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iTunes now costs $1.3 billion/yr to run

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Re: iTunes now costs $1.3 billion/yr to run

#11

Post by recoiledsnake »

int3rnaut wrote: post #8
zitterbewegung wrote: post #5

Even if it costs 1.3 billion to run a year Apple's profit from quarter to quarter vastly dwarfs that. Sort of like how it used to cost microsoft to create their xbox platform. I think it is worth it.

As a gamer I was thinking about the exact same thing. When assessing this model do you think it matters that Microsoft has a monopoly on Xbox games, whereas Apple has a number of competitors in terms of App and Music services?

Who are the competitors to Apple for iOS apps and games? Android and BlackBerry? On that metric,XBox has competitors in the form of PS3, Wii etc. Apple does have a monopoly on iOS games and apps.

Re: iTunes now costs $1.3 billion/yr to run

#12

Post by recoiledsnake »

ugh wrote: post #10
recoiledsnake wrote: post #9

Earlier quoted context omitted.

Yes,Apple is a white horse when it comes to financial and legal matters, right?

I don't know, I have no evidence to claim that Apple routinely lies to shareholders. That's why I don't. I'm not particularly attached to that postion and willing to be convinced.

Judging by your posting history, I am not surprised.

http://www.eetimes.com/electronics-news/4068357/Apple-restat...

http://www.betanews.com/article/SEC-Charges-Former-Apple-Cou...

http://arstechnica.com/apple/news/2008/07/steve-jobs-and-com...

From the wiki:

http://en.wikipedia.org/wiki/Steve_Jobs#Stock_options_backda...

Edit:

Thanks for the silent downvotes with no replies.

Here's the relevant quote from the first link:

In the filings, Apple (Cupertino, Calif.) acknowledged that the company faked documentation to indicate that a grant of 7.5 million options to CEO Steve Jobs was recorded at a special meeting of the board of directors on Oct. 19, 2001. Such a meeting, Apple said, did not occur.

Re: iTunes now costs $1.3 billion/yr to run

#13

Post by smackfu »

Too bad Apple doesn't break it down a bit:

iTunes music: must make money. There is no review process, the labels handle everything, and the file sizes are tiny.

iBooks: Probably loses money, based on a gut feeling for how many people are actually buying books on iBooks vs Amazon.

Mac App Store: Probably losing money at this point.

iOS App Store: Could be break even I suppose. Obviously lose money on free apps, plus the review process can't be cheap.

Re: iTunes now costs $1.3 billion/yr to run

#14

Post by tjogin »

recoiledsnake wrote: post #9
ugh wrote: post #6

Earlier quoted context omitted.

Let's say 300 million? That would still mean that iTunes costs a billiom to run for a year. Saying that iTunes is run a bit over break even – which Apple did during their conference calls – while making something like 300 million is very likely illegal and not something Apple would do.

Yes,Apple is a white horse when it comes to financial and legal matters, right?

No, but they also aren't complete imbeciles.

Apple are making money hand over fist overall. First of all, it would be astonishingly idiotic of them to break the law for such relatively little potential gain.

Secondly, it wouldn't make any sense of them to nickel and dime customers for such a tiny little part of their overall business. This is peanuts to them.

The AppStore's purpose is not to bring in a relatively tiny bit of profit to Apple, it purpose is providing reasons for developers to invest in their ecosystem, and for customers to buy their hardware, where their real money comes from.

Re: iTunes now costs $1.3 billion/yr to run

#15

Post by int3rnaut »

recoiledsnake wrote: post #11
int3rnaut wrote: post #8

Earlier quoted context omitted.

As a gamer I was thinking about the exact same thing. When assessing this model do you think it matters that Microsoft has a monopoly on Xbox games, whereas Apple has a number of competitors in terms of App and Music services?

Who are the competitors to Apple for iOS apps and games? Android and BlackBerry? On that metric,XBox has competitors in the form of PS3, Wii etc. Apple does have a monopoly on iOS games and apps.

