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Happy Birthday iTunes Store

Apr 29, ’13 1:39 PM

iTunes (including software and services) revenues in Q1 topped $4 billion and were 30% higher than (re-stated) 2012 Q1 revenues. Accompanying this revenue figure were additional data points from the company:

  • Cumulative app downloads have surpassed 45 billion
  • Payments to developers reached a cumulative total of $9 billion
  • Payments to developers were $4.5 billion in most recent four quarters
  • Now paying $1 billion to developers every quarter
  • 800 apps are downloaded every second
  • iOS app revenues doubled since year-ago quarter
  • App Store accounted for 74% of all app sales in the quarter (citing Canalys)
  • App stores reach customers in 155 countries (850k Apps, 350k iPad apps)
  • iTunes music downloads are available in 119 countries (35 million songs)
  • Movies are sold in 109 countries (60k titles)
  • iBookstore is available in 155 countries (1.75 million titles)

This data allows for a few inferences:

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Margin call update: About those changes in service policies

Apr 26, ’13 1:23 PM

In the March quarter, our gross margin was 37.5%. It was at the low end of our range. We had a few items that on balance resulted in us reporting at the low end. They included mix, in particular, selling more iPads than we had planned, including getting iPad mini into our four- to six-week channel inventory range, some changes in our service policies that required us to make provisions for prior quarter sales, and we had some unfavorable adjustments.

- Peter Oppenheimer, Apple CFO, FQ2 2013 Earnings Conference Call

[my emphasis]

Thanks to Philip Elmer DeWitt for bringing this quote to my attention in the comments to Margin Call 2.

I was curious about the “changes in service policies” and what that might have meant, especially since they seem to have been retroactive (provisions for prior quarter sales).

The 10Q offers more details:

Accruals for product warranty for the three months ended March 30, 2013 include $414 million associated with product sales in prior fiscal periods reflecting the impact of changes to certain of the Company’s service policies and other estimated warranty costs. Of this amount, $224 million is associated with product sales in the first quarter of 2013, and the remainder is associated with product sales in 2012.

- Apple 10Q, Note 6, Page 17, second paragraph.

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Sponsor: Filepicker.io Cloud Connect APIs

Apr 25, ’13 3:16 PM

Develop Smarter, Simpler and Better Connected Apps with Javascript

Imagine connecting your app to everything with just 2 lines of code – files from all over the web, across cloud storage source, social networks and devices. Filepicker.io provides a full file system API for your web and mobile applications that allows your app to upload, open, read, write, store, sync and convert files from over 17 sources including Dropbox, Google Docs, Facebook, Skydrive and Box.

With the Filepicker.io Javascript API, request a file and receive a simplified URL. Then, upload the URL to your server or serve through your CDN. Filepicker.io includes a customizable drop-in UI widget and an API library allowing you to send uploaded files directly to your S3. Sign up for Filepicker.io today!

Sponsorship by The Syndicate

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Margin Call 2

Apr 25, ’13 9:38 AM

I expected Apple’s margins to improve  last quarter. They didn’t and so the question I needed to answer is why. Here is a history of Apple’s gross margin and operating margin as reported since late 2005:

Screen Shot 2013-04-25 at 4-25-9.26.53 AM

For a company selling hardware these are extraordinarily high margins. They are higher than those of Google and have narrowed the gap with Microsoft,  neither of which has a high proportion of hardware sales:

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Asymco Workshops Australia 2013

Apr 24, ’13 12:13 PM

Screen Shot 2013-04-24 at 4-24-6.38.35 PM

I will be in Australia in May and thought to invite local readers to join me for a few hours of in-depth discussion on the future of our industry.

I plan to have an event in Sydney on the 3rd in the morning (9:00 to noon at the Radisson Blu 27 O’Connell. Press Room) and in Melbourne on the 6th in the afternoon (1:30 to 4:30 PM at Victoria University City Flinders Campus: Level 12, Function Room 4, 300 Flinders Street, Melbourne, VIC, 3000).

Nominally, the topic will be: The history and future of computing using disruptive analysis.

I will present recent material (including the latest data from Apple) and we will have a few hours of Q&A.

Tickets are $120 and seating will be limited to 100.

You can register here: Asymco Workshops Australia 2013.

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