"Apple is not buying 100,000 Brittany.AAC files from RIAA and reselling them. They're providing digital files and distribution, and the cost of goods sold calculation is somewhat more involved."
This is exactly what they are doing. The only difference is they don't have to buy 100,000 at a time. They just have to report which ones they sold and collect their check.
It is a zero inventory resale business. The cost of goods sold calculation is NOT more involved, if anything less involved. With a physical product you have to put in warehouse costs. Shipping and recieving labor. Inventory shrink costs. RMA costs. Markdowns costs. the list goes on.
None of these costs are involved with iTMS. Instead they have other costs such as bandwidth (which online retailers also have to deal with) and system admin costs )which also online retailers must have) and development costs (which again, retailers must deal with)
There isn't much special about iTMS to any other ecommerce business other than the fact that their costs are significantly LOWER Than any other physical product reseller. So trying to argue the OPPOSITE doesn't really make much sence.
You can criticise my understanding of supply chains and reselling business and revenues and costs all day. it doesn't change the fact that your argument is not supportive of iTMS's reality. If you are trying to say that iTMS has more costs than an online retailer of physical products, then you must have no faith in Steve Jobs as a CEO.
"And I'm sorry, but you don't understand what a gross profit is. You are talking about reseller margin as 99-65 = 34c. But gross profit is selling price - cost price. 99-65 = 34c. It's the same thing when you are in fact a reseller."
And your right. Profits is revenue - costs. My origional post is in support of that. My problem with all this "barely profitable" and "low margin sales" etc etc posts is just that. People aren't taking into account that iTMS is an online e-commerce site RESELLING a product. The margin on those products are 35%. Most online retailers which have WAY more to worry about such as warehouses, inventory, and shipping and recieving scrape by on 10% reseller margins and are still more profitable than apple is claiming to be.
My main premise is that Apple is not stupid. They can run a business just like everyone else on the internet is by minimizing costs. If they are making 35% on their resales. And that is their only business for iTMS. And they are barely scraping by. Then Apple iTMS is a failed business model.
The point I'm trying to make isn't that apple isn't scraping by on paper. It is that they are EXTREMELY profitable in iTMS. It just so happens that they do not put that profit into dividends. Instead they put it back into growing their business elsewhere (iPod+iTunes TV commercials, etc).
If you run a business and you have a ton of profit you have some options. One is to give that money to the stockholders. An other is to build your business. Apple is doing the latter. Just because shareholders aren't seeing direct dividends from iTMS doesn't mean it isn't bringing in any profits.
Maybe you didn't notice. Each post was in reply to "where are your sources?" Just because you don't like ONE OF THE SOURCES doesn't mean everything you say is accurate. In fact, you haven't posted a single source to back up any of your claims.
lol: did you bother to go past the first link? Just shows your closed mindedness. The downhill article is talking about apple's cut before their costs. Just like it talks about the RIAA cut before THEIR costs. Your argument is in the same direction as mine. It doesn't refute anything I have posted. I agree with you 100% that the CC companie gets a cut of the 35% that apple gets.
Try reading the forbes and FT articles then. There are plenty to choose from. Just because you don't agree with the first one doesn't mean none are credible.
How do you assume the credit card company is making 35%? I have never heard of even small time processing companies charging more than a few percent. I have seen one or two that charge ~10% if they are doing some sort of added value to a small business.
At the pure volume apple is processing credit cards, I can say that they are definately not being charged 35% for CC processing. The ceiling would have to be 10% and in actuality it would be much smaller than that. Apple has the revenue to be negotiating thin cuts to the CC companies.
"Boy howdy, everybody here is saying you are an asshole and you know what? From your posts tonight, it looks like they might be right"
I'm sorry if I offended you. I will try to be nicer when pointing out blatant misleading statements. To be honest I felt I was too harsh after posting my reply. But to be honest everything I posted above is the truth.
You don't haveh to call me an asshole directly. I already know I am. I'd rather be an asshole than to allow people to mislead others about the facts. At the same time I will try to be nicer next time. I realized how it looks after the fact.
Next time I will stop at my first post and not reply to return flamebait. I am obviously outnumbered by people who still believe apple only scrapes by with iTMS. If you didn't believe that you wouldn't have posted the above comment.
Maybe my first comment was partially flamebait. It still doesn't make it right to spread misleading information onto slashdot. That was the purpose of my origional post. And it is the purpose of this post. To defend the truth. Any additional personal offense given to the doc is my fault and I'm sorry.
