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Its incredible that "Services" brings as much revenue as Mac, iPad and wearables/accessories combined. I wonder what are the profit margins on services compared

Its incredible that "Services" brings as much revenue as Mac, iPad and wearables/accessories combined. I wonder what are the profit margins on services compared to traditional consumer electronics from Apple's point of view (they obviously need to sell both of them, since without hardware the software is not that useful but still it might incentivize them to subsidize the hardware like console makers in order to earn more from subscriptions).

HDThoreaun 3y ago
taking 30% of other people's revenue is as close to free money as you can get.
- andy_ppp 3y ago
  It’s unbelievable really, I thought protection rackets and preventing shops from opening without payment would be illegal.
- lockhouse 3y ago
  Unpopular opinion, but it’s not like these developers are getting nothing from Apple out of this. Apple runs the modern digital mall. They provide the space, the signage, the discovery, they even handle payment for you. Also, small indie developers are only being charged 15% until they exceed $1 million. So the 30% you always hear about are the big fish that can afford it anyway.
  - HDThoreaun 3y ago
    Hey I'm not saying apple isn't providing value here, just that they're making unbelievable margins on the app store. Just guessing here but would not be surprised if just the app store ads cover all the app store expenses and then the 30% is pure profit.
    - jbverschoor 3y ago
      Credit card fees are somewhere between 0.5% and 2.8% So when do we start complaining about Nintendo, Sony, Microsoft, Spotify, etc. etc? They all take 30%+ margins on their platforms.
      - HDThoreaun 3y ago
        I've been complaining about high margin service business for quiet a while now. The credit card business is especially problematic, we need to limit fees like the EU did asap.
      - ketralnis 3y ago
        Since forever? It turns out that more than one thing can be bad
      - lockhouse 3y ago
        Game consoles are even worse because you usually have to buy special developer kit hardware. As far as I’m aware only Xbox lets you switch to developer mode on standard hardware. Also Google takes the exact same cut on the Play Store and yet Apple is still the one that usually gets singled out.
        bryanlarsen 3y ago
        The top player is always the one singled out. For example, when people protest about excessive packaging for fast food packaging they protest McDonald's, not Burger King.
        ribosometronome 3y ago
        Interestingly, that's not really what has happened here. In the Epic vs Apple case, iOS represented only 7% of Fortnite revenue while Playstation alone represented nearly 47%. All the platforms pretty much have 30% default markups, though. >Apple lawyers also took the dominance of consoles as a chance to ask why Epic Games has not sued Sony for the 30% fees it charges to Epic Games. (Sony is a major investor in Epic Games, and it recently put $200 million into the company.) Epic’s lawyers’ rebuttal was to point out the major differences between phones and game consoles, as well as the fact that Sony and Microsoft are more willing to negotiate than Apple. At one point, Sweeney said he would have taken a deal from Apple for lower commissions, if it had been offered. Sweeney also noted that most game consoles are sold at a loss and make money back from sales. Unlike phones, consoles are mainly used to play games. To Sweeney, this was a big reason why Sony and Microsoft’s fees are more palatable. Read more at: https://www.newsobserver.com/news/business/article251156384.html https://www.newsobserver.com/news/business/article251156384....
  - gnicholas 3y ago
    > They provide the space, the signage, the discovery Signage and discovery are a joke. The App Store is littered with garbage, and even when you search for an app by name, you often get unrelated apps for pages and pages before the real app. > Also, small indie developers are only being charged 15% until they exceed $1 million. So the 30% you always hear about are the big fish that can afford it anyway. This is a new development, which seems to have resulted only because of the pressure from regulators.
    - lapcat 3y ago
      > This is a new development, which seems to have resulted only because of the pressure from regulators. The 15% was actually part of the settlement of the lawsuit Cameron, et al. v. Apple Inc.
      - gnicholas 3y ago
        Thanks for the clarification — I thought it was due to soft pressure, but you're right it was hard pressure as you mention.
    - guiltygods 3y ago
      > Signage and discovery are a joke. The App Store is littered with garbage, and even when you search for an app by name, you often get unrelated apps for pages and pages before the real app. That's what you get by making it is easy for anyone to develop and release apps. It is a very low barrier of entry. Almost anyone sitting at home can make an app and release it. If they release garbage to game the system and Apple blocks it, then there cries of draconian policies. Imagine the garbage that you will have to wade through when sideloading is forced upon them.
      - gochi 3y ago
        Somehow I have a hard time believing that the store being littered with junk comes from first timer app developers.
      - what_ever 3y ago
  - joejerryronnie 3y ago
    Apple also controls all methods of transportation to the mall.
  - ketralnis 3y ago
    They also run the local government and ban any other malls from existing. Nothing could be more rent-seeking.
    - Dig1t 3y ago
      In this metaphor, another mall would be another platform, e.g. Android. Apple isn’t stopping anyone else from creating a new platform, though it does seem pretty difficult. See: Samsung, Huawei, BlackBerry, etc
