Apple, Epic, and the App Store • Hacker News Board

Re: Apple, Epic, and the App Store

#641

Post by valuearb » Tue, Aug 18, 2020, 6:05 AM UTC

cromwellian wrote: post #352

"But Apple needs to fund the App Store. XCode, payment processing, reviewers, it all costs money". Yes, very little in comparison. Apple made $50 billion in revenue from the App Store in 2019. $50 BILLION. The data centers costs to serve up this are miniscule in comparison. Apple could build 50 datacenters PER YEAR EVERY YEAR for that revenue. Reviewers? A staff of 10,000 fulltime reviewers paid $200k per year would…

Apple doesn’t make $50B a year from the App Store. That’s roughly it’s entire services revenues. It’s estimated that developers had gross sales of $50B from the AppStore last year, of which $15B is Apples share before expenses.

Apples audited financials tell us gross margins on services is 68%, and $9B of those services are from an annual payment from Google for search placement in Safari with a gross margin approaching 100%. So you can make up whatever numbers you want given your limited understanding of what services the App Store provides, but App Store gross margins are clearly likely to be in the 50-65% range, making its break even somewhere between 10-15% of developer revenues.

And lastly, gross margins aren’t net margins. Apple still has to pay for marketing, sales, admin, support, etc out of iPhone gross margins, and the App Store still needs to contribute to some if these as well.

Re: Apple, Epic, and the App Store

#642

Post by Jommi » Tue, Aug 18, 2020, 6:07 AM UTC

CamelCaseName wrote: post #478

Jommi wrote: post #403

Earlier quoted context omitted.

High product margins are usually signs of monopolistic powers used, otherwise profits would slowly move towards cost as time goes forward. This has not been the case with Apple.

This is only true of products with substitutes. The extreme example being commodities. Pretty much any luxury brand has high product margins, but certainly not for lack of competition.

Exactly, and luxury brands are characterized by their electivity. While and appstore has formed to become something close to a virtual public good.

Re: Apple, Epic, and the App Store

#643

Post by valuearb » Tue, Aug 18, 2020, 6:09 AM UTC

NorwegianDude wrote: post #442

WWLink wrote: post #367

Earlier quoted context omitted.

I agree with the sunk cost - besides, who is the customer and who is the product here? The customer is supposed to be the one who bought the phone and is using the OS in their best interest. Right? This whole thing feels all wrong. Both Apple for "gatekeeping OUR customers" and Epic for "Apple's stealing OUR money" (or "Apple is making us pay 30% so we're going to charge you 30% more") Besides, it's not as if the App…

>Apple is making us pay 30% so we're going to charge you 30% more You would have to charge $142.86 for something you otherwise could sell for $100 if it wasn't for Apple taking a 30 % cut. So ~43 % more, not 30 % more. Apple sure is milking iOS users for alot of money, without users knowing.

Apple is adding a lot of value for developers and customers by providing a secure low friction app sales and discovery system.

Re: Apple, Epic, and the App Store

#644

Post by FrozenSynapse » Tue, Aug 18, 2020, 6:23 AM UTC

ntsplnkv2 wrote: post #11

A pretty well-thought out article, given the inflammatory nature of the subject matter. I think Apple is right on the line. But I don't see a good argument as to what their doing is being anti-competitive. ~2 million apps are on the app store. Charging a fee for giving developers a huge market that spends money is not exactly unfair. And the rules of engagement are generally applied equally to everyone - the exceptio…

It is anticompetitive because there is no other way to get apps on iOS. If they would allow side loading and other store apps I would have nothing against them

Re: Apple, Epic, and the App Store

#645

Post by josteink » Tue, Aug 18, 2020, 6:36 AM UTC

> But Apple needs to fund the App Store. XCode, payment processing, reviewers, it all costs money

This is the investment Apple has to put in to make sure there are apps on their platform.

Their "funding" for this is iPhone and iPad sales.

Re: Apple, Epic, and the App Store

#646

Post by lostmsu » Tue, Aug 18, 2020, 6:40 AM UTC

donor20 wrote: post #521

naikrovek wrote: post #427

Earlier quoted context omitted.

