Can anyone point me to numbers regarding the app store revenue vs. hardware revenue?
I'm surprised that the app store revenue would be "just a drop in the bucket" compared to the hardware revenue.
I'm surprised that the app store revenue would be "just a drop in the bucket" compared to the hardware revenue.
By contrast Apple likes to mark up hardware at 100% over bill of materials. That is to say if $300 worth of components goes into an iPhone, Apples wants to sell it for at least $600. The major exception to this is the iPad which Apple takes less to keep pressure on the competition.
Regarding iAds, I believe iAds was suppose to have sold around $65 million worth of ads for the initial launch. The revenue from that being split between Apple and the app maker. This is a tiny drop in the bucket. And there are reports Apple is having a hard time getting advertisers to renew. [2]
[1] http://www.macobserver.com/tmo/article/apple_app_store_runs_...
[2] http://www.macrumors.com/2011/02/10/apples-iad-program-strug...
For comparison, their total hardware revenue was just under $28 billion [Ibid.]. Making software something like 2% of their total revenue.
That is, more or less, a "drop in the bucket," as Gruber says [2].
[1]: http://images.apple.com/pr/pdf/fy11q3datasum.pdf
[2]: Which doesn't of course, make Gruber any less of an insufferable ass, yada yada, so on and so forth.
On top of that, there's probably a smaller segment of users who spend _ridiculously_ more than $10 on applications, and then even more on in-app purchases.
http://www.readwriteweb.com/archives/iphones_ipads_are_nearl...
Keep in mind those cite revenue; of which Apple retains only 30% on apps. In short: if the app store loses to HTML5 in the long run, but people continue to prefer iPads and iPhones at current rates, you'd need a microscope to see the effect on Apple's bottom line.
That Apple recognizes and allows this behavior really tells me that they don't care about profit from apps.
Apps, for Apple, are features of the real product, the hardware. Hundreds of thousands of features where the competing hardware platforms don't compare as favorably.
It was the same with AAC DRM music on the iPod (when few other players at the time supported AAC, and none supported FairPlay DRM)... these were little land mines in a music library that prevented users from switching or even considering it.