Apple: Yes, It Makes Money On The App Store
There is widespread agreement that the Apple (AAPL) App Store has changed the face of the handset business, forcing other companies to scramble in a desperate attempt to keep up. At last count, Apple said over 1.8 billion apps had been downloaded …
Context & Ripple Effects
In May 2009, Lightspeed Venture Partners argued Apple had made no more than $20-45m from the App Store — pocket change against iPhone hardware margins. With this report, Apple pushes back directly: the store is a money-maker, not a loss-leader marketing expense, alongside confirmation that over 1.8 billion apps have been downloaded.
That framing matters because the store has already reshaped the handset market — Apple itself concedes rivals are scrambling to copy it — so whether the model pays its own way determines how hard competitors will chase it.
First-order effects
- Apple now has public cover to keep investing in the App Store as a standalone business rather than an accessory to iPhone sales, while its handset rivals' scramble to build competing stores gains urgency because the incumbent claims the model is profitable.
Second-order effects
- Rival handset makers and carriers building their own app storefronts will benchmark against Apple's take rate, turning app-store commissions into a visible pricing battleground rather than a hidden cost of selling phones.
Third-order effects
- If every major phone platform converges on a commission-based app store, the take rate becomes the industry's contested economic choke point — the structure that later debates over regulating platform commissions would attach to.
The trend: Smartphone platforms are consolidating around commission-based app stores as profit centers in their own right, with Apple setting the template rivals feel compelled to replicate.