My point (and I have gone off topic somewhat) is that apple is spending all this profit on advertising. Technically, you can probably say they aren't profiting much (though most analysts say 4-10%) However that is misleading. Their profits are in advertising dollars which is spent to sell iPods. Every iTunes commercial on TV out there. all of it.
Apple may be justifying that iTunes makes no profit but it is a misleading statement. What e-commerce business makes no profit and resells product which has no inventory and no shipping and recieving and shrink costs for a 35% margin?
The simple answer is none. Most online resellers have a 10% margin on products and make more profits than apple is claiming. And these people must maintain inventories and supply chains.
Apple is making a huge profit on this. They are just folding it back into iPod advertising and calling it a break even. It is misleading to their shareholders and most of all to their customers. because now customers are lead to believe that apple only shaves 4c on the dollar from each itunes sell when in actuallity they are shaving off significantly more and spending it on iPod TV ads.
This is because Radio Shack is a 3rd party dealer. They buy the phone from the provider at full price, then take a loss on it and make it back up with the sale of the contract.
When the provider sells that 50$ phone to you for $150 they are making anywhere from 50-100$ margin on that sale. Then they give it back to you when you sell the contract (maybe they even give back more in some instances)
It is a common misconception that the cost of the phone is actually 150. The cellular providers actually pay significantly less and then resell them to Radio Shack (or whoever) at their list price. You are then forced to make it back up with the contract and sell the phone for less. You can do some fact checking by looking at how much phones without contract sell for overseas, and then compare them to the non-contract price in the US. Usually a $100 phone in europe (without contract) will cost you around $400-500 without contract in the US.
I'm sorry but you are definately wrong. The "subsidised" phones with contract are only discounted from the margin of the phone. The companies actually pay much less for them than their retail price. When they "subsidise" it they just drop it down to a thin margin. But they definately aren't LOSING money on it.
Mayb the $19 phone and the free phone. Sometimes there are sales where they drop the price significantly. But in the normal day to day operations, they make serious margins on their phones. This is not bullshit, and it isn't from TFA. It is a common misconception in the US because of the way cellular providers run their business and market their phones. The whole idea of taking a loss on the phone is fabricated by the cellualr providers. And you happen to believe them (I used to believe them until I found out how much phones cost overseas: less than they cost here with a 2yr contract)
Apple gets much more than 4c per song. The analysis you are seeing on stock geek websites are showing total operational profits. NOT the margin on the actual song.
"Because the numbers I have (as a shareholder) reveal that margins are closer to 6%"
Then you are not a very astute shareholder. Total operating profits ARE NOT THE SAME as resellers margin. Apple sells their songs at a significant margin. This isn't going to stop them from burning it all on (well recieved) advertising. But it certaintly does not have anything to do with "razor thin" margins. MARGINS are defined based on the cost of a product. PROFITS are defined based on your total revenues and your total costs. There is a HUGE difference here. iTMS is a VERY HIGH MARGIN business. It just so happens that Apple puts nearly every penny they earn off it back into the business in the form of advertising.
Get your facts straight before you go spouting off your BS about being a "shareholder" and your "portfolio" says differently and the "data you have" shows differently. Saying things like this doesn't make you look smarter. Having a Ph.D. doesn't make you look smarter. It just makes other people who read your posts confused because they are reading 2 different things (yours being the wrong one)
"I'll let the Ph.D. and my publications speak to that"
With all due respect, I hope your Ph.D. it is not business, being that you cannot accurately define margin and profit.
"You never "checked". Apple does not release information on their gross or net profits per song. There has been a credible analyst that puts it at 25c proft, and an analyst in TFA puts it at 4c. Truth is we really don't know."
Please NOTICE for one second that I never talked about PROFITS. I talked about resellers margins. There is a BIG difference. Apple just happens to spend most of their margins on advertising. If you make a million dollars in a year doing business, but spend a million advertising, then that is a break even. It doesn't mean that you didn't sell something for a million dollars more than you paid for it though!
"So your claim of a 40% direct margin doesn't come close to including all direct costs, and completely ignores indirects."
Dude, have you ever run an e-commerce site which does reselling? You just admitted that the record label charges between 60-65c per song. Apple sells them for 99c. That is a 39% margin.
Mainstream online resellers make about 10% margin on their products. Infrastructure costs and all that other shit is the cost of doing the business. But the margin of the actual product is 39c. You must take your additional costs out of there as well.
