Apple and the 30% cut

I always find it so adorable when I’m talking to someone about Apple’s strategy around the App Store model and they smirkingly explain that Apple’s push toward getting developers to use their app store to sell stuff is all part of a grand scheme to get 30% of their revenue.

If you are truly convinced that this is Apple’s ultimate goal and that they have spent decades building the most successful electronic hardware company in the world because the real money is in leeching money off of the developers that came into existence to develop software for your hardware, there’s little I can probably do for you. However, if you’re the kind of person who might be convinced when shown some cold hard facts, well, let’s maybe take a look at a couple.

First, let’s maybe look at how much money Apple reported earning last quarter:
(this is from Apple’s PR site for 1Q 2012 earnings)
$46.33bn total revenue with $13bn quarterly net profit

That’s a lot of fucking revenue, isn’t it?

On the other hand, let’s look at how much Apple’s been paying out to developers making apps. This article notes that as of Jan 2011 Apple had paid out $2bn to developers to date. That’s a pretty astounding jump given that it took till June 2010 for Apple to pay out the first billion and just seven months after that to double that total payout. I can’t locate more recent figures, but I seem to recall the $3bn mark getting reached last summer. Let’s be safe and just say that $5bn total has been paid out to date to developers (that’s me being really safe).

Okay, so if $5bn is the 70% developers kept, that means that Apple to date has pocketed $2.14bn off these hard working developers’ backs from the summer of 2008 (when the App Store debuted) and today. And again, this is assuming that $5 billion has been paid out and I am overestimating that a tad.

$2.14 billion sure isn’t chump change, but let’s go back to some of those first figures. Remember that $13 billion Apple made? In profit? In one QUARTER alone?

I’m sure Apple really appreciates the $2.14bn in revenue it made from the third party apps, but it probably doesn’t do much more than pay the bills for those data centers that developers’ apps are hosted on. Perhaps it also covers the cost of the reviewers and also perhaps some of the people who, you know, wrote the APIs and frameworks that these apps couldn’t exist without.

And as Apple sells more devices that App Store revenue’s just going to grow over time, no doubt, but so will the costs associating with the app store upkeep. And in the meantime, you know what will grow a hell of a lot more? Apple’s revenues from selling literally tons of iPhones, iPads, iPods and Macs.

Apple’s pushing developers on the Mac to get their apps in the App Store because that’s a super straightforward, Mac-like way to install software on your computer and it’s the best experience for the user. People (including myself) are (rightly) concerned about the limits of what Apple lets into the App Store and are (rightfully) concerned about Apple one day deciding that going App Store-only’s best for them.

But if you think Apple is going to do that because they want to stop developers from making money without Apple getting a 30% cut you’re delusional.

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