As someone who qualified as an accountant over 15 years ago, it's not obvious to me how you would develop a meaningful allocation of costs.
I suspect this misunderstanding stems from the same thinking that leads people to believe the myth that Costco makes no profit on its physical products, only on memberships.
Am I missing something here?
You are also ignoring the app store's advertising revenue.
And you're assuming that it costs zero to run the app store.
This isn't an unreasonable assumption, especially considering the invoice for my last App Store purchase has an Apple address and tax identifier (VAT number). Apple is the merchant of record.
They know all the labor costs and revenue for each of their products. Every single one.
Zero chance Apple doesn’t categorize server allocation and assign those to budgets. Small companies do it.
So, the obvious answer is they’re lying. They’ve done it before, too. They’re doing it now.
Your rebuttal is simply “of course they know the answer”.
Is there any reason someone reading this thread should prefer your take over theirs?
I am no expert, but that seems like a 74% margin on services, which would seem to include their "app store".
It is difficult for me to imagine that apple is somehow incapable of breaking those numbers down into smaller component categories.
1. The first $1 trillion, $3 trillion and (soon to be) $4 trillion company. 2. Cancels or stops production of products that don't make money (VisionPro being the latest). 3. Spent over half a trillion dollars in stock buybacks.
No company gets to the height Apple is currently without knowing every dollar coming in and going out.
I'm reminded of "if it don't make dollars, it don't make sense" chorus from DJ Quik's "Dollaz + Sense".
When I apply that to Apple (let alone any successful company for that matter), the claim that they don't know if the AppStore is profitable or not *defies belief*.
Schiller might not know exactly how much profit is generated, but to suggest that he's clueless whether or not on the WHOLE if the AppStore is profitable... If people believe that, I got a bunch of bridges up for sale.
But seriously, this ignores too many simple truths. Companies with even under $100 million in revenue categorize labor and other general expenses. Even full-time employees who don’t log their hours have them tracked by entry-level management all over the U.S.
Why would one do this? To capitalize on software costs, apart from even hardware costs. Something Apple does regularly, and they have a history of sharing that information with shareholders.
So, the GP is talking out of his rear end. The obvious reason Apple doesn't want to share their margins is because every closed software ecosystem is absolutely screwing their developers. That’s why.
There isn’t a single company I’ve worked for in nearly 20 years that doesn’t assign department and project costs to employees, contractors, and ancillary workers. Each department and project also has its own materials expenditure reports.
All of them. Even the smallest companies do this. It’s such a naive claim to think otherwise. I have no idea why people here think the “integrated” argument holds up at Apple, either. Staff there absolutely have "App Store and related work" assigned to their employee profiles. Without a doubt. Even their hiring roles don’t hire general software engineers; each role is preassigned to a specific department or project.
But that being said, if the AppStore were somehow spun off into a separate company, I think their costs would be less than 10% or even 5% of the cut that Apple takes from the AppStore sales. I'm sure I could run it at those costs.
Still, it's fair for Apple to want the cut they take from the App store revenues. I totally get their position. They built a great product and platform. They deserve to reap the rewards.
Are you counting the surely enormous amount you would have to pay Apple for the privilege of being the App Store?
But that being said, if the AppStore were somehow spun off into a separate company
When they say that the profit margin isn't 75-78%, I assume that's because it's 79% or more.
Because that is what Apple is round-a-bout saying. That its such an integrated product, you can't tally the net revenue from one component and call it profit.
MacOS yes, but if they were just shipping a phone with built in applications it would look quite a lot different I'd imagine.
Similar to the amazon dont make a profit for a decade by dumping it into growth, Apple can dump all their app store "profit" into developing new api's that apps can access, such as ai tools etc.
Folks are so naive.
I think it was always naive.
ahahahahahahahah
Do they also have to be good at perjury?
Is that FAANG job interview analogous to the one for software engineers?
"Can you go to the whiteboard, and perform for me one of the standard case studies of CFOs who got away with perjury? Which you should have memorized, even if you learned nothing else in school."
"Using STAR format, tell me about a time that you lied about financials, and got away with it."
"OK, in the 3 minutes left, I want to turn this over to you, for any questions you have. ... Oh, if you have experience working with financials, normally people mention that in the Hobbies section of their resume; here at Faang, our interviews focus instead on the fundamentals."
The cost would need to included not just development hours that have gone into creating and maintaining the system, but hours of other employee's used for the project. Also the servers, the network, buildings, etc.
If there were forced to calculate this number, it wouldn't surprise me if they were able to do so in a manner that shows they lose money. At best they could be forced to track the cost going forward using a third party auditor.
That's why a court would ask for the procedures that they followed and revise if they did something like that intentionally. This would be the definition of malicious compliance.
1. Do you think your employer can calculate the profit margin on what you do? I sincerely doubt it, unless maybe you work in sales or something.
2. How would you calculate the value of HN to YC?
3. How would you calculate the value of iMessage? It has no direct revenue, but it has a huge effect on other revenue. How much though?
I'd say a hard limit like 10% for digital download stores (app store, google play, steam, ...), and 20% for streaming sites (youtube, twitch, ...)