Not entirely true anymore:
1) About $8-12 billion paid by Google to have their search engine default. [1]
2) About $20 billion from their 15-30% cut of third party app developers. Where the App Store is protected from competition. [2]
3) Apple services (like Apple TV+), which collects usage data for itself and third parties. [3]
[1] https://www.macrumors.com/2020/10/25/google-apple-search-def...
[2] https://www.theverge.com/2020/6/15/21292203/apple-app-store-...
As much as I would like them to default to and support DuckDuckGo instead (hell, it would be a match made in heaven if Apple were to buy DDG and make it their privacy centrepiece), a lot of people would be confused if they got DDG instead of Google, so I don't really think it's fair to make it out as some "chink in the armour". It's a business win-win in my eyes and doesn't affect me at all.
> those are revenue figures, not profit
> $10 billion from Google out of $60 billion in profit is significant
Historically, for example, Playstations were sold at a loss and the games were sold at a profit and a licensing fee to offset that loss.
In the more modern world, Steam and Apple and Epic Games all charge a percentage-based commission for the games and in-app purchases their games have (at least some of them charge the latter). The cost of keeping the game in their catalog is very low compared to the price they charge. The markup is very high; but, it does offset development costs throughout the company. Those development costs may or may not help drive traffic or even use the services that the money-making services boulster, but the money-making services do help pay for it.
If they stop making, marketing, and selling hundreds of millions of iPhones Google would probably stop paying them for default search status.
The trailing 12 month revenue for Mac, iPhone, iPad and Apple Watch (+ HomePod, AirPods, etc.) was over $220 billion.
And while $20 billion is not nothing, it's actually not that big a deal for Apple, especially when you consider its $2 trillion market cap.
Apple makes about 60 billion a year in the profit. The 10 billion they get from Google constitutes 16% of their annual profit. That’s significant!
Apple trades at a 37x P/E ratio. An additional $20B profit could be worth about an additional $760 billion in market cap. You can’t dismiss 10 billion in pure profit because their market cap. Those numbers are directly related and far closer in meaning than you give credit.
You're playing funny buggers with figures there. According to your standard the sales of physical devices constitutes over 350% of their annual profit.
The $10B Google money is basically pure profit. It costs Apple nothing. Maybe a few million in lawyer time to negotiate the fee each year.
Hardware sales generates enormous revenue and also very large profit. I believe more than half of Apple’s profit is still hardware sales. But they’re working very hard to increase their services income.
If they didn't spend all that money on producing the phones they'd have nothing to sell to Google. You can't meaningfully divorce the two, all profit centres of a business rely on the cost centres.
They are saying that you can't account for the Google money as pure profit, even though the costs aren't as obvious. In particular, their argument says, you have to make and sell the phones before Google will give you money to make their search engine the default.
So the Google money is not pure profit, in the same way the phone sales are not pure profit (even though the underlying costs are not as obvious).
Scroll way back to the root of this conversation. Someone said that $20B is not nothing but is a small fraction of their revenue. I think this is a poor characterization because you need to consider the source of both gross and net revenue.
Yes, services revenue is dependent on hardware sales. And yes the margin on services is significantly higher than the margin on hardware. Apple has been working very very very hard to increase services revenue because it is so profitable. Yes that profit is dependent on their ability to continue to sell hardware. Apple’s ability to grow their annual profit is highly dependent on their ability to both maintain hardware sales and increase services revenue. There is a LOT of room to grow services revenue. There is much less room to grow hardware revenue.
I look forward to seeing where the goal post gets moved next.
I agree with this wholeheartedly.
From earlier upthread (forrestthewoods-0):
> Apple makes about 60 billion a year in the profit. The 10 billion they get from Google constitutes 16% of their annual profit. That’s significant!
This is the contentious part.
Some of the $10B from Google needs to be allocated against the cost centres that enable the sale, in order to account for it correctly. To put it another way, the marginal cost of this revenue is insignificant but the capital costs are significant.
It is worthwhile to consider marginal and capital costs separately, but it's not reasonable to ignore those upfront costs when making an argument - it comes across as "playing funny buggers with figures" (wyattpeak-1).
So I generally agree with your points, but also agree with people who say you need to factor in the non-marginal costs required to generate the Google revenue.
As a meta point, your comments on goal post moving (while potentially correct - I'm not making a comment on correctness here) don't add to your argument, your argument makes sense without them (and in my opinion would come across better if you left them out).
forrestthewoods-0: https://news.ycombinator.com/item?id=25432024
wyattpeak-1: https://news.ycombinator.com/item?id=25438323
And Mozilla, who wrote this article, also gets the majority of their funding through paid search, mostly from Google.
> Precisely 94% of Mozilla revenues came through royalties received by search engines to be featured on its Mozilla Firefox browser.[0]
I don't understand why we should always have good guys and bad guys and we can't accept that none of those company respect us.
Nothing will change if we relay Apple's propaganda about privacy. People will think that the solution is already there and it's Apple. And it's not. Apple has catastrophic Privacy, just a bit less catastrophic than Google but that's it.
They don't even encrypt your cloud, how's that remotely close to "privacy focused company"
1: https://www.forbes.com/sites/johnkoetsier/2020/09/03/idfa-st...
This change moved Apple a little closer to the "good guys" column, but not really into it.
It's up to the people to be the champions of privacy and help Apple realize that our interests (privacy) are aligned with their interests (profit).
(And I say this as someone who's rather anti-Apple for other reasons. Life is complicated and full of compromises.)
Anyone aware of Apple's history knows that Apple has always pushed consumer privacy forward, forcing others in the industry to follow.
I don't know any other consumer electronics company other than Apple that has been championing consumer privacy so much over the last 12-15 years.
If you learned about Apple's stance on privacy only in their recent marketing, that doesn't mean they haven't been doing it before.
I will admit that this action to change the advertising ID to default-off is a promising one though.
Sent from my Huawei.
https://uk.reuters.com/article/us-apple-fbi-icloud-exclusive...
Not saying I agree or disagree with it, but it's something worth highlighting
But, just like with FileVault, the roll out will most likely be relatively slow and progressive.
https://www.reuters.com/article/us-apple-fbi-icloud-exclusiv...
Sent from my Pinephone.
It’s also a good way to combat the push from companies like Google to bring down the prices of devices to allow for better tracking.
I haven't followed this very closely, has anyone determined exactly what is being sent?
I also think this is why Apple and Microsoft have bright futures but companies like Amazon, Google, and Facebook will only see more legal hurdles from here on out.
It's a lot of money, but it's pocket change for Apple in the scheme of things—$220 billion in hardware revenue and a $2 trillion market cap.
Google needs to pay it far more than Apple needs the money. Google knows Apple customers are far more lucrative than Android customers.
I wish they had come up with an alternate revenue stream.
Also people would want google anyway. After all it’s still the most useful search engine for almost everyone. Apple is primarily still a device maker for people who want stuff to justwerk and people who have no interest in tech.
You do not need to send Apple your drivers license to compile software for Apple hardware.
Sent from my Thinkpad.