Text 9432, 270 rader
Skriven 2006-01-28 18:21:44 av John Oellrich (1:379/45)
Kommentar till text 9409 av Glenn Meadows (1:379/45)
Ärende: Re: iPod business
=========================
From: "John Oellrich" <john@oellrich.us>
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Glenn,
I'm pretty sure I read that Apple has been getting a much larger chunk = of the
music sale than that. But now I can't remember where I read it.
As Apples revenues on iPods, of course it is a major contributor. The = sold
over 11 times more iPods than Macs of all flavors (14 million vs. = 1.25
million) in the last quarter. And for revenue its $2.9B for the = iPods, $1.7B
for the Macs (or $207 per iPod and $1,724 per Mac). I would = argue that the
margins are much different for an iPod than a Mac. The = Mac benefits from
using truly commodity components (other than the CPU, = but going Intel will
solve that nasty little problem) where Apple = benefits from the volumes of the
entire PC industry. The same is not = true for the iPod, a lot of comparatively
low volume and expensive = (smaller ain't cheaper) components.
When the iPod Nano was released a study of its Bill of Materials (the = cost of
the components) showed that it was in fact being sold at a loss. = The cost of
the flash in the device alone was around 40% of its list = price. The total BOM
for a device should only be roughly 33% of its list = price is the old rule of
thumb. The speculation was Apple priced it as = it did for one reason, boost
iTunes downloads.
The revenue from iTunes last quarter was $491M (not a pure number, Apple =
rolled up some other revenue sources in the number as well, but iTunes = is
probably the lion's share). Let's ignore the fact that this isn't a = pure
number and go with your 2/3's back to the studio (oops just did a = Google,
Apple gets a tad over 34%). 34+% of $491M is $168.4M or $56.1M = per month. How
much do you really think it costs Apple to run iTunes per = month? Whatever, it
is not going to be anywhere close to $56.1M. Overall = in Apple's profits, yep
iTunes is small potatoes, but a potato that is = growing very rapidly.=20
--=20
john
john@oellrich.us
"Glenn Meadows" <gmeadow@comcast.net> wrote in message =
news:43db9005$1@w3.nls.net...
John,
I've got to side with Rich on this. Apple does NOT make any =
appreciable=20
profit on the store. 2/3 of the revenue from the sale of a track goes =
to=20
the label who owns the copyright (actually it's going up another few =
percent=20
shortly). Then from that, Apple has to pay the full staff that runs =
the=20
store, does all the previewing of the music, etc. Plus, they pay the =
(Apple=20
pays) the CC processing fees from their portion, as wall as all the=20
bandwidth costs, customer support calls,etc. And, for most of the =
majors,=20
they do all the encoding and processing of the new material (at least =
they=20
did for the first year to get it going).
Within the industry, it's fairly well known, that Apple makes =
virtually=20
nothing on the sale of the music, it's the drive of the content to =
sell=20
iPods. I believe that a recent news story I read said that they're =
making=20
as much, or more on iPod sales, than they are on computer hardware =
sales.
The iPod profit is a very large margin all the way through the retail =
chain=20
is suspect.
--=20
Glenn M.
"John Oellrich" <john@oellrich.us> wrote in message=20
news:43db849c$1@w3.nls.net...
Rich,
Nope it is the other way around. Well they do probably make a profit =
on the=20
iPod, but it has no where near the margin of iTunes.
--=20
john
john@oellrich.us
"Rich" <@> wrote in message news:43db18e3$1@w3.nls.net...
Doesn't apple make money on the ipod hardware and little to none =
on the=20
itunes store?
Rich
"John Oellrich" <john@oellrich.us> wrote in message=20
news:43da8441@w3.nls.net...
Talk about stupid! Yet another money losing piece of hardware =
where they=20
will try to make it up in the volume ;->
...
I would suggest that MS might be better off working with Creative =
if=20
they want to blunt Apple's dominance in this arena. Get Windows Media =
10=20
ported to the device, and then MS could use MSN for the delivery =
vehicle for=20
the purchased media which is where the real money is.
--=20
john
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<DIV>Glenn,</DIV>
<DIV> </DIV>
<DIV>I'm pretty sure I read that Apple has been getting a much larger =
chunk of=20
the music sale than that. But now I can't remember where I read = it.</DIV>
<DIV> </DIV>
<DIV>As Apples revenues on iPods, of course it is a major contributor. =
The sold=20
over 11 times more iPods than Macs of all flavors (14 million vs. 1.25 =
million)=20
in the last quarter. And for revenue its $2.9B for the iPods, $1.7B for = the
Macs=20
(or $207 per iPod and $1,724 per Mac). I would argue that the margins = are
much=20
different for an iPod than a Mac. The Mac benefits from using truly =
commodity=20
components (other than the CPU, but going Intel will solve that nasty =
little=20
problem) where Apple benefits from the volumes of the entire PC = industry.
