Apple Inc. (AAPL) App Store Profit May Be More Modest Than You Think

Apple Inc. (AAPL) App Store Profit May Be More Modest Than You Think

Apple Inc. (NASDAQ:AAPL)’s App Store might not be bringing in as high a profit for the company as you might think. Last week reports indicated that Apple Inc. (NASDAQ:AAPL) captured 74 percent of mobile app revenue during the first quarter. However, we don’t know just how much revenue that amounted to.

Apple Inc. (AAPL) App Store Profit May Be More Modest Than You Think

A report in The Wall Street Journal indicates that in spite of that high number, sales are actually quite modest. Author Rolfe Winkler used Pandora Media Inc (NYSE:P)’s app sales as a guide for how much Apple Inc (NASDAQ:AAPL) and its closest competitor Google Inc (NASDAQ:GOOG) bring in through app sales.

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Pandora Media Inc (NYSE:P) offers an app that’s free to download, although users who don’t want to listen to ads along with their music can pay a subscription fee. According to Winkler, Pandora’s subscription sales for the quarter ending in January added up to approximately $16 million, with about 80 percent coming from mobile devices. He said that 80 percent corresponds to how much more time users spend on their mobile devices rather than desktop PCs.

The majority of that subscription revenue came through Apple Inc. (NASDAQ:AAPL)’s App Store because it only started offering its app on Android about halfway through the January quarter. Apple Inc. (NASDAQ:AAPL) takes 30 percent of the App Store sales, so that would only be about $3 million from Pandora’s app alone during the last quarter, even though Pandora is one of the App Store’s top-selling apps.

And there are other indications that sales from the App Store are rather modest. CEO Tim Cook said back in January, that since the App Store opened in 2008, Apple only paid about $8 billion to developers. The company’s cut from that is approximately $3.4 billion over five years, compared to the $31 billion the company earned from selling iPhones during the last quarter.

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