
Ask HN: iTunes vs Device Earnings? - pg
Does anyone know how much Apple makes (earnings, not revenues) from iTunes vs the physical devices they sell?
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sama
If you believe that they make $200 per iPhone and have sold 35M iPhones,
that'd be about 7 billion in earnings. It's a bit weird because they take the
earnings over 2 years per device (or something close to that). Most estimates
on profit per song sold are around 10 cents
([http://www.appleinsider.com/articles/07/04/23/itunes_store_a...](http://www.appleinsider.com/articles/07/04/23/itunes_store_a_greater_cash_crop_than_apple_implies.html)),
and they'd sold 6 billion songs by the beginning of this year. App Store sales
are probably not significant here, although they're critical to why they sell
so much hardware. I've read stuff that earnings to Apple are less than 100M.

So, say 7B for iPhone (alone, not counting iPods!!) earnings and 700M for
iTunes.

EDIT: several people have suggested to me that in fact Apple makes closer to
400 than 200 per iPhone when you take into account revenue shares and all
subsidies. strikes me as high.

~~~
brk
* It's a bit weird because they take the earnings over 2 years per device*

That's not really weird, it's standard accounting. iPhone sales are linked to
two year contracts. The sale isn't "complete" legally until all contractual
obligations are satisfied, thus the deferred revenue recognition.

I had a sales person give 2 extra "free" years of hardware warranty, which in
short caused that revenue recognition to be deferred until all contract
obligations were met.

~~~
lionhearted
Fascinating - do you know if it's possible/feasible to do this if you're doing
projects and contract work? Any ideas on what kind of view is taken of
offering some long term support/warranty/guarantee and taking your earnings
over two years? Any articles or insight would be very much appreciated.

------
brk
Based on: [http://www.techcrunch.com/2009/01/06/itunes-
sells-6-billion-...](http://www.techcrunch.com/2009/01/06/itunes-
sells-6-billion-songs-and-other-fun-stats-from-the-philnote/)

iTunes has sold 6 billion songs. That probably includes full album sales as
well as singles. Guessing an average per-track price of 80 cents then, or 4.8
billion in revenue.

According to:
[http://74.125.113.132/search?q=cache:OuySBgKhHGIJ:www.applei...](http://74.125.113.132/search?q=cache:OuySBgKhHGIJ:www.appleinsider.com/articles/07/04/23/itunes_store_a_greater_cash_crop_than_apple_implies.html+apple+itunes+profit+per+song&cd=1&hl=en&ct=clnk&gl=us)

It looks like they make about 10 cents per song, so they've earned about
400-600million from iTunes sales.

Other online stats point to about 220million iPod/iPhone devices sold, the
vast majority of that number being iPods.

I am going to _guess_ that they have a pretty decent margin on iPods, 50% at
least. An average iPod is probably $200, figure $50-$100 in profit per iPod
and they've easily made 10-20+ billion on iPod sales.

Even in the extreme best case/worst case scenario, they've earned at least 2x
from hardware vs album sales.

------
byoung2
It's hard to tell where revenue comes from by looking at their earnings
reports, since they aren't broken down by product/service
(<http://www.apple.com/pr/library/2009/07/21results.html>). Clearly they make
more from selling Macs, but if you did a strict iPod/iPhone vs iTunes, it
would be close.

