Apple service business faces profit margins and competition challenges

category:Internet
 Apple service business faces profit margins and competition challenges


In the second quarter, including subscribers for third party applications on iPhone, apple paid registered users reached 270 million, an increase of 100 million over the same period last year. But there is a great difference in profitability between different service products. The profit margin of some businesses seems to be lower than the overall profit margin of apple. The company reported that its gross profit margin in the second quarter was 38.3%. In Apple services, application store AppStore and storage service iCloud are similar to high margin software services, while Apple Music and emerging video services are similar to low profit media services. The profit margin for some services is certainly much lower than the apple core hardware business, said Bob Odonnell (BobODonnell), an analyst at TechAnalysisResearch, a market research firm. He said Apples music business may not be totally different from Spotify, Pandora or Pandora. I guess that few apple services will be light investments, and content is the most prominent example. Apples chief financial officer, LucaMaestri, said he expected a profit margin for Apple services, but the number of product lines is likely to bring uncertainty. Maestri said in an interview: as we further expand the service business, this should have a positive impact on profit margins. At the same time, in our portfolio of service products, they have different profitability, so we also need to consider the problem of the combination of service products we provide to the users. He told Reuters that AppStore is the biggest part of Apples service sector. For a one-time purchase and application purchase, the apple takes 30% of the price for the service, and if the user subscribes to Netflix and other services for more than one year, the apple takes only 15% of the fee. AppStore is a high margin business, but the company has launched this service for 10 years. AppStores income may not have reached its peak, but it does not represent the long-term future of the apple, said Julie Thorne (JulieAsk), an analyst at ForresterResearch, a market research firm. In the second quarter, Apples iCloud online store business grew by 50% over the same period last year, and its profit margin may be very high. For example, in 2017, excluding stock compensation payments, cloud storage company Dropbox had a gross margin of 68%. Challenges facing entertainment business ErikGordon, a professor at the Ross School of business at University of Michigan, pointed out that, facing strong rivals, they have more historical origins and deeper relationships with their customers, and Apples entertainment business may be difficult to grow. Since its launch in 2015, apple music has grown rapidly, with 40 million paid users and 8 million trial users, but with the high cost of music copyright, its main competitor, Spotify, was only 20% in 2017. In addition, Apple plans to spend $1 billion to develop original video content, but these programs will not be charged on AppleTV (Apple TV) devices. In 2017, the so-called contribution profit of Netflix streaming media -- the company used to measure the profit margin index of this market segment -- reached 37%. Odonnell said, look at what Netflix and Amazon are doing. These companies have invested hundreds of millions of dollars or billions of dollars in content. (Liu Chun) source: NetEase science and technology report editor: Bai Xin _NT4464 Since its launch in 2015, apple music has grown rapidly, with 40 million paid users and 8 million trial users, but with the high cost of music copyright, its main competitor, Spotify, was only 20% in 2017. In addition, Apple plans to spend $1 billion to develop original video content, but these programs will not be charged on AppleTV (Apple TV) devices. In 2017, the so-called contribution profit of Netflix streaming media -- the company used to measure the profit margin index of this market segment -- reached 37%. Odonnell said, look at what Netflix and Amazon are doing. These companies have invested hundreds of millions of dollars or billions of dollars in content. (Liu Chun)