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Just One Percent of Apple's Gross Profit Comes From the App Store

June 23, 2010

Fortune magazine has reviewed Piper Jaffray's take on Apple's latest financial reports and there is some stunning news.  Not only is just one percent of Apple's total gross profit tied to the App Store, but that small piece of the pie is generated by the downloading of 16.6 million apps per day versus the 8.9 million music tracks that are downloaded each day from iTunes.

Other findings include:
$1 billion generated for developers since the store launched on 7/10/08 suggests gross App Store revenue of $1.4 billion, $429 million of which Apple keeps after paying the developers' 70% cut. App pricing data suggest that 81% of apps are free and 19% are paid, with an ASP (average selling price) of $1.49. Apple's gross margin on the App Store is about 44%, according to Munster, assuming 70% goes to the developer, $0.20 plus 2% of the ASP to the credit card company, and 1% for storage and delivery. Apple has generated a total of $33.7 billion in gross profit since the App Store launched, to which the App Store has contributed $189 million, or 1%. Over the same time period (Q4 2008 to Q2 2010), the entire iTunes store has generated $3.6 billion in revenue, to which the App Store has contributed $429 million, or 12%.
To see the break down of the average cost of selling an app, take a look at this chart: Apple previously said its App Store broke even and today's numbers certainly support that statement.  Of course, it is nice to know that developers are receiving 70 percent of the revenue for each paid download. [Chart: Piper Jaffray]

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