      - slashdev 3y ago
        There are two malls, Apple and Android on different sides of town. Both have a high level of foot traffic. There's a wide river with only one rickety old bridge joining the two halves of the town. People on the one side of the town almost never go to the mall on the other side of town. So both malls have a monopoly on their side of the town, and you have no choice but to pick one or both malls to setup your store and sell your wares. Both charge incredibly high rents, but then what choice do you have? There's just the two malls, and nobody has successfully started another mall in a decade.
        arcticbull 3y ago
        Is it possible that on Android, where other malls have been permitted for a long time (and sideloading, too) - that there really just isn't much demand for another mall? Maybe they haven't been successful because nobody really wants to deal with another mall. Maybe this will be a complete no-op for Apple if they allow other app stores, too. If they allowed other app stores, I wouldn't make the move. I get a ton of value out of Apple's ecosystem, including - maybe especially - the ability to see what subscriptions I have and cancel them with a single click without even interacting with the app vendor. idk what they'd have to do to make me move over, but man, it'd have to be demonstrably valuable - not just the same thing but different 3 feet over that way. [edit] What if I told you Amazon had its own Android App Store, and literally nobody cares. [1] [1] https://www.amazon.com/gp/help/customer/display.html?nodeId=GP96AU3MQ58FMV8U https://www.amazon.com/gp/help/customer/display.html?nodeId=...
  - sneak 3y ago
    Normal credit card processing is 1-3%. They are literally charging 10x market simply because they are the only game in town (due to bundling). They aren't providing 10x in value over basic card processing just by running the app store.
    - epistasis 3y ago
      Are they a credit card processor, or are they a store? What do you think the margin is at the mall?
      - sneak 3y ago
        For IAPs? They are a card processor.
    - ribosometronome 3y ago
      The only game town for what, though? Doing things on your iPhone? Most of the things Apple takes a 30% cut for are things that are very easy to do on other devices, it's just that people specifically want to do them on the iPhone. The most notable 30% case is with Fortnite but that's an excellent example of portability. There isn't really anything locking anyone to playing on iPhone except wanting to play on iPhone. Purchased skins and the like are all accessible regardless of where you purchase or play as long as it was linked to your Epic account.
      - makeitdouble 3y ago
        > The only game town for what, though? Doing things on your iPhone? Well, yes. There's only two generally available phone platforms and they both collude to take a 30% cut, so avoid that cut amounts to getting exculded from the largest computing platform used worldwide (except China)
  - summerlight 3y ago
    If the number was something around 5~10%, your opinion would be more popular and I think Apple deserves that. But 30%, not so much.
  - jonplackett 3y ago
    While the AppStore was a meritocracy I think this could be fair comment. Now that you can pay your way to the top with a shitty spammy app and outcompete a good quality less well funded app, because search and discover ability are absolutely dire, I don’t think it holds true. Being an indie developer used to be great. Now you just get a bit shafted by the system.
  - Gigachad 3y ago
    For a small developer/company, it's a good deal. If you are the scale of something like Ikea and are perfectly capable of building your own building, attracting your own customers and managing your own payments, then it becomes a bad deal that you are forced in to accepting.
  - jliptzin 3y ago
    Even 15% is too high. It's pretty hard as a developer to lop 30% or even 15% off your top line and still survive in a market that is already really competitive. That's why I got out about a decade ago. You have to spam the hell out of your users with ads and dark patterns and endless freemium tricks so that you can make back that Apple tax and then still have enough left over for an advertising budget and to pay the rest of the bills. If you don't, then your competitors are doing it and they'll have a larger advertising budget and you'll eventually be pushed out. That's why you see so much shit on the app store. The good apps are usually from companies that already have a successful standalone business somewhere else (either physical or a web presence) and don't need to squeeze every last drop of revenue from their apps. I still don't understand how they got away with it in the first place, what if Microsoft said they are entitled to 30% of all revenue generated by all Windows applications?
  - tqkxzugoaupvwqr 3y ago
    It’s a scam. You are required to pay Apple for a developer account. You are required to hand over 15%/30% of revenue for the lifetime of your app. You are bullied into paying Apple for App Store search ads or else someone else will take the number one spot even if the search query matches exactly your app name. Then you have to buy multiple generations of Apple hardware to test your app in different OS versions. And then Apple has the audacity to allow plain subscription scams in the App Store but bullies you in the app submission process for trivial things or rejects your app because the reviewer just didn’t read any provided instructions because they only have a few minutes per app review.
- summerlight 3y ago
  Not only 30%. Apple actually launched lots of competing services on their platform, which effectively means that it has a significant advantage in their product pricing.
