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App Store Not Profitable for Apple, Only 19% of Software is Paid

Apple’s App Store may be a runaway success thanks to the quality of applications and incredible offerings we often take for granted, but Apple isn’t exactly profiting off the massive sales. Wall Street analyst Gene Munster says that of all the downloaded App Store applications, 81% are free. Of those paid for, the average selling price is $1.49.

Now keep in mind that apple takes a 30% cut of every paid purchase. However, Apple turns around and pays the credit card company a mandatory $.20 + 2% of the sale, then includes a %1 processing fee on top of that. Since the launch of the App Store, Apple has been speculated to earn 428 million dollars, with 189 million dollars left in gross profit (which is just 1% of Apple’s 33.7 billion in gross profit). Apple themselves have spent 81 million in maintaing the solidity of the App Store. If we figure in the fact that iOS devices attribute to 16.6 million sales per day, compared to 8.9 million downloads per day on the iTunes store, the numbers are rather astounding considering how little profit Apple is making in the grand scale of things.

An earlier report suggested that of the ten thousand applications in the iPad App Store on June 12th, 78% of those applications were paid. This suggest that premium content is either better sold on the iPad, or is more suitable for a device that’s capable of replacing your laptop or desktop machine. On a mobile handset, consumers expect pockets of content to be free, cheap, and widely available. Munster cites that the top thirty iPad applications average out to a selling price of $4.99.

[via AppleInsider]

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