JohnPaczkowski
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iTunes is more than earning its keep
As writer John Paczkowski notes in an AllThingsD article today, iTunes was originally "conceived as a low-margin 'break-even' operation intended to drive hardware sales" -- in particular sales of iPods. Now that the iTunes Store is used to sell more than just songs and videos, it's turning into a "significant profit center for the company". Paczkowski was commenting on numbers from Asymco analyst Horace Dediu, who notes that now that Apple has folded its in-house software group into iTunes, Apple software is having "significant implications for iTunes margins." The software, including items like iWork, iLife, Final Cut Pro, Aperture and more, has much higher profit margins than traditional iTunes items like music, books, video, and apps. Dediu deduced that Apple sold about US$3.6 billion worth of its software products in 2012, and that profit margins for software is usually about 50 percent. If that's the case for Apple -- and Dediu is usually correct in his assumptions -- then iTunes is generating operating margins of about 15 percent on gross revenue. That's about $2 billion in profit for 2012, or as Paczkowski so eloquently put it, one "hell of a way to break even."
Apple's Bob Mansfield: influenced to stay by Scott Forstall's departure?
In the latest episode of the soap opera known as "Apple: As The Revolving Door Turns", we saw Senior Vice President of Technologies Bob Mansfield being persuaded somehow to stay on with the company for at least another two years while former iOS software VP Scott Forstall was quietly ushered out the door. Now AllThingsD is positing that apparently Mansfield stayed on because he knew that Forstall would be leaving. AllThingsD's John Paczkowski notes that a source close to Apple told the site that "the timing of Bob's return is not coincidental." Mansfield apparently disliked Forstall's confrontational style and avoided him at all costs. A Bloomberg post from last year quoted former Apple software engineer Mike Lee as referring to Forstall as "Apple's chief a-hole" as a compliment. That same post pointed out that other executives, including Mansfield and Industrial Design Senior VP Jony Ive, would not attend meetings with Forstall unless Tim Cook was present. Forstall was, according to the year-old Bloomberg post, "a striver who was better at managing up than down -- that is, making sure his accomplishments were noticed first, and blaming others for mistakes." The iOS 6 Maps debacle appears to have been one mistake too many for Apple CEO Tim Cook to ignore, and served as an easy way to show Forstall the door. In retrospect, the year-old Bloomberg post appears to have been a roadmap for the reorganization that occurred this week.
Ballmer: Apple has not produced a product that customers use
Someone in Redmond, WA needs to call the folks with the straitjackets, as it appears that Microsoft CEO Steve Ballmer has gone certifiably bonkers. AllThingsD's John Paczkowski notes that in a recent interview with CNBC, Ballmer went on record as saying that "I don't think anybody has done a product that is the product that I see customers wanting. You can go through the products from all those guys ... and none of them has a product that you can really use. Not Apple. Not Google. Not Amazon." Okaayyyyy, Steve. Just put down the Microsoft Surface and sit down, and let's talk about this. What about the 100 million iPads that Apple has sold in a little over two years? How about the Amazon Kindle Fire, which (despite the company refusing to release actual sales figures) is supposedly the best-selling Amazon product ever? Ballmer is maintaining that everyone wants the Surface, which he touts as the product that can be both PC and tablet, at play and at work. Perhaps it's the stress of last week's product launch of Windows 8 and Surface, or maybe the fact that the company is spending an estimated $1.5 billion to launch those products that's causing him to lose sight of reality. Paczkowski ends his post by saying that "Maybe Microsoft will change users' expectations for tablets. But after two and half years and 100 million iPads sold, it's not going to be easy."
IDC: Apple tops in mobile revenue, operating profits
AllThingsD's John Paczkowski, reporting on some of the numbers released by IDC last week, notes that although Samsung shipped almost double the number of smartphones that Apple did, it makes absolutely no difference because Apple "far outshines its rivals in both revenue and operating profits." Apple shipped only 6 percent of the industry total of smartphones and tablets, yet thanks to its immense gross margins the company pulled in 43 percent of the industry's revenues (above) and 77 percent of the operating profits (below). Raymond James analyst Tavis McCourt said it best -- "Ultimately, profits are the feedstock of innovation; and, innovation drives profits. Until Samsung starts generating more profits than Apple, we would not be overly concerned with who has the unit share lead. Remember, HP and Dell still sell a lot more PCs than Apple sells Macs, but does it matter?" That sound you hear is Apple laughing all the way to the bank... #next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; } #next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; }