- pjmlp 3y ago
  Still way better than the 70% - 90% that telcos used to charge for Palm, Windows CE/Pocket PC, Blackberry, Symbian, J2ME.
gordon_freeman 3y ago
I read somewhere a while ago (can’t recall the source) that services has way more profit margin than their hardware and it’s somewhere around 50%.
jrockway 3y ago
I'm not really surprised. The profitability of services are why everything ships with a service these days. Users obviously prefer "pay once and use forever" for things like heated seats on their car, but there is just too much money left on the table to offer that as an option. Depressing, but that's market forces for you. Apple definitely got me on services with E2E encryption. I am happy to pay $0.99 a month to keep all my data in their cloud. I suppose I would be even happier if it was included for the life of my iPhone for free, though.
- quickthrower2 3y ago
  Keeping all your data on their cloud at least costs them every month, and cannot be feasibly offered as a lifetime purchase. A heated seat though?
  - twoodfin 3y ago
    Automotive leasing is basically “personal mobility-aaS” and it’s wildly popular. Decomposing that lease cost into a bunch of small feature pieces is really about better price discrimination + fewer “SKUs”.
  - helf 3y ago
    [dead]
  - solomatov 3y ago
    It's actually possible to do this. There's a thing which is called perpetual bonds, i.e. bonds which pay a fixed sum ad infinitum. Not surprisingly, they have a non infinite cost. (https://en.wikipedia.org/wiki/Perpetual_bond https://en.wikipedia.org/wiki/Perpetual_bond) If you add a perpetual bonds with a coupon equal to the service charge, and the service price doesn't increase, you could create a perpetual "free" iCloud offering. However, I think the main problem there aren't that many people who are willing to pay for it.
    - hotstickyballs 3y ago
      It’s not possible because the point of services is that you can jack up the pricing any time. Perpetuities are only possible because of non negative interest rates but inflation tends to be higher so they don’t pay out constant in terms of purchasing power
jzl 3y ago
Why else do you think they’re fighting tooth and nail to preserve their 30% App Store cut?
lapcat 3y ago
Products: Net sales $60,584M - Cost of sales $39,136M = Gross margin $21,448M (35.4% of net sales) Services: Net sales $21,213M - Cost of sales $6,248M = Gross margin $14,965M (70.5% of net sales) https://www.apple.com/newsroom/pdfs/fy2023-q3/FY23_Q3_Consolidated_Financial_Statements.pdf https://www.apple.com/newsroom/pdfs/fy2023-q3/FY23_Q3_Consol...
joegahona 3y ago
"Services" includes Apple TV+, Apple Music, Apple Arcade, Apple News, and iCloud+. I wish Apple broke out the subscriber or revenue numbers for each item in Services.
- deleted 3y ago
  [deleted]
- lapcat 3y ago
  Those may actually be the smaller part of services. Services also include the App Store, AppleCare, and the Google deal to be the default search engine in Safari, which is massive.
  - guiltygods 3y ago
    Apple TV+, Apple Music, Apple Arcade, Apple News, and iCloud+ will outpace the Appstore as they gain traction. They just have to ensure that they maintain quality.
    - gochi 3y ago
      There is no way that happens unless mobile game monetization is so severely regulated that studios switch gears entirely. Remember 70% of revenue of the App Store comes from games.
- PlunderBunny 3y ago
  Does services also include the 'protection money' Apple gets from Google to keep Google as the default search provider in Safari? That's worth a few hundred million a year, isn't it?
  - lapcat 3y ago
    > That's worth a few hundred million a year, isn't it? More like $20 billion, perhaps up to 25% of all services revenue. https://www.fool.com/investing/2023/02/21/20-billion-reasons-alphabets-moat-isnt-as-big-as-i/ https://www.fool.com/investing/2023/02/21/20-billion-reasons...
randerson 3y ago
I take full advantage of my iPhone 14 Pro's 48MP camera raw and 4K60 video formats. Which quickly pushed my iCloud into the 2TB plan at $120/year. Which seems cheaper than AWS S3. In my particular case, I'm nowhere close to using the full 2TB, which is likely where the profit comes from on that particular service.
r0fl 3y ago
I believe Services margins are ~70% By far the highest of their entire product mix
tguedes 3y ago
Services also includes the amount that Google pays Apple each year to be the default search engine on iOS. It’s estimated to be $15+ billion a year https://www.makeuseof.com/why-google-pays-apple-billions-of-dollars/ https://www.makeuseof.com/why-google-pays-apple-billions-of-... That’s pure profit
- prepend 3y ago
  > That’s pure profit The have to pay someone to edit the config file.
  - tqkxzugoaupvwqr 3y ago
    It’s been last edited in 2007.
metaphor 3y ago
> Its incredible that "Services" brings as much revenue as Mac, iPad and wearables/accessories combined. That's not the story the numbers are telling: 23 YTD 22 YTD Change ====== ====== ====== Mac 21,743 28,669 -24.2% iPad + 21,857 + 22,118 -1.2% Wearables + 30,523 + 31,591 -3.4% -------- -------- ------ 74,123 82,378 -10.0% Services / 62,886 / 58,941 +6.7% ======== ======== ====== +17.9% +39.8% Even with Mac sales getting smashed hard YTD, Services would still need to generate ~18% more to be comparable in revenue; $11.2 billion delta is not insignificant, even with games buried in footnotes[1; p. 37] being played like: >> Services net sales also include amortization of the deferred value of services bundled in the sales price of certain products. [1] https://www.sec.gov/Archives/edgar/data/320193/000032019322000108/aapl-20220924.htm#ief5efb7a728d4285b6b4af1e880101bc_94 https://www.sec.gov/Archives/edgar/data/320193/0000320193220...

