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>Yes, obviously they want to make as much money as possible, and this is at odds with consumer interests. It's not at odds with consumer interests at all. It's

>Yes, obviously they want to make as much money as possible, and this is at odds with consumer interests. It's not at odds with consumer interests at all. It's at odds with developer interests. It would actually cost consumers more if Apple couldn't make any money from developers directly because they'd try to make it up by charging more for Apple products. Developers might prefer to shift the burden to consumers's wallets instead of their own, but overall this model is beneficial for everyone involved. It is also better for the environment because directly making money from developers incentivizes them to support old hardware for as long as possible.

xp84 1mo ago
> because they'd try to make it up by charging more for Apple products. > Developers might prefer to shift the burden to consumers's wallets I vigorously disagree with this. It sounds very confused about economics, specifically prices. Apple, as every market actor does, charges the absolute maximum price the market will bear for their products and not a penny less. They cannot "make up" any money that comes from unrelated parties (such as their Google payola for search, or their casino games for children IAP revenue) by raising product prices. If they could raise their product prices and have that be profit-positive, they would have done it yesterday. They could raise prices on phones to make up for a hypothetical "free iCloud+," because the same consumers are the other party in both those transactions so presumably many people would see that the more expensive phone justifies free iCloud services. Apple doesn't set its prices by saying "OK, we need exactly 83 billion dollars in net income this year, so given that our products cost us 233 billion dollars to make and we have 54 billion dollars in expenses, we need 383 billion in revenue, so now let's set prices of each product to target this." That $83 billion in net income is just the number they are able to make last year with the prices being what the market would bear. Trying to increase prices to hold it there when a downfall in other revenue happens would depress sales.
- Despegar 1mo ago
  >Apple, as every market actor does, charges the absolute maximum price the market will bear for their products and not a penny less. That price is much lower than it otherwise would be if the only revenue Apple could generate came from hardware. The opposite incentive exists today, where it actually benefits Apple to sell cheaper razors to make more money from the razor blades.
  - rekoil 1mo ago
    Only if consumers would pay it, which isn’t something we can really know.
  - troupo 1mo ago
    > That price is much lower than it otherwise would be if the only revenue Apple could generate came from hardware. And that narrative is based on what exactly? Apple's profit margin is 25% by the way.
akst 1mo ago
That's just not how that works, how much consumers will pay is a binding constraint. Apple isn't subsiding their phone with developer fees and distributing their below marginal cost. Apple is almost certainly charging well above its marginal costs and is already charging the revenue maximising price, it's not willingly leaving money on the table. Not entirely how you've made formed this connection but respectively it sounds like you've confused several things here.
- NetMageSCW 1mo ago
  They are obviously not charging the maximum price because they’ve raised the price significantly when the iPhone X came out and suffered no harm. Apple sets prices based on a 30% raw profit margin and ignores the market except as it constrains their raw material and manufacturing costs. They use that 30% to pay there other costs, such as iOS development and R&D and investing in manufacturing partners.
  - ben_w 1mo ago
    The iPhone X, like all models, is a different model than all the others; the maximum price for one model is not going to be the maximum price for another. > Apple sets prices based on a 30% raw profit margin and ignores the market except as it constrains their raw material and manufacturing costs. Literally impossible ahead of time, as some of their costs are fixed rather than marginal. If you spend, as they did last year, ~$34.5bn on R&D, and you make a thing that costs $1000 to make and then you price it at $1300, but the market looks at what it is and what it costs and says "nah" so only 1 million people buy it that year, then what you're actually making isn't a 30% profit, it is a loss >110x your revenue. We don't know exactly how much R&D was spent on the AVP, nor the exact sales, but the market reaction to the price is something you should have in mind. No matter what its unit economics were, Apple probably made a loss overall.
troupo 1mo ago
> It would actually cost consumers more if Apple couldn't make any money from developers directly because they'd try to make it up by charging more for Apple products. iPhone sales pay for the entirety of Apple's R&D. 10 times over.
- NetMageSCW 1mo ago
  You work for $8000 a year?
  - troupo 1mo ago
    I fail to understand your question. Apple sells 240+ million iPhones a year. Apple's profit margin is an unheard-of 25%. iPhone customers pay for everything.

