It is part of their (Apple's) ecosystem, so it really is just sales and general admin. expenses at this point.
iTunes now costs $1.3 billion/yr to run
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Re: iTunes now costs $1.3 billion/yr to run
#62Okay... so if 70% of the take is 2.5 billion, that means the total amount taken in is 3.57 billion and change. So Apple gains 1.07 billion with their 30% cut and spends 1.30 billion? In other words, Apple digs into their own pocket for 230 million dollars in order to run it? And people still complain about Apple's 30% cut. Wow.
From the article:
If we add the content margins from music and apps ---> and assume the store runs at break even
Asymco's analysis always seems to have some completely unsupported claim at the center of its logic, thrown in almost as an aside. The portion marked with arrows is the questionable bit this time. While the numbers aren't broken out directly in their market filings, it is both obvious from their behavior, and support by quite a number of analysts that the App Store(s) return significant operating profit to Apple.
Cook suggests they run the service "just a bit ahead of break even" which would suggest that they're up instead of down, but even that presumably dubiously includes a large swath of media buys that are arguably more promotional for the ecosystem as a whole than simply getting iPhone users to go buy an album or app today. There's a reason that they don't break it out: pissing off their content partners.
Think about it. You don't fight tooth and nail for 30% on bringing content in house (ebooks, etc.) if you're somehow only going to break even on it or worse.
Just on the face of it, it's wildly improbable that you could spend over a billion dollars operating ITMS.
Re: iTunes now costs $1.3 billion/yr to run
#63Okay... so if 70% of the take is 2.5 billion, that means the total amount taken in is 3.57 billion and change. So Apple gains 1.07 billion with their 30% cut and spends 1.30 billion? In other words, Apple digs into their own pocket for 230 million dollars in order to run it? And people still complain about Apple's 30% cut. Wow.
From the article: If we add the content margins from music and apps ---> and assume the store runs at break even Asymco's analysis always seems to have some completely unsupported claim at the center of its logic, thrown in almost as an aside. The portion marked with arrows is the questionable bit this time. While the numbers aren't broken out directly in their market filings, it is both obvious from their behavior,…
Just on the face of it, it's wildly improbable that you could spend over a billion dollars operating ITMS.