HDThoreaun 3y ago

taking 30% of other people's revenue is as close to free money as you can get.

andy_ppp 3y ago
It’s unbelievable really, I thought protection rackets and preventing shops from opening without payment would be illegal.
lockhouse 3y ago
Unpopular opinion, but it’s not like these developers are getting nothing from Apple out of this. Apple runs the modern digital mall. They provide the space, the signage, the discovery, they even handle payment for you. Also, small indie developers are only being charged 15% until they exceed $1 million. So the 30% you always hear about are the big fish that can afford it anyway.
- HDThoreaun 3y ago
  Hey I'm not saying apple isn't providing value here, just that they're making unbelievable margins on the app store. Just guessing here but would not be surprised if just the app store ads cover all the app store expenses and then the 30% is pure profit.
  - jbverschoor 3y ago
    Credit card fees are somewhere between 0.5% and 2.8% So when do we start complaining about Nintendo, Sony, Microsoft, Spotify, etc. etc? They all take 30%+ margins on their platforms.
    - HDThoreaun 3y ago
      I've been complaining about high margin service business for quiet a while now. The credit card business is especially problematic, we need to limit fees like the EU did asap.
    - ketralnis 3y ago
      Since forever? It turns out that more than one thing can be bad
    - lockhouse 3y ago
      Game consoles are even worse because you usually have to buy special developer kit hardware. As far as I’m aware only Xbox lets you switch to developer mode on standard hardware. Also Google takes the exact same cut on the Play Store and yet Apple is still the one that usually gets singled out.
      - bryanlarsen 3y ago
        The top player is always the one singled out. For example, when people protest about excessive packaging for fast food packaging they protest McDonald's, not Burger King.
        ribosometronome 3y ago
        Interestingly, that's not really what has happened here. In the Epic vs Apple case, iOS represented only 7% of Fortnite revenue while Playstation alone represented nearly 47%. All the platforms pretty much have 30% default markups, though. >Apple lawyers also took the dominance of consoles as a chance to ask why Epic Games has not sued Sony for the 30% fees it charges to Epic Games. (Sony is a major investor in Epic Games, and it recently put $200 million into the company.) Epic’s lawyers’ rebuttal was to point out the major differences between phones and game consoles, as well as the fact that Sony and Microsoft are more willing to negotiate than Apple. At one point, Sweeney said he would have taken a deal from Apple for lower commissions, if it had been offered. Sweeney also noted that most game consoles are sold at a loss and make money back from sales. Unlike phones, consoles are mainly used to play games. To Sweeney, this was a big reason why Sony and Microsoft’s fees are more palatable. Read more at: https://www.newsobserver.com/news/business/article251156384.html https://www.newsobserver.com/news/business/article251156384....
- gnicholas 3y ago
  > They provide the space, the signage, the discovery Signage and discovery are a joke. The App Store is littered with garbage, and even when you search for an app by name, you often get unrelated apps for pages and pages before the real app. > Also, small indie developers are only being charged 15% until they exceed $1 million. So the 30% you always hear about are the big fish that can afford it anyway. This is a new development, which seems to have resulted only because of the pressure from regulators.
  - lapcat 3y ago
    > This is a new development, which seems to have resulted only because of the pressure from regulators. The 15% was actually part of the settlement of the lawsuit Cameron, et al. v. Apple Inc.
    - gnicholas 3y ago
      Thanks for the clarification — I thought it was due to soft pressure, but you're right it was hard pressure as you mention.
  - guiltygods 3y ago
    > Signage and discovery are a joke. The App Store is littered with garbage, and even when you search for an app by name, you often get unrelated apps for pages and pages before the real app. That's what you get by making it is easy for anyone to develop and release apps. It is a very low barrier of entry. Almost anyone sitting at home can make an app and release it. If they release garbage to game the system and Apple blocks it, then there cries of draconian policies. Imagine the garbage that you will have to wade through when sideloading is forced upon them.
    - gochi 3y ago
      Somehow I have a hard time believing that the store being littered with junk comes from first timer app developers.
    - what_ever 3y ago
- joejerryronnie 3y ago
  Apple also controls all methods of transportation to the mall.
- ketralnis 3y ago
  They also run the local government and ban any other malls from existing. Nothing could be more rent-seeking.
  - Dig1t 3y ago
    In this metaphor, another mall would be another platform, e.g. Android. Apple isn’t stopping anyone else from creating a new platform, though it does seem pretty difficult. See: Samsung, Huawei, BlackBerry, etc
    - slashdev 3y ago
      There are two malls, Apple and Android on different sides of town. Both have a high level of foot traffic. There's a wide river with only one rickety old bridge joining the two halves of the town. People on the one side of the town almost never go to the mall on the other side of town. So both malls have a monopoly on their side of the town, and you have no choice but to pick one or both malls to setup your store and sell your wares. Both charge incredibly high rents, but then what choice do you have? There's just the two malls, and nobody has successfully started another mall in a decade.
