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Business News: Apple make money’s logic

Apple App Store and its fire, the developer numerous countless imitators. When Apple’s market value beyond Microsoft as the world’s largest technology company, who began to flock from all areas of music content platform of imitators, but it really can make everyone making money?

Cherry and Cake

To demonstrate the impact of Apple’s content marketing, reporters were tested four mobile phone manufacturers and journalists by the composition of the sample library. When asked, the hottest applications Apple App Store’s revenue, how much profit can be accounted for? Reporter heard the answer, without exception, will first say, “Oh, these programs downloada lot of people, a large scale. “guess they give from 10% to 20%.

The correct answer surprised them – App Store Apple’s gross profit contribution of 1%.

Since July 10, 2008 Since the launch, App Store has been brought to the developers of 10 billion dollars in revenue. According to Apple and the developers sharing ratio between the notoginseng, App Store so far is about 1.4 billion total revenue.

According to data from investment bank Piper Jaffray, in the application of price, 81% of the application is free to download amounted to 40 billion, accounting for 19% of paid applications, the average price of $ 1.49; App Store’s gross margin of approximately 44%; Since the App Store launch, Apple has received 337 billion dollars in gross margin, while the contribution of App Store was only 189 million, accounting for 1%.

From the fourth quarter of 2008 to second quarter of 2010, the Apple iTunes store to bring only 36 billion dollars in revenues.

Since the contents of such a “no money”, then the answer is obvious, App Store to promote hardware sales, Apple on expensive hardware to get a huge amount of profit, which pushed the market value of the nation’s second position.

Those books and games, just like the cherry on the cake, a bonus gift in the window, the user needs to enjoy them pay a higher price.

Let’s look at Apple’s income changes, those who do not “cherry” are losing the main decorative hardware status, such as iMac, Apple has been dominated before the single largest source of income status, but the iPhone has become Apple’s largest single revenue source.

“We need to re-evaluate Apple’s stock.” JP Morgan analyst Mark Moskowitz (Mark Moskowitz) that Apple’s new generation of smart phones iPhone 4 will lead to a new iPhone frenzy is expected in September of this year’s quarterly sales of Apple’s iPhone, will exceed 10 million, an increase of 65%.

The first quarter of this year, Apple’s iPhone, sales of 8.75 million, achieved the highest quarterly iPhone sales since its listing. Moreover, the second quarter of this year, Apple expects to sell 3.8 million iPad, in fiscal year 2011, Apple sold 21.5 million will be iPad. Apple’s worldwide penetration will be further accelerated.

Thus, Apple’s application in use “make crying,” hardware could “make money.”

Changes of the

But only to see the content is far less than hardware to make money now the problem is not too short-sighted it? Some people think that the face of iTunes and the App Store, you are difficult to define a hardware developers, Apple, so iPhone and iPad analysts to predict sales of the hardware is not meaningful. Should really be to predict, is the application software on the App Store will be the number of sales. Will prove, the user spent on software spending will be more than he spent on hardware, consumer, and that Apple is the real future.

Have a new problem came out to Apple, the user is really in the content consumption will exceed the consumption of the hardware it?

Still need to look at the data, the U.S. investment bank Piper Jaffray, the data show that the top fifty downloads application downloads, paid an average price of $ 1.49. iPad application download slightly higher price, top downloads application downloads iPad thirty of the average price of $ 4.66.

IPad the hands of the user and the iPhone easily $ 499 ~ $ 599, two or three years when users replace iPhone 5 or iPad 2, they download the contents of over 499 U.S. dollars it? This requires at least 300 paid to download the application will download an average of two to three days one, so a large number who use the program?

Do not forget, there are 81% of the program is a free download. And, not like the world is all like the United States the use of legitimate content market, in fact, break from the U.S. and Europe to China, “Prison Break” has long been popular, pirated content at your fingertips.

To develop content that Apple is not really have a future? However, the average view of little significance, but “Pareto rule” still works, is a unique top-ranking and model developers will really profit.

On the surface, iPad, and iPhone4 have sold more red apple platform. Jobs said Apple is now the application has been downloaded 50 million passengers, which also attract more developers to join Apple’s camp.

According to data released by Apple, developers are making money since the beginning of 2008, Apple’s App Store brings a total of about 14 billion dollars in revenue, developers earn 10 billion U.S. dollars, from this perspective, this is really a good platform .

But things must not be so simple. According to the telecommunications industry analyst Mahoning (Tomi T Ahonen) data provided by the application of a total of 164,000 points scored 10 billion dollars in revenue. Then, for each application received an average of about $ 6,100 in revenue.

The 10 billion dollars in revenue is calculated from 2008 to the present, has been more than two years, so each application developers revenue of approximately $ 3,000 per year.

From the Apple applications store the cheapest fee $ 0.99 to count, half of the fee application downloads less than 1,000 people, average annual income of $ 682 developers.

So, the developer how much cost? According to the average of the two bodies of data, an average cost of application development is $ 35,000, according to the $ 682 of revenue, developers need 51 years to recover the costs. Even by at least 1.5 million cost, but also 22 years to recover the costs. But every application have become propaganda iPhone Apple’s “cherry” to help sell more Apple iPhone.

Good developers can indeed make a lot of money, such as a dance Tap Tap Revenge game downloads in the APP store has reached 20 million, but it is a free game, using the advertising revenue model. Now accounted for $ 1,000,000 per month.

Finally, the business logic of the role of leading us back to nature. Content providers in the industry chain and Apple will not be profit centers. Jobs fact reveals the essence, “we re-invented the mobile phone”, Apple’s profit lies in mobile phones and tablet PCs on the innovation, experience multi-touch, high-speed processing capability, beyond the retinal resolution LCD screen , beautiful shape. If the user does not like Apple’s mobile phones and tablet PCs, Apple e-book and application content more, but also failed to attract users, increase profits.

App Store and e-book platform is indeed a major industry model innovation, handset manufacturers, operators can thus bonding application developers and consumers, and make a profit. But not “cart before the horse”, to design a good big sell mobile phones, good computer is the last word, good applications, good content is the crowing of the Orioles in the tree, not the roots absorb nutrients.