Margin Call
by zdw on 2/1/2026, 9:33:02 PM
https://asymco.com/2026/02/01/margin-call-3/
Comments
by: benoau
Not a huge surprise, there's an iCloud antitrust alleging a 78% gross profit margin:<p><a href="https://storage.courtlistener.com/recap/gov.uscourts.cand.425656/gov.uscourts.cand.425656.1.0.pdf" rel="nofollow">https://storage.courtlistener.com/recap/gov.uscourts.cand.42...</a><p>The Epic legal case ruling cites a 75% profit margin on App Store fees:<p><a href="https://storage.courtlistener.com/recap/gov.uscourts.cand.364265/gov.uscourts.cand.364265.812.0_3.pdf" rel="nofollow">https://storage.courtlistener.com/recap/gov.uscourts.cand.36...</a><p>And of course, their 36% share of Google Ad revenue revealed in Google's antitrust has to be approximately 100% profit:<p><a href="https://www.cnbc.com/2023/11/14/google-pays-apple-36percent-of-safari-search-revenue-sundar-pichai.html" rel="nofollow">https://www.cnbc.com/2023/11/14/google-pays-apple-36percent-...</a>
2/1/2026, 9:53:00 PM
by: zmmmmm
Somehow Apple maintains this perception that they make money on the hardware and therefore are trustworthy because they don't have any interests hostile to their users.<p>But when you look at what's really happening it's clear - they have a highly hostile interest to their users - they want to lock them into the ecosystem and then rent seek like crazy on services that their users have almost no choice but to buy.<p>This is why I love Apple products but I only buy the open ones that leave me choice to do what I want - which pretty much means I'm only buying Macbooks these days.
2/1/2026, 10:29:28 PM
by: marcusestes
That's too much margin. They're trading net profits for user happiness and it's hurting their brand more than they understand. The app store cartel must fall.
2/1/2026, 9:50:42 PM
by: TacticalCoder
Ah. We had:<p>Margin call (the term):<p><a href="https://en.wikipedia.org/wiki/Margin_(finance)#Margin_call" rel="nofollow">https://en.wikipedia.org/wiki/Margin_(finance)#Margin_call</a><p>Margin Call (the good movie):<p><a href="https://en.wikipedia.org/wiki/Margin_Call" rel="nofollow">https://en.wikipedia.org/wiki/Margin_Call</a><p>I guess now we have "Margin Call", the one page long blog entry.
2/2/2026, 12:26:25 AM
by: caminante
You're editorializing the headline, aside from your vague phrasing for "margin" (actually gross margin) and "Services [segment]" which has had gross margins >66% since FY20.<p>Better to reflect the actual headline and then add a comment.<p>edit:<p>This is the SaaS division. Similar at GOOG, MSFT, CRM, etc. have similar gross margins.
2/1/2026, 9:52:39 PM
by: runako
I think comments focusing on the App Store are way off base.<p>Unless my household is a wild outlier, I would expect the vast majority of services revenue to be Apple One and similar. You need more cloud storage to backup your photos, you get Music and TV with it. Even many folks who don't do Apple One will end up paying for some amount of iCloud storage.<p>Yes, renting cloud storage at scale to consumers can be very profitable. BackBlaze is not as scaled, and doesn't have the platform tie, and achieves a 60% gross margin.
2/1/2026, 10:22:40 PM
by: raincole
Why do people even calculate or care the gross margin percentage outside of manufacturing and retailing?<p>I genuinely fail to see why and how it's a number with any meaning. For example, a plumber fixed your house's pipe. He charged mostly for his time instead of the tools and materials he used (righteously). If you count his 'gross margin percentage' it might be higher than Apple. Does it mean anything?
2/1/2026, 10:23:46 PM
by: mrtksn
This screams huge potential for dividing the internet into localities due to new geopolitical situation.<p>Europe accounts for over %26 of the revenue, for $30B thats close to ~$8B for the last 3 months.<p>The thing about hegemons is that they are able to enforce things like breaking the network effect or demolishing the walls of walled gardens. If things get bad enough, EU can give Apple a choice: leave EU market and loose all your EU revenue which is %26 of all revenue or as big as %65 of the US revenue OR unlock your devices %100 to be usable with 3rd party services. Put in numbers, definitely loose $38B per quarter or possibly loose $8B per quarter.<p>I bet with %76.5 margin which translates to potential $2B profit per month and employment for thousands of high paying jobs, this will create enough greed to push for 3rd party local services investment. Anti-Americanism, national security concerns, pricing and better services(Apple's some services can be better) or even maybe bad due to war/political meddling can push Apple's services revenue to 3rd parties. Also, there's quite a bit unemployed American talent out there so with EU's push they can move to EU and eat Apple's service revenue.<p>That's a bit on the fantasy realm but considering that so many unthinkable things are happening these days, maybe US will threaten France and bring a carrier strike group to Normandy shores and US services revenues from EU will go to zero? There's definitely will among the people for that, just the politicians need some push.
2/1/2026, 10:17:22 PM
by: marstall
yet tim cook still feels the need to attend the melania premiere
2/1/2026, 10:47:58 PM
by: didip
As a shareholder, this is super fantastic.
2/1/2026, 10:34:25 PM
by: gigatexal
Yea. I saw that too. One day all the hardware will be loss leaders for services revenues.
2/1/2026, 9:53:46 PM
by: zer00eyz
For some context:<p>Nvidia: GAAP and non-GAAP gross margins are expected to be 74.8% and 75.0%,<p>Micron: MU (Micron Technology) Gross Margin % as of today (January 28, 2026) is 56.04%
2/1/2026, 10:50:58 PM
by: behnamoh
I wonder how AI can disrupt this nasty business by teaching users how they can self-host much of those services and save $$$. Let's face it: for the normies out there, the idea of having "your own iCloud" is still daunting (albeit very much possible).<p>Can AI level the playing field between users and greedy firms like Apple?
2/1/2026, 10:09:09 PM
by: troupo
Upton Sinclair coined the oft-cited maxim “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” I propose a corollary: It is difficult to get a company to see that certain of its core competencies[1] are in severe decline[2] when the company is making more money than ever.<p><a href="https://daringfireball.net/linked/2026/01/30/apple-reports-record-breaking-revenue-and-profit-for-q1-fy26" rel="nofollow">https://daringfireball.net/linked/2026/01/30/apple-reports-r...</a><p>[1] <a href="https://daringfireball.net/2026/01/resizing_windows_macos_26" rel="nofollow">https://daringfireball.net/2026/01/resizing_windows_macos_26</a><p>[2] <a href="https://daringfireball.net/2025/03/something_is_rotten_in_the_state_of_cupertino" rel="nofollow">https://daringfireball.net/2025/03/something_is_rotten_in_th...</a>
2/1/2026, 10:11:55 PM