I'm not talking about total operating costs. If I were I would be agreeing with you. Do you actually think Amazon.com makes more than 10% on their rock bottom prices for technology? Do you honestly think Newegg.com sells at more than 10% margins (on top of their product costs)
Everyone has a "break even" point on what they have to make in margin on their resales. Apple, being that they spend almost ALL of their margin on advertising, probably does have a near 1% total operating margin. This does not mean that they mark their songs up with a 1% margin though. It means that they mark them up at 39% and then spends say.. 35% of it on advertising and the rest on cost of infrastructure, programers, and sys admins.
"Your ridiculously inaccurate numbers would mean that Apple is netting over $100 million a year from music downloads -- nearly double Apple's entire net profit in 2003 and more than 2/3 of their incredible 2004 results."
Please go back and read my origional post. I _NEVER_ said that apple's total operational margin was 40%. _NEVER_. I simply stated that iTMS songs are a VERY HIGH MARGIN product. Most retailers would be happy to take 15% margin on products.. much less 40%. If apple chooses to burn all that on marketing hype to make their iPod more popular that is another story altogether. This has _NOTHING_ to do with total operational margin. I _NEVER_ said it did.
"Wednesday CEO Steve Jobs admitted that Apple makes no revenue from the online download service"
Then obviously jobs isn't a good CEO. Everyone knows that all incoming cash is revenue. Profit is a different story. They _MAY_ make no profit in iTMS but that has NOTHING to do with revenue.
When you talk about revenue streams, and its costs and benefits, reselling margin is a huge factor. The iTMS may be breaking even if you take into consideration R&D on iTunes and iTunes servers, cost of running the servers, and advertising costs. But you are missing the point. Apple spends more on advertising iTMS than _ANY_ other company in the mp3 player or music downloading industry. They spend more money on advertising iTMS than the top 2 competitors COMBINED.
Saying that they make no profits on iTMS is a ridiculous statement. That is like saying bakery makes no money on bread because they take all their advertising and labor costs out on just their bread revenue and none of their other products.
All that I'm saying is that Apple spends almost literally _ALL_ of that 40% margin on advertising the service combined with its use on an iPod. Telling me that isn't bringing in revenue is the most hilarious thing I have heard someone say. If Jobs told that to the board of directors he would be lying and could be liable for fraud.
Also don't forget that the carriers (including cingular, Sprint, and Verison) ALL modify firmware in your phone to disable features which would otherwise allow you to put BG images and ringtones into your phone. _EVERY_ phone that does not allow the user to modify the BG image without paying has been modified in firmware to disable that feature. It is a scam. There are almost NO phones which allow you to modify the firmware without having special programer cables and software. This has all been because of modified firmware installed into the phone.
Cellular service in asia and europe for voice and SMS is cheaper than in the US.
The problem is that in the US, SMS is MORE EXPENSIVE than voice calls. Where in the rest of the world, it is cheaper. one SMS message in the US is more expensive than 1 minute of voice. Pathetic.
The cellular providers are killing off the technology by locking down the phone's features and forcing a pay per use pricing system on every feature of your phone. It is utter insulting and will eventually die out (but only after all the providers consolidate and screw us another way)
" I thought the wireless companies make enough profit by passing on their fees and surcharges directly to the customer"
Actually, cellular companies make a hefty profit by reselling the phones. They only "lose" money on the free phones. All the "discounted" phones are still above their costs. They just jack them up significantly and then drop them back down to a reasonable level when you buy the 2yr contract.
"The problem of course is that on sales of the songs themselves, Apple's profit is next to nothing."
Last I checked, apple pays 60c per song and resells them for 99c. That is approximately a 40% margin. Most online retailers who go through less volume than that and must maintain inventory (which apple doesn't on music) scrape by with less than 10% margin on products if they are LUCKY. This is before you factor in shrink and damaged goods and returns. You can hardly say iTMS is next to nothing in margin.
You obviously have no concept of margins in e-commerce. Otherwise you wouldn't be saying that. Next time try to make your argument stick in real world scenerios rather than make believe BS you want to spout off to try to look smart (and I'm sure there are plenty of apple ipod fanboys who probably read your post and accepted it at face value.)
The keyboard+mouse that goes with the mac mini will set you back $58. A set of speakers from apple will set you back even more. The monitor will set you back ~ 100$ for a cheap CRT.