> Epic has a monopoly on selling items inside Fortnite. 3rd party artists can't create anything that can be used inside Fortnite, neither inside the v-bucks store nor outside of it. There's no 3rd party "market" at all. Apple has a market where third parties can market their apps. Apple requires a cut of all purchases made through that store, which alone is not monopolistic. Apple also requires that you sell your iOS…

Xbox has a monpoly on their game store. Sony has a monpoloy on their game store. Come on - is this argument going to be used for all these too? Walmart has a monopoly on what sells in Walmart.

AFAIK, you can install 3rd party apps to Xbox without paying MS. If that is not true, it should be fixed.

Re: Apple, Epic, and the App Store

#647

Post by josteink » Tue, Aug 18, 2020, 6:43 AM UTC

MobileVet wrote: post #417

harryf wrote: post #391

Earlier quoted context omitted.

This is a great picking apart of Apples justification but I think the issue that most irks everyone who’s not apologizing for Apple is where did this magic number 30% come from? Which market forces created it? Here on HN most of us probably feel that product manager at Apple licked their finger, felt the wind and said “Yeah 30% seems about the most we can get away with” And what irks even more is once Apple set the p…

It is interesting that few people are recognizing that the 30% buys you distribution on a billion devices. Yes, I know, the web is free...and the App Store search is broken so discovery isn’t what it was... but still. Market access is VERY significant and worth something and the incremental cost to Apple has no bearing on what it is worth. As discussed, prior mobile cuts were far more one sided. We payed the carrier…

> the App Store search is broken so discovery isn’t what it was.

More often than not, I can't find a named, non-popular app, even when searching for its exact name. The only way I can find it, is if they have a web-page and an direct link to their appstore entry on that web-page.

So ironically I have to search Google/DDG on the open web to find the apps I'm looking to install on my iPhone.

"Broken" doesn't fully convey just how mismanaged the AppStore is.

Re: Apple, Epic, and the App Store

#648

Post by lancepioch » Tue, Aug 18, 2020, 6:54 AM UTC

Jommi wrote: post #403

misnome wrote: post #377

Earlier quoted context omitted.

I don't understand these arguments either. It's not illegal to have high product margins, right? Why can't they charge whatever they want? It comes across as pure moral "I don't like it" objection, which is fine, but don't use it as a legal argument.

High product margins are usually signs of monopolistic powers used, otherwise profits would slowly move towards cost as time goes forward. This has not been the case with Apple.

Google has basically the same profit margins with their Pixel phones compared to Apple and Android has 85% market share. Yeah you can sideload any app you want on your Android, but I've heard of no even half serious 3rd party competitors to the Play store. Not sure what the point is here.

Re: Apple, Epic, and the App Store

#649

Post by nwienert » Tue, Aug 18, 2020, 6:56 AM UTC

creato wrote: post #631

nwienert wrote: post #585

Earlier quoted context omitted.

Apple and Google have some >90% and are colluding to keep their cash cows fat. Antitrust needs no monopoly to enforce.

How are they colluding? Both google and apple seem to be trying to commoditize each other's (very different) cash cows and both are mostly failing at that. At least, google is failing miserably to make a dent in smartphone hardware, apple seems to struggle with software services, but maybe not as badly as google is at hardware.

Apple avoids search and ads. Google avoids high end anything (except phones perhaps, but they will never take Apple’s share there anyway).

Re: Apple, Epic, and the App Store

#650

Post by simonh » Tue, Aug 18, 2020, 6:56 AM UTC

naikrovek wrote: post #427

misnome wrote: post #384

Earlier quoted context omitted.

> Epic doesn't have a monopoly on any market. Epic has a monopoly on selling items inside Fortnite. The problem is that as soon as you allow narrowing your definition of words to whatever supports your argument, then they become meaningless.

> Epic has a monopoly on selling items inside Fortnite. 3rd party artists can't create anything that can be used inside Fortnite, neither inside the v-bucks store nor outside of it. There's no 3rd party "market" at all. Apple has a market where third parties can market their apps. Apple requires a cut of all purchases made through that store, which alone is not monopolistic. Apple also requires that you sell your iOS…

XCode, the iOS software libraries and tools are all Apple products and are used to develop software for iOS. By requiring that Apple allow developers to distribute software outside the App Store with no revenue for Apple, you are requiring Apple to give away their products for free. On what basis do you or anyone else have that right?

Apple has a monopoly on how those products are sold and licensed because they are Apple products, in exactly the same way that Fortnite and it's marketplace are Epic products. There's no requirement for Epic to open that up, and if they do it will be on their terms. Their house, their rules.