Thursday, February 24, 2011 [Tweets] [Favorites]

App Store Revenue Stream

John Gruber:

The iTunes Store was and remains a business in its own right. Its mission isn’t selling music, or movies, or TV shows, or apps, but building an end-to-end system, a platform that allows people to easily buy anything digital. If you think the App Store shouldn’t be “a huge revenue stream” then you’re not seeing things the way Apple does.

And yet, CFO Peter Oppenheimer responded to criticism of the iOS subscription policy by saying that Apple runs the store “just a little over breakeven.”

3 Comments

I may just not understand, but you can make billions in revenue and still just "break even", can't you? They're saying they don't make much profit. That's my take at least.

@AaronS That’s what Oppenheimer is saying, but Gruber means (and I think he’s correct) that this will be a source of profits for Apple. I agree with Neven Mrgn that it would be better if the profits came from direct product sales.

"I agree with Neven Mrgn that it would be better if the profits came from direct product sales."

But then Apple couldn't sell the dream of owning 30% of the planet to their real customers - aka not their product users, but their investors.

It's the same thing that killed Microsoft in the '90's. They stopped thinking of their product customers as their real customers, and instead started thinking ways to use their temporary position of leverage to milk their product customers for a share of all commerce, which definitely pleases investor dreams.

Wall Street loves beyond the box. It may not ever work in the real world, but they still love it. And they'll throw lots of money at it.

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