ALL of these things would be included in the 499 PC at walmart (or even the 299 PC at walmart)
Even apple's lowest priced machine is significantly more expensive than walmart PC's. And it isn't even as powerful.
"Furthermore, Dell's Inspiron line is comparable to the iBook, not the PowerBook."
get a clue dude.
Dell's inspiron lineup is the top of the line laptops dell sells. The only thing they have more powerful are the Precision workstation laptops (which are HEAVY, not standard laptops but portable workstations)
You do have one point though, 12" intel laptops are a lot more expensive than 12" apple laptops (unless you buy averatec). But as soon as you go to 14,15,17in, apple becomes tremendously more expensive (and they aren't any sturdier or lighter or cooler either)
"Furthermore, I don't know where you live, but around here (the city, admittedly) ps2->usb adapters are $2."
No they aren't. You are thinking of straight through pin adapters for USB and PS2... What the parent poster is talking about is a different beast altogether. It is a cable with logic built into it. The cable is actually a USB device in itself, which translates PS2 signals into USB HID signals. It isn't just a simple circuit either. It is a full blown USB client. Protocol and all. I have personally tried 2 different models of these adapters and they work well with some computers, OK in others, and just plain don't work in others. They are also heavilly keyboard dependant. Many keyboards just won't work with them. (I admit I haven't tried them on a Mac tho but I'm sure it would work on some and not on others)
The cheapest these exist on the internet are about $8. Maybe you found them on clearance?
Realize that apple does not honor this policy unless you buy from their website or from a Retail apple store.
The bulk of their sales (through 3rd parties) they do not honor at all. The reseller must eat the defective hardware if they are to do a replacement as you describe.
Remember that this includes Dead on Arrival machines. You must pay for shipping back and they will send it back to you when they get around to it (usually within 1-3 weeks)
Not to mention when you get it back, you have never used it, and it is no longer a brand new machine, yet you paid brand new price for it.
They do the same thing with the iPods... I have seen them send a refurb scratched up iPod to replace a brand new DOA iPod because they do not accept open box returns on iPods. Pitiful.
Slashdot Mirror
"Apple is not buying 100,000 Brittany .AAC files from RIAA and reselling them. They're providing digital files and distribution, and the cost of goods sold calculation is somewhat more involved."
This is exactly what they are doing. The only difference is they don't have to buy 100,000 at a time. They just have to report which ones they sold and collect their check.
It is a zero inventory resale business. The cost of goods sold calculation is NOT more involved, if anything less involved. With a physical product you have to put in warehouse costs. Shipping and recieving labor. Inventory shrink costs. RMA costs. Markdowns costs. the list goes on.
None of these costs are involved with iTMS. Instead they have other costs such as bandwidth (which online retailers also have to deal with) and system admin costs )which also online retailers must have) and development costs (which again, retailers must deal with)
There isn't much special about iTMS to any other ecommerce business other than the fact that their costs are significantly LOWER Than any other physical product reseller. So trying to argue the OPPOSITE doesn't really make much sence.
You can criticise my understanding of supply chains and reselling business and revenues and costs all day. it doesn't change the fact that your argument is not supportive of iTMS's reality. If you are trying to say that iTMS has more costs than an online retailer of physical products, then you must have no faith in Steve Jobs as a CEO.
"And I'm sorry, but you don't understand what a gross profit is. You are talking about reseller margin as 99-65 = 34c. But gross profit is selling price - cost price. 99-65 = 34c. It's the same thing when you are in fact a reseller."
And your right. Profits is revenue - costs. My origional post is in support of that. My problem with all this "barely profitable" and "low margin sales" etc etc posts is just that. People aren't taking into account that iTMS is an online e-commerce site RESELLING a product. The margin on those products are 35%. Most online retailers which have WAY more to worry about such as warehouses, inventory, and shipping and recieving scrape by on 10% reseller margins and are still more profitable than apple is claiming to be.
My main premise is that Apple is not stupid. They can run a business just like everyone else on the internet is by minimizing costs. If they are making 35% on their resales. And that is their only business for iTMS. And they are barely scraping by. Then Apple iTMS is a failed business model.
The point I'm trying to make isn't that apple isn't scraping by on paper. It is that they are EXTREMELY profitable in iTMS. It just so happens that they do not put that profit into dividends. Instead they put it back into growing their business elsewhere (iPod+iTunes TV commercials, etc).
