Apple’s iOS profits are 2.3 times higher than Microsoft’s Windows profits

Tue, May 10, 2011

Analysis, Finance, News

By John Hiesler:

In an era where PC growth is declining, Apple is the lone company actually seeing an uptick in PC sales. More than that, because Apple offers a unique and non-commoditized experience, the margins it enjoys for each Mac sold is the envy of the entire industry. In the most recent quarter, Apple reported sales of 3.76 million Macs, a 28% increase from the same quarter in 2010.

As impressive as that is, the bulk of Apple’s profits these days are derived from iOS devices like the iPhone and iPod Touch. Indeed, iOS devices accounts for more than 75% of Apple’s profits while the Mac accounts for only 13%. If we take a step back and realize that the bulk of Apple’s profits come from products that didn’t even exist at this time 4 years ago, it really drives home how quickly Apple was able to capitalize on, if not create an entire market of advanced touch-based handheld devices.

So while companies like Microsoft continue to generate massive profits from antiquated Office code, Apple’s profits are from technological leaps that fundamentally shift the technological playing field.

Taking a look at some financial figures from both Apple and Microsoft, Horace Dediu of Asymco writes that while Microsoft revenue from Windows related sales were about twice as what Apple earned with the Mac, “iOS and OS X together enable 3.5 times the profits of Windows.”

Now sure, one could argue that you can’t lump together OS X and iOS and compare it to Windows, but the reality is that OS X and iOS are both differentiated software platforms meant to drive hardware sales. To that end, they’re really not all that different. Technically, they both run OS X at the core, and more than that, some of the more anticipated features from OS X Lion are shamelessly¬†borrowed directly from iOS. Apple has made no qualms about its intention to blur the lines between its desktop and mobile OS and so looking at each OS together arguably makes a lot more sense than looking at them as distinct entities.

And let’s say, just for argument’s sake, that we take the Mac out of the equation. That doesn’t fundamentally change much as iOS devices together generate 2.3 times as much profit as Windows does for Microsoft. Microsoft may still be the revenue king, but Apple has an uncanny way to eek out as much profit from its hardware and software combo as possible. As Apple’s marketshare in the mobile and desktop space continues to increase, and indeed it’s certainly not going down, Apple’s profits are only bound to increase.

  Share

, , , , , ,

1 Comments For This Post

  1. PhillyG Says:

    FAIL!!!

    Your graph shows that – even before the introduction of iOS – OSX (whatever that is: I thought OSX was the name of the iPhone OS before it was changed to iOS) accounted for around 50% of Apple’s profit. So where did the other 50% come from, and where did it go?

    The idea that some mystery platform that accounted for 55% of Apple profits in Q405 only accounted for 5% of Apple profits in Q410 would be a scoop for you, if only you could name that platform.

eXTReMe Tracker