The=20
same is not true for the iPod, a lot of comparatively low volume and =
expensive=20
(smaller ain't cheaper) components.</DIV>
<DIV> </DIV>
<DIV>When the iPod Nano was released a study of its Bill of Materials =
(the cost=20
of the components) showed that it was in fact being sold at a loss. The = cost
of=20
the flash in the device alone was around 40% of its list price. The = total
BOM=20
for a device should only be roughly 33% of its list price is the old = rule
of=20
thumb. The speculation was Apple priced it as it did for one reason, = boost=20
iTunes downloads.</DIV>
<DIV> </DIV>
<DIV>The revenue from iTunes last quarter was $491M (not a pure number, =
Apple=20
rolled up some other revenue sources in the number as well, but iTunes = is=20
probably the lion's share). Let's ignore the fact that this isn't a pure =
number=20
and go with your 2/3's back to the studio (oops just did a Google, Apple = gets
a=20
tad over 34%). 34+% of $491M is $168.4M or $56.1M per month. How much do =
you=20
really think it costs Apple to run iTunes per month? Whatever, it = is
not=20
going to be anywhere close to $56.1M. Overall in Apple's profits, yep = iTunes
is=20
small potatoes, but a potato that is growing very rapidly. </DIV>
<DIV><BR>-- <BR>john</DIV>
<DIV> </DIV>
<DIV><A href=3D"mailto:john@oellrich.us">john@oellrich.us</A></DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV>"Glenn Meadows" <<A=20
href=3D"mailto:gmeadow@comcast.net">gmeadow@comcast.net</A>> wrote =
in message=20
<A=20
=
href=3D"news:43db9005$1@w3.nls.net">news:43db9005$1@w3.nls.net</A>...</DI=
V>John,<BR><BR>I've=20
got to side with Rich on this. Apple does NOT make any =
appreciable=20
<BR>profit on the store. 2/3 of the revenue from the sale of a =
track=20
goes to <BR>the label who owns the copyright (actually it's going up =
another=20
few percent <BR>shortly). Then from that, Apple has to pay the =
full=20
staff that runs the <BR>store, does all the previewing of the music, =
etc.=20
Plus, they pay the (Apple <BR>pays) the CC processing fees from their =
portion,=20
as wall as all the <BR>bandwidth costs, customer support =
calls,etc. And,=20
for most of the majors, <BR>they do all the encoding and processing of =
the new=20
material (at least they <BR>did for the first year to get it=20
going).<BR><BR>Within the industry, it's fairly well known, that Apple =
makes=20
virtually <BR>nothing on the sale of the music, it's the drive of the =
content=20
to sell <BR>iPods. I believe that a recent news story I read =
said that=20
they're making <BR>as much, or more on iPod sales, than they are on =
computer=20
hardware sales.<BR><BR>The iPod profit is a very large margin all the =
way=20
through the retail chain <BR>is suspect.<BR><BR>-- <BR><BR>Glenn =
M.<BR>"John=20
Oellrich" <<A =
href=3D"mailto:john@oellrich.us">john@oellrich.us</A>> wrote=20
in message <BR><A=20
=
href=3D"news:43db849c$1@w3.nls.net">news:43db849c$1@w3.nls.net</A>...<BR>=
Rich,<BR><BR>Nope=20
it is the other way around. Well they do probably make a profit on the =
<BR>iPod, but it has no where near the margin of iTunes.<BR><BR>--=20
<BR>john<BR><BR><A=20
href=3D"mailto:john@oellrich.us">john@oellrich.us</A><BR> "Rich" =
<@>=20
wrote in message <A=20
=
href=3D"news:43db18e3$1@w3.nls.net">news:43db18e3$1@w3.nls.net</A>...<BR>=
=20
Doesn't apple make money on the ipod hardware and little to none on =
the=20
<BR>itunes store?<BR><BR> Rich<BR><BR> "John =
Oellrich"=20
<<A href=3D"mailto:john@oellrich.us">john@oellrich.us</A>> wrote =
in=20
message <BR><A=20
=
href=3D"news:43da8441@w3.nls.net">news:43da8441@w3.nls.net</A>...<BR>&nbs=
p; =20
Talk about stupid! Yet another money losing piece of hardware where =
they=20
<BR>will try to make it up in the volume =
;-><BR><BR> =20
...<BR><BR> I would suggest that MS might be better =
off=20
working with Creative if <BR>they want to blunt Apple's dominance in =
this=20
arena. Get Windows Media 10 <BR>ported to the device, and then MS =
could use=20
MSN for the delivery vehicle for <BR>the purchased media which is =
where the=20
real money is.<BR><BR> -- <BR> =20
john<BR><BR><BR></BLOCKQUOTE></BODY></HTML>
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