If you run a business and you have a ton of profit you have some options. One is to give that money to the stockholders. An other is to build your business. Apple is doing the latter. Just because shareholders aren't seeing direct dividends from iTMS doesn't mean it isn't bringing in any profits.
Maybe you didn't notice. Each post was in reply to "where are your sources?" Just because you don't like ONE OF THE SOURCES doesn't mean everything you say is accurate. In fact, you haven't posted a single source to back up any of your claims.
lol: did you bother to go past the first link? Just shows your closed mindedness. The downhill article is talking about apple's cut before their costs. Just like it talks about the RIAA cut before THEIR costs. Your argument is in the same direction as mine. It doesn't refute anything I have posted. I agree with you 100% that the CC companie gets a cut of the 35% that apple gets.
Try reading the forbes and FT articles then. There are plenty to choose from. Just because you don't agree with the first one doesn't mean none are credible.
How do you assume the credit card company is making 35%? I have never heard of even small time processing companies charging more than a few percent. I have seen one or two that charge ~10% if they are doing some sort of added value to a small business.
At the pure volume apple is processing credit cards, I can say that they are definately not being charged 35% for CC processing. The ceiling would have to be 10% and in actuality it would be much smaller than that. Apple has the revenue to be negotiating thin cuts to the CC companies.
"Boy howdy, everybody here is saying you are an asshole and you know what? From your posts tonight, it looks like they might be right"
I'm sorry if I offended you. I will try to be nicer when pointing out blatant misleading statements. To be honest I felt I was too harsh after posting my reply. But to be honest everything I posted above is the truth.
You don't haveh to call me an asshole directly. I already know I am. I'd rather be an asshole than to allow people to mislead others about the facts. At the same time I will try to be nicer next time. I realized how it looks after the fact.
Next time I will stop at my first post and not reply to return flamebait. I am obviously outnumbered by people who still believe apple only scrapes by with iTMS. If you didn't believe that you wouldn't have posted the above comment.
Maybe my first comment was partially flamebait. It still doesn't make it right to spread misleading information onto slashdot. That was the purpose of my origional post. And it is the purpose of this post. To defend the truth. Any additional personal offense given to the doc is my fault and I'm sorry.
I see your point AC
My point (and I have gone off topic somewhat) is that apple is spending all this profit on advertising. Technically, you can probably say they aren't profiting much (though most analysts say 4-10%) However that is misleading. Their profits are in advertising dollars which is spent to sell iPods. Every iTunes commercial on TV out there. all of it.
Apple may be justifying that iTunes makes no profit but it is a misleading statement. What e-commerce business makes no profit and resells product which has no inventory and no shipping and recieving and shrink costs for a 35% margin?
The simple answer is none. Most online resellers have a 10% margin on products and make more profits than apple is claiming. And these people must maintain inventories and supply chains.
Apple is making a huge profit on this. They are just folding it back into iPod advertising and calling it a break even. It is misleading to their shareholders and most of all to their customers. because now customers are lead to believe that apple only shaves 4c on the dollar from each itunes sell when in actuallity they are shaving off significantly more and spending it on iPod TV ads.
This is because Radio Shack is a 3rd party dealer. They buy the phone from the provider at full price, then take a loss on it and make it back up with the sale of the contract.
When the provider sells that 50$ phone to you for $150 they are making anywhere from 50-100$ margin on that sale. Then they give it back to you when you sell the contract (maybe they even give back more in some instances)
It is a common misconception that the cost of the phone is actually 150. The cellular providers actually pay significantly less and then resell them to Radio Shack (or whoever) at their list price. You are then forced to make it back up with the contract and sell the phone for less. You can do some fact checking by looking at how much phones without contract sell for overseas, and then compare them to the non-contract price in the US. Usually a $100 phone in europe (without contract) will cost you around $400-500 without contract in the US.
I'm sorry but you are definately wrong. The "subsidised" phones with contract are only discounted from the margin of the phone. The companies actually pay much less for them than their retail price. When they "subsidise" it they just drop it down to a thin margin. But they definately aren't LOSING money on it.