      - arcticbull 3y ago
        Is it possible that on Android, where other malls have been permitted for a long time (and sideloading, too) - that there really just isn't much demand for another mall? Maybe they haven't been successful because nobody really wants to deal with another mall. Maybe this will be a complete no-op for Apple if they allow other app stores, too. If they allowed other app stores, I wouldn't make the move. I get a ton of value out of Apple's ecosystem, including - maybe especially - the ability to see what subscriptions I have and cancel them with a single click without even interacting with the app vendor. idk what they'd have to do to make me move over, but man, it'd have to be demonstrably valuable - not just the same thing but different 3 feet over that way. [edit] What if I told you Amazon had its own Android App Store, and literally nobody cares. [1] [1] https://www.amazon.com/gp/help/customer/display.html?nodeId=GP96AU3MQ58FMV8U https://www.amazon.com/gp/help/customer/display.html?nodeId=...
- sneak 3y ago
  Normal credit card processing is 1-3%. They are literally charging 10x market simply because they are the only game in town (due to bundling). They aren't providing 10x in value over basic card processing just by running the app store.
  - epistasis 3y ago
    Are they a credit card processor, or are they a store? What do you think the margin is at the mall?
    - sneak 3y ago
      For IAPs? They are a card processor.
  - ribosometronome 3y ago
    The only game town for what, though? Doing things on your iPhone? Most of the things Apple takes a 30% cut for are things that are very easy to do on other devices, it's just that people specifically want to do them on the iPhone. The most notable 30% case is with Fortnite but that's an excellent example of portability. There isn't really anything locking anyone to playing on iPhone except wanting to play on iPhone. Purchased skins and the like are all accessible regardless of where you purchase or play as long as it was linked to your Epic account.
    - makeitdouble 3y ago
      > The only game town for what, though? Doing things on your iPhone? Well, yes. There's only two generally available phone platforms and they both collude to take a 30% cut, so avoid that cut amounts to getting exculded from the largest computing platform used worldwide (except China)
- summerlight 3y ago
  If the number was something around 5~10%, your opinion would be more popular and I think Apple deserves that. But 30%, not so much.
- jonplackett 3y ago
  While the AppStore was a meritocracy I think this could be fair comment. Now that you can pay your way to the top with a shitty spammy app and outcompete a good quality less well funded app, because search and discover ability are absolutely dire, I don’t think it holds true. Being an indie developer used to be great. Now you just get a bit shafted by the system.
- Gigachad 3y ago
  For a small developer/company, it's a good deal. If you are the scale of something like Ikea and are perfectly capable of building your own building, attracting your own customers and managing your own payments, then it becomes a bad deal that you are forced in to accepting.
- jliptzin 3y ago
  Even 15% is too high. It's pretty hard as a developer to lop 30% or even 15% off your top line and still survive in a market that is already really competitive. That's why I got out about a decade ago. You have to spam the hell out of your users with ads and dark patterns and endless freemium tricks so that you can make back that Apple tax and then still have enough left over for an advertising budget and to pay the rest of the bills. If you don't, then your competitors are doing it and they'll have a larger advertising budget and you'll eventually be pushed out. That's why you see so much shit on the app store. The good apps are usually from companies that already have a successful standalone business somewhere else (either physical or a web presence) and don't need to squeeze every last drop of revenue from their apps. I still don't understand how they got away with it in the first place, what if Microsoft said they are entitled to 30% of all revenue generated by all Windows applications?
- tqkxzugoaupvwqr 3y ago
  It’s a scam. You are required to pay Apple for a developer account. You are required to hand over 15%/30% of revenue for the lifetime of your app. You are bullied into paying Apple for App Store search ads or else someone else will take the number one spot even if the search query matches exactly your app name. Then you have to buy multiple generations of Apple hardware to test your app in different OS versions. And then Apple has the audacity to allow plain subscription scams in the App Store but bullies you in the app submission process for trivial things or rejects your app because the reviewer just didn’t read any provided instructions because they only have a few minutes per app review.
summerlight 3y ago
Not only 30%. Apple actually launched lots of competing services on their platform, which effectively means that it has a significant advantage in their product pricing.
pjmlp 3y ago
Still way better than the 70% - 90% that telcos used to charge for Palm, Windows CE/Pocket PC, Blackberry, Symbian, J2ME.