xp84 1mo ago

> because they'd try to make it up by charging more for Apple products. > Developers might prefer to shift the burden to consumers's wallets I vigorously disagree with this. It sounds very confused about economics, specifically prices. Apple, as every market actor does, charges the absolute maximum price the market will bear for their products and not a penny less. They cannot "make up" any money that comes from unrelated parties (such as their Google payola for search, or their casino games for children IAP revenue) by raising product prices. If they could raise their product prices and have that be profit-positive, they would have done it yesterday. They could raise prices on phones to make up for a hypothetical "free iCloud+," because the same consumers are the other party in both those transactions so presumably many people would see that the more expensive phone justifies free iCloud services. Apple doesn't set its prices by saying "OK, we need exactly 83 billion dollars in net income this year, so given that our products cost us 233 billion dollars to make and we have 54 billion dollars in expenses, we need 383 billion in revenue, so now let's set prices of each product to target this." That $83 billion in net income is just the number they are able to make last year with the prices being what the market would bear. Trying to increase prices to hold it there when a downfall in other revenue happens would depress sales.

Despegar 1mo ago
>Apple, as every market actor does, charges the absolute maximum price the market will bear for their products and not a penny less. That price is much lower than it otherwise would be if the only revenue Apple could generate came from hardware. The opposite incentive exists today, where it actually benefits Apple to sell cheaper razors to make more money from the razor blades.
- rekoil 1mo ago
  Only if consumers would pay it, which isn’t something we can really know.
- troupo 1mo ago
  > That price is much lower than it otherwise would be if the only revenue Apple could generate came from hardware. And that narrative is based on what exactly? Apple's profit margin is 25% by the way.

akst 1mo ago

That's just not how that works, how much consumers will pay is a binding constraint. Apple isn't subsiding their phone with developer fees and distributing their below marginal cost. Apple is almost certainly charging well above its marginal costs and is already charging the revenue maximising price, it's not willingly leaving money on the table. Not entirely how you've made formed this connection but respectively it sounds like you've confused several things here.

NetMageSCW 1mo ago
They are obviously not charging the maximum price because they’ve raised the price significantly when the iPhone X came out and suffered no harm. Apple sets prices based on a 30% raw profit margin and ignores the market except as it constrains their raw material and manufacturing costs. They use that 30% to pay there other costs, such as iOS development and R&D and investing in manufacturing partners.
- ben_w 1mo ago
  The iPhone X, like all models, is a different model than all the others; the maximum price for one model is not going to be the maximum price for another. > Apple sets prices based on a 30% raw profit margin and ignores the market except as it constrains their raw material and manufacturing costs. Literally impossible ahead of time, as some of their costs are fixed rather than marginal. If you spend, as they did last year, ~$34.5bn on R&D, and you make a thing that costs $1000 to make and then you price it at $1300, but the market looks at what it is and what it costs and says "nah" so only 1 million people buy it that year, then what you're actually making isn't a 30% profit, it is a loss >110x your revenue. We don't know exactly how much R&D was spent on the AVP, nor the exact sales, but the market reaction to the price is something you should have in mind. No matter what its unit economics were, Apple probably made a loss overall.

troupo 1mo ago

> It would actually cost consumers more if Apple couldn't make any money from developers directly because they'd try to make it up by charging more for Apple products. iPhone sales pay for the entirety of Apple's R&D. 10 times over.

NetMageSCW 1mo ago
You work for $8000 a year?
- troupo 1mo ago
  I fail to understand your question. Apple sells 240+ million iPhones a year. Apple's profit margin is an unheard-of 25%. iPhone customers pay for everything.