Mayb the $19 phone and the free phone. Sometimes there are sales where they drop the price significantly. But in the normal day to day operations, they make serious margins on their phones. This is not bullshit, and it isn't from TFA. It is a common misconception in the US because of the way cellular providers run their business and market their phones. The whole idea of taking a loss on the phone is fabricated by the cellualr providers. And you happen to believe them (I used to believe them until I found out how much phones cost overseas: less than they cost here with a 2yr contract)
And straight from the FT horse's mouth. (reg required)
And straight from the FT horse's mouth. (reg required)
And checked:
And Checked again:
And Checked again:
And Checked again:
And Checked again:
And Checked again:
And straight from the FT horse's mouth. (reg required)
"Because the numbers I have (as a shareholder) reveal that margins are closer to 6%"
Then you are not a very astute shareholder. Total operating profits ARE NOT THE SAME as resellers margin. Apple sells their songs at a significant margin. This isn't going to stop them from burning it all on (well recieved) advertising. But it certaintly does not have anything to do with "razor thin" margins. MARGINS are defined based on the cost of a product. PROFITS are defined based on your total revenues and your total costs. There is a HUGE difference here. iTMS is a VERY HIGH MARGIN business. It just so happens that Apple puts nearly every penny they earn off it back into the business in the form of advertising.
Get your facts straight before you go spouting off your BS about being a "shareholder" and your "portfolio" says differently and the "data you have" shows differently. Saying things like this doesn't make you look smarter. Having a Ph.D. doesn't make you look smarter. It just makes other people who read your posts confused because they are reading 2 different things (yours being the wrong one)
"I'll let the Ph.D. and my publications speak to that"
With all due respect, I hope your Ph.D. it is not business, being that you cannot accurately define margin and profit.
No, I did check:
And checked:
And Checked again:
And Checked again:
And Checked again:
And Checked again:
And Checked again:
And straight from the FT horse's mouth. (reg required)
Please NOTICE for one second that I never talked about PROFITS. I talked about resellers margins. There is a BIG difference. Apple just happens to spend most of their margins on advertising. If you make a million dollars in a year doing business, but spend a million advertising, then that is a break even. It doesn't mean that you didn't sell something for a million dollars more than you paid for it though!
"So your claim of a 40% direct margin doesn't come close to including all direct costs, and completely ignores indirects."
Dude, have you ever run an e-commerce site which does reselling? You just admitted that the record label charges between 60-65c per song. Apple sells them for 99c. That is a 39% margin.
Mainstream online resellers make about 10% margin on their products. Infrastructure costs and all that other shit is the cost of doing the business. But the margin of the actual product is 39c. You must take your additional costs out of there as well.
I'm not talking about total operating costs. If I were I would be agreeing with you. Do you actually think Amazon.com makes more than 10% on their rock bottom prices for technology? Do you honestly think Newegg.com sells at more than 10% margins (on top of their product costs)
Everyone has a "break even" point on what they have to make in margin on their resales. Apple, being that they spend almost ALL of their margin on advertising, probably does have a near 1% total operating margin. This does not mean that they mark their songs up with a 1% margin though. It means that they mark them up at 39% and then spends say.. 35% of it on advertising and the rest on cost of infrastructure, programers, and sys admins.
"Your ridiculously inaccurate numbers would mean that Apple is netting over $100 million a year from music downloads -- nearly double Apple's entire net profit in 2003 and more than 2/3 of their incredible 2004 results."
Please go back and read my origional post. I _NEVER_ said that apple's total operational margin was 40%. _NEVER_. I simply stated that iTMS songs are a VERY HIGH MARGIN product. Most retailers would be happy to take 15% margin on products.. much less 40%. If apple chooses to burn all that on marketing hype to make their iPod more popular that is another story altogether. This has _NOTHING_ to do with total operational margin. I _NEVER_ said it did.
"Wednesday CEO Steve Jobs admitted that Apple makes no revenue from the online download service"
Then obviously jobs isn't a good CEO. Everyone knows that all incoming cash is revenue. Profit is a different story. They _MAY_ make no profit in iTMS but that has NOTHING to do with revenue.
When you talk about revenue streams, and its costs and benefits, reselling margin is a huge factor. The iTMS may be breaking even if you take into consideration R&D on iTunes and iTunes servers, cost of running the servers, and advertising costs. But you are missing the point. Apple spends more on advertising iTMS than _ANY_ other company in the mp3 player or music downloading industry. They spend more money on advertising iTMS than the top 2 competitors COMBINED.
Saying that they make no profits on iTMS is a ridiculous statement. That is like saying bakery makes no money on bread because they take all their advertising and labor costs out on just their bread revenue and none of their other products.
