What Apple Makes

Posted in Apple, Media, Tech at 3 pm

It seems that a lot of people are missing a fundamental aspect of what Apple sells. Simply put, Apple Profits on What Apple Physically Makes.

Anything that Apple licenses to sell through iTunes, or Apps they sell on behalf of third party developers are ancillary to what they manufacture. Apple will be profitable based on what their own physical products are worth in the market. Everything else is a break-even proposition. Look at Mac OS X or iOS and you’ll see that Apple nearly gives them away. The iLife suite is nearly free as is the iWork software. Even the Pro tools like Final Cut and Logic are deeply discounted from just a few years ago, taking down the prices of entire software categories in their wake. Someone call Kevin Kelly.

Apple makes money by selling high-end products. They sustain the rest of their digital ecosystem with just enough to get by, and little more.

Amazon and Netflix are only profiting what other companies own. If and when those companies learn to sell this material themselves, they will go away. Amazon is not just selling media that other people make. Excepting the Kindles, the company re-sells other companies’ products.

Netflix is already on the knife’s edge of failing due to their ‘partners’ pulling out of the licensing contracts. A pure digital play when they don’t own the digits. They may be able to coast along on the back of hardware that has them built-in, but even on those devices (Roku, Apple TV, PlayStation) Netflix is “just another app” that can be turned off at will.

Apple has done a smart thing by making their own destiny. If someone else figures out a better way to sell movies or music or apps, then all the better for Apple since it will allow them to focus on what’s making them money: their hardware. What they make.

RSS feed for comments on this post · TrackBack URL

Leave a Comment