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Bryan M. Wolfe
| March 25, 2013
Apple Is Generating Huge Profit Margins From The Mac App Store
One of Steve Jobs’ last product launches as Apple CEO was the Mac App Store, which went online in January 2011. That store, and the products it includes, is one of the reasons that iTunes is no longer a “break-even” enterprise, according to Asymco. The iTunes store turns 10 in April. Since its inception, Apple’s digital hub has largely operated near, or slightly above, the break-even point. That all changed when the Mac App Store opened. Cupertino’s profit margin on music, video, book, and app sales are relatively small, sometimes as little as 1 percent. This isn’t the case for software like the iWork and iLife suites, Aperture, and Final Cut Pro. In total, Apple’s own software generated $3.6 billion in revenues in 2012.
As you can imagine, this is a high margin business which grows at nearly 20%/yr. Although I estimate that the software business has been overtaken by the Apps and Music businesses in gross revenues, it keeps an operating margin similar to that of Microsoft or about 50% ... ... This means that iTunes inclusive of Apple’s own Software generates as much as 15% operating margin on gross revenues. That’s over $2 billion a year.It is nice to see that Mac applications are helping Apple's bottom line. However, it would also be beneficial were Apple to actually update these applications. The company's iWork suite, for example, hasn't seen a significant update since 2009. Do you hear that Apple?