All that I'm saying is that Apple spends almost literally _ALL_ of that 40% margin on advertising the service combined with its use on an iPod. Telling me that isn't bringing in revenue is the most hilarious thing I have heard someone say. If Jobs told that to the board of directors he would be lying and could be liable for fraud.
AMEN!
Also don't forget that the carriers (including cingular, Sprint, and Verison) ALL modify firmware in your phone to disable features which would otherwise allow you to put BG images and ringtones into your phone. _EVERY_ phone that does not allow the user to modify the BG image without paying has been modified in firmware to disable that feature. It is a scam. There are almost NO phones which allow you to modify the firmware without having special programer cables and software. This has all been because of modified firmware installed into the phone.
That is just ignorant.
Cellular service in asia and europe for voice and SMS is cheaper than in the US.
The problem is that in the US, SMS is MORE EXPENSIVE than voice calls. Where in the rest of the world, it is cheaper. one SMS message in the US is more expensive than 1 minute of voice. Pathetic.
The cellular providers are killing off the technology by locking down the phone's features and forcing a pay per use pricing system on every feature of your phone. It is utter insulting and will eventually die out (but only after all the providers consolidate and screw us another way)
" I thought the wireless companies make enough profit by passing on their fees and surcharges directly to the customer"
Actually, cellular companies make a hefty profit by reselling the phones. They only "lose" money on the free phones. All the "discounted" phones are still above their costs. They just jack them up significantly and then drop them back down to a reasonable level when you buy the 2yr contract.
"The problem of course is that on sales of the songs themselves, Apple's profit is next to nothing."
Last I checked, apple pays 60c per song and resells them for 99c. That is approximately a 40% margin. Most online retailers who go through less volume than that and must maintain inventory (which apple doesn't on music) scrape by with less than 10% margin on products if they are LUCKY. This is before you factor in shrink and damaged goods and returns. You can hardly say iTMS is next to nothing in margin.
You obviously have no concept of margins in e-commerce. Otherwise you wouldn't be saying that. Next time try to make your argument stick in real world scenerios rather than make believe BS you want to spout off to try to look smart (and I'm sure there are plenty of apple ipod fanboys who probably read your post and accepted it at face value.)
Try to be more accurate next time.
Why amusing?
The keyboard+mouse that goes with the mac mini will set you back $58. A set of speakers from apple will set you back even more. The monitor will set you back ~ 100$ for a cheap CRT.
ALL of these things would be included in the 499 PC at walmart (or even the 299 PC at walmart)
Even apple's lowest priced machine is significantly more expensive than walmart PC's. And it isn't even as powerful.
"Furthermore, Dell's Inspiron line is comparable to the iBook, not the PowerBook."
get a clue dude.
Dell's inspiron lineup is the top of the line laptops dell sells. The only thing they have more powerful are the Precision workstation laptops (which are HEAVY, not standard laptops but portable workstations)
You do have one point though, 12" intel laptops are a lot more expensive than 12" apple laptops (unless you buy averatec). But as soon as you go to 14,15,17in, apple becomes tremendously more expensive (and they aren't any sturdier or lighter or cooler either)
"Furthermore, I don't know where you live, but around here (the city, admittedly) ps2->usb adapters are $2."
No they aren't. You are thinking of straight through pin adapters for USB and PS2... What the parent poster is talking about is a different beast altogether. It is a cable with logic built into it. The cable is actually a USB device in itself, which translates PS2 signals into USB HID signals. It isn't just a simple circuit either. It is a full blown USB client. Protocol and all. I have personally tried 2 different models of these adapters and they work well with some computers, OK in others, and just plain don't work in others. They are also heavilly keyboard dependant. Many keyboards just won't work with them. (I admit I haven't tried them on a Mac tho but I'm sure it would work on some and not on others)
The cheapest these exist on the internet are about $8. Maybe you found them on clearance?
Realize that apple does not honor this policy unless you buy from their website or from a Retail apple store.
The bulk of their sales (through 3rd parties) they do not honor at all. The reseller must eat the defective hardware if they are to do a replacement as you describe.
Remember that this includes Dead on Arrival machines. You must pay for shipping back and they will send it back to you when they get around to it (usually within 1-3 weeks)
Not to mention when you get it back, you have never used it, and it is no longer a brand new machine, yet you paid brand new price for it.
They do the same thing with the iPods... I have seen them send a refurb scratched up iPod to replace a brand new DOA iPod because they do not accept open box returns on iPods. Pitiful.