I suppose that's true, I think I was looking at things with more of a lens towards music.

Re: iTunes now costs $1.3 billion/yr to run

#16

Post by jonknee »

zdw wrote: post #3

So, is 30% too much of a cut when the platform offers: - Credit card processing - The largest marketplace with the most paying customers - Download hosting - Promotion - Highly available document and key/value store infrastructure - Keeping junk and malware out of the store, which maintains user trust. I'd argue that, like most emotionally influence business decisions, Apple sticking with the same percentage is a goo…

I don't think the 30% has ever been an issue. The exclusivity is. Doubly so as Apple keeps changing the rules which if you're caught on the wrong side of can destroy your business.

Re: iTunes now costs $1.3 billion/yr to run

#17

Post by Aloisius »

zdw wrote: post #3

So, is 30% too much of a cut when the platform offers: - Credit card processing - The largest marketplace with the most paying customers - Download hosting - Promotion - Highly available document and key/value store infrastructure - Keeping junk and malware out of the store, which maintains user trust. I'd argue that, like most emotionally influence business decisions, Apple sticking with the same percentage is a goo…

Does anyone believe that the promotion that Apple offers on average is worth two cents?

And what good is a marketplace with some of the worst discovery ever? I mean, there are now hundreds of thousands of apps. Finding high quality apps on the app store is like finding a needle in a Utah sized haystack.

I much rather do my own marketing, have a user download the app off my website or heck, Amazon (which actually has a decent recommendation engine).

And keeping junk out? Have you seen most of the apps? I mean the number of them that haven't been updated in years is staggering. The number that are essentially clones churned out by some make-an-app framework is ridiculous. The signal-to-noise ratio on the app store is awful.

Credit card processing? Not having to do anything is worth 4-5%.

Re: iTunes now costs $1.3 billion/yr to run

#18

Post by briandoll »

Also of note, according to the article they spend $2.5 B on developers (ops likely included in that stat).

Another data point to illustrate that to effect total cost of ownership on a given system, focusing on developer productivity can have a greater impact than operational efficiencies.

Re: iTunes now costs $1.3 billion/yr to run

#19

Post by xenophanes »

Aloisius wrote: post #17
zdw wrote: post #3

So, is 30% too much of a cut when the platform offers: - Credit card processing - The largest marketplace with the most paying customers - Download hosting - Promotion - Highly available document and key/value store infrastructure - Keeping junk and malware out of the store, which maintains user trust. I'd argue that, like most emotionally influence business decisions, Apple sticking with the same percentage is a goo…

Does anyone believe that the promotion that Apple offers on average is worth two cents? And what good is a marketplace with some of the worst discovery ever? I mean, there are now hundreds of thousands of apps. Finding high quality apps on the app store is like finding a needle in a Utah sized haystack. I much rather do my own marketing, have a user download the app off my website or heck, Amazon (which actually has…

> Does anyone believe that the promotion that Apple offers on average is worth two cents?

I do. I made a couple small and quick apps. They have made several hundred dollars. I attribute that almost entirely to Apple's promotion of them, mostly by having them show up in iTunes search results which Apple promotes. Also having them show up as recent releases.

My promotion consisted of linking them on my websites. If that was all it was -- my website links and nothing else -- I think sales would be near zero.

For better apps, Apple's promotion is even more valuable. Definitely no where near 2 cents.

Re: iTunes now costs $1.3 billion/yr to run

#20

Post by leviathant »

int3rnaut wrote: post #15
recoiledsnake wrote: post #11

Earlier quoted context omitted.

Who are the competitors to Apple for iOS apps and games? Android and BlackBerry? On that metric,XBox has competitors in the form of PS3, Wii etc. Apple does have a monopoly on iOS games and apps.

I suppose that's true, I think I was looking at things with more of a lens towards music.

Anecdote: When I buy music, I either buy it from Amazon MP3 or direct from the artist via Bandcamp.
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