gordon_freeman 3y ago

I read somewhere a while ago (can’t recall the source) that services has way more profit margin than their hardware and it’s somewhere around 50%.

jrockway 3y ago

I'm not really surprised. The profitability of services are why everything ships with a service these days. Users obviously prefer "pay once and use forever" for things like heated seats on their car, but there is just too much money left on the table to offer that as an option. Depressing, but that's market forces for you. Apple definitely got me on services with E2E encryption. I am happy to pay $0.99 a month to keep all my data in their cloud. I suppose I would be even happier if it was included for the life of my iPhone for free, though.

quickthrower2 3y ago
Keeping all your data on their cloud at least costs them every month, and cannot be feasibly offered as a lifetime purchase. A heated seat though?
- twoodfin 3y ago
  Automotive leasing is basically “personal mobility-aaS” and it’s wildly popular. Decomposing that lease cost into a bunch of small feature pieces is really about better price discrimination + fewer “SKUs”.
- helf 3y ago
  [dead]
- solomatov 3y ago
  It's actually possible to do this. There's a thing which is called perpetual bonds, i.e. bonds which pay a fixed sum ad infinitum. Not surprisingly, they have a non infinite cost. (https://en.wikipedia.org/wiki/Perpetual_bond https://en.wikipedia.org/wiki/Perpetual_bond) If you add a perpetual bonds with a coupon equal to the service charge, and the service price doesn't increase, you could create a perpetual "free" iCloud offering. However, I think the main problem there aren't that many people who are willing to pay for it.
  - hotstickyballs 3y ago
    It’s not possible because the point of services is that you can jack up the pricing any time. Perpetuities are only possible because of non negative interest rates but inflation tends to be higher so they don’t pay out constant in terms of purchasing power

jzl 3y ago

Why else do you think they’re fighting tooth and nail to preserve their 30% App Store cut?

lapcat 3y ago

Products: Net sales $60,584M - Cost of sales $39,136M = Gross margin $21,448M (35.4% of net sales) Services: Net sales $21,213M - Cost of sales $6,248M = Gross margin $14,965M (70.5% of net sales) https://www.apple.com/newsroom/pdfs/fy2023-q3/FY23_Q3_Consolidated_Financial_Statements.pdf https://www.apple.com/newsroom/pdfs/fy2023-q3/FY23_Q3_Consol...

joegahona 3y ago

"Services" includes Apple TV+, Apple Music, Apple Arcade, Apple News, and iCloud+. I wish Apple broke out the subscriber or revenue numbers for each item in Services.

deleted 3y ago
[deleted]
lapcat 3y ago
Those may actually be the smaller part of services. Services also include the App Store, AppleCare, and the Google deal to be the default search engine in Safari, which is massive.
- guiltygods 3y ago
  Apple TV+, Apple Music, Apple Arcade, Apple News, and iCloud+ will outpace the Appstore as they gain traction. They just have to ensure that they maintain quality.
  - gochi 3y ago
    There is no way that happens unless mobile game monetization is so severely regulated that studios switch gears entirely. Remember 70% of revenue of the App Store comes from games.
PlunderBunny 3y ago
Does services also include the 'protection money' Apple gets from Google to keep Google as the default search provider in Safari? That's worth a few hundred million a year, isn't it?
- lapcat 3y ago
  > That's worth a few hundred million a year, isn't it? More like $20 billion, perhaps up to 25% of all services revenue. https://www.fool.com/investing/2023/02/21/20-billion-reasons-alphabets-moat-isnt-as-big-as-i/ https://www.fool.com/investing/2023/02/21/20-billion-reasons...

randerson 3y ago

I take full advantage of my iPhone 14 Pro's 48MP camera raw and 4K60 video formats. Which quickly pushed my iCloud into the 2TB plan at $120/year. Which seems cheaper than AWS S3. In my particular case, I'm nowhere close to using the full 2TB, which is likely where the profit comes from on that particular service.

r0fl 3y ago

I believe Services margins are ~70% By far the highest of their entire product mix

tguedes 3y ago

Services also includes the amount that Google pays Apple each year to be the default search engine on iOS. It’s estimated to be $15+ billion a year https://www.makeuseof.com/why-google-pays-apple-billions-of-dollars/ https://www.makeuseof.com/why-google-pays-apple-billions-of-... That’s pure profit

prepend 3y ago
> That’s pure profit The have to pay someone to edit the config file.
- tqkxzugoaupvwqr 3y ago
  It’s been last edited in 2007.

metaphor 3y ago

> Its incredible that "Services" brings as much revenue as Mac, iPad and wearables/accessories combined. That's not the story the numbers are telling: 23 YTD 22 YTD Change ====== ====== ====== Mac 21,743 28,669 -24.2% iPad + 21,857 + 22,118 -1.2% Wearables + 30,523 + 31,591 -3.4% -------- -------- ------ 74,123 82,378 -10.0% Services / 62,886 / 58,941 +6.7% ======== ======== ====== +17.9% +39.8% Even with Mac sales getting smashed hard YTD, Services would still need to generate ~18% more to be comparable in revenue; $11.2 billion delta is not insignificant, even with games buried in footnotes[1; p. 37] being played like: >> Services net sales also include amortization of the deferred value of services bundled in the sales price of certain products. [1] https://www.sec.gov/Archives/edgar/data/320193/000032019322000108/aapl-20220924.htm#ief5efb7a728d4285b6b4af1e880101bc_94 https://www.sec.gov/Archives/edgar/data/320193/0000320193220...