I would be interested in seeing the numbers on this, as I have a hard time figuring out how they could not make a huge profit on selling other people's work.
Thanks for the link. It may not be a cash cow in comparison to the rest of Apple's business, but a 44% gross profit margin sounds pretty substantial to me.
I think you misread that article. In the most basic sense, it isn't possible for Apple to get 44% profit margin when developers get 70%.
Here's how I understand the argument in the article (but keep in mind the numbers are as of 2010 so they aren't current.)
Basically, the article is saying that Apple claimed that developers earned $1 billion through 2010. Since developers earn 70%, the total revenue coming into Apple would be a billion / .7 = 1.428 billion giving them a profit of $428 million (matching the figure in the article). Then the article does some estimations about how much of that $428 million goes to the credit card company and is used for processing instead of being Apple's profit and calculates that Apple only gets 44% of their 30% as profit. (Although comments on the article suggest that Apple might be able to get more favorable deals with the credit card company than what was used in the estimations.)
So if you trust the article's credit processing fee assumptions, then Apple gets $189 million of the $1.428 billion which is about 13%. And if you factor in their costs for free apps ($81 million is cited in the article), the effective percentage becomes ((189-81)/189) * 13% = 7%.
Edit: I'm pretty sure these numbers are the right interpretation of the article. Somebody in the comments mentioned that the 44% should be 14% net profit since it matches some graph that I haven't seen and that seems similar to the 13% I got in the above calculations.
I don't know anything about the app store, but the 70% is purportedly the developer's revenue from someone's app purchase. The 44% profit margin would mean that about half of Apple's 30% app-revenue-cut goes to the cost of running the store and a little less than half goes to Apple's coffers.
Right. But I think the more significant number is what percentage of a user's purchase becomes profit for Apple. After including expenses for free apps (assuming the numbers in the article are accurate and keeping in mind this is old data), the profit margin on that 30% drops from 44% to around 25% such that Apple nets about 7% of App Store sales.
