Margin Call

https://asymco.com/2026/02/01/margin-call-3/

by zdw • 6 months ago

160 101 6 months ago

marcusestes2• 6 months ago

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.

aucisson_masque• 6 months ago

The competition is limited to android and Google is sabotaging every advantage they held against Apple. Customization is lost, freedom is lost, even the smartphones prices are now similar to iPhones. Pixels sell for premium price nowadays.

decimalenough• 6 months ago

The sad truth is the average user couldn't care less about "customization" (unless you're talking about background images), much less "freedom".

Pixel has always been the flagship and priced to match. Unlike Apple, there are plenty of Android phones at all price points.

irl_zebra2• 6 months ago

imo the app store thing is very niche and only affects a small, vocal group that tends to sit on hacker news and pay attention to these things. Can almost guarantee that 95% of the iphone-having population does not know/care about the app store "issue." I do think the general decline in quality and uptick in bugs will bite them slowly, at least once there's an iphone competitor of note.

marcusestes2• 6 months ago

It affects everyone, because the aggressive revenue cut prevents entire categories of apps and services from being published to the app store. An app store with a 5-10% cut would be an app store with a much richer choice of apps.

candiddevmike• 6 months ago

Most folks don't realize they're paying (up to) an extra 30% to Apple on everything they purchase in the app store. On top of an already exorbitant device price.

I'm sure you'd see more outrage if you had the app price listed without the fee, and then showed the fee below it/at time of purchase. It's another hidden fee.

dyauspitr• 6 months ago

I don’t even know what the “issue” is. I’m guessing it’s the 30% they take because it’s definitely not the quality and range of apps they offer.

SoftTalker• 6 months ago

I haven't ever purchased a single thing in the App Store or in-app so I guess I don't care. But it does seem like a monopoly and something that should be forced to allow competition.

esseph2• 6 months ago

at least once there's an iphone competitor of note.

What does this even mean? Do you mean in the US or globally?

By units sold, by platform, globally:

Android ~885 Million ~71%

iOS (iPhone) ~247 Million ~20%

HarmonyOS & Others ~118 Million ~9%

amelius• 6 months ago

That's what you get with shareholders ...

PunchyHamster• 6 months ago

It's a bit of Valve situation, the competition just refuses to make better product

benoau3• 6 months ago

No. The "competition" is artificially limited to buying an Android phone, and mobility between platforms can be very complicated, not by accident, while apps like Patreon can simply be forced to comply with massive fees even if it makes their service much more expensive.

Stripe, PayPal and a bag full of other payment options would be able to compete just fine with IAP and its fees.

crazygringo2• 6 months ago

What evidence is there that it's hurting their brand?

Outside of HN I see zero complaints. And the situation has been going on for a while. I might not like it, but it seems perfectly fine for their brand as far as I can tell.

latexr4• 6 months ago

I see a lot of complaints outside of HN. For starters, not every nerd, and not even every Apple nerd, is on HN. Outside of that, even my non-tech-savvy acquaintances have been complaining as of late.

Is it enough of a damaged brand to hurt their profits as of now? Clearly not. But cracks are forming. Apple’s brand isn’t damaged when they’re seen as bad, but when they’re seen as the same as everyone else.

raincole2• 6 months ago

hurting their brand more than they understand

Among perhaps the 1% super tech savvy users. I never heard anyone who wants to sideload apps outside online (not even from other programmers I know in real life. Ones who care like much always have been using rooted android from day 1.)

PlatoIsADisease5• 6 months ago

Brand name? Apple is a faux-Veblean good targeting lower middle class people, moms, and teens (Who pretend the $50/mo payments are expensive).

Its a demonstration of wealth.

no_wizard4• 6 months ago

I don't think the sell through of Android phones to the wealthiest has been all that high. Celebