm focus towards more of an innovation-harm focus, but discussions of gross margin are highly misleading when assessing the expenses paid by software companies -- as is the cited article.
1cvmask 5y ago
I would have guessed that the profit margin would have been around 90 percent for the App Store.
- olliej 5y ago
  Why?
  - pixl97 5y ago
    Many companies have the revenue of Apple. Few have the profits. Something has to have a high profit margin somewhere.
    - olliej 5y ago
      Their profits aren’t close to 78%, they make more profit than other companies because they aren’t perpetually doing race to the bottom pricing. Every machine and device they sell is a high end (in market sense) for that category of device and so has high end margins.
3327 5y ago
Apple wouldn’t replace my shitty butterfly macbook pro keyboard. I went to windows, not that Microsoft is any better but at least its a Pc. although it seems walled gardens are everywhere nowadays. In short, Apple is a monopoly. Anti competitive. Market abuser. So 75-78% basically in short - its probably up there. Breakem up. And Google, and Facebook and Amazon. And watch the techno, economic engine start like it did when Bell was split.

rchaud 5y ago

According to this, Apple's services business had a gross margin of 63% in 2019 [0]. The 78% figure from the court testimony may not be perfectly accurate but I can't imagine its margins are lower than than something like Apple Music. [0] https://www.investopedia.com/apple-s-5-most-profitable-lines-of-business-4684130 https://www.investopedia.com/apple-s-5-most-profitable-lines...

chrisandchris 5y ago
At least the other site ending in *pedia has a list of sources. I don‘t know anything about investopedia, but I see a lot of numbers and not one source for any of the numbers at all. Not going to trust it.
- rchaud 5y ago
  If you'd like to refute it, you're free to look at Apple's own financials.
rsj_hn 5y ago
Software companies have high gross margins because the measure excludes the cost of developing and maintaining the software. So Autodesk's gross margins are 90%, Adobe's are 86%, etc. When you see numbers like that, it should tell you that you are not capturing the expenses of the company in that metric, rather than concluding the company is earning fantatiscally high profits. With Apple, the investment is in the platform, which includes everything from designing their own chips to writing their own OS and exposing and maintaining APIs for third party apps to use, as well the development costs of the infrastructure behind the app-store itself. None of those costs appear in a gross margin calculation. Not saying that Apple should or should not fall under anti-monopoly laws or that we shouldn't change our monopoly laws away from the current consumer harm focus towards more of an innovation-harm focus, but discussions of gross margin are highly misleading when assessing the expenses paid by software companies -- as is the cited article.

1cvmask 5y ago

I would have guessed that the profit margin would have been around 90 percent for the App Store.

olliej 5y ago
Why?
- pixl97 5y ago
  Many companies have the revenue of Apple. Few have the profits. Something has to have a high profit margin somewhere.
  - olliej 5y ago
    Their profits aren’t close to 78%, they make more profit than other companies because they aren’t perpetually doing race to the bottom pricing. Every machine and device they sell is a high end (in market sense) for that category of device and so has high end margins.

3327 5y ago

Apple wouldn’t replace my shitty butterfly macbook pro keyboard. I went to windows, not that Microsoft is any better but at least its a Pc. although it seems walled gardens are everywhere nowadays. In short, Apple is a monopoly. Anti competitive. Market abuser. So 75-78% basically in short - its probably up there. Breakem up. And Google, and Facebook and Amazon. And watch the techno, economic engine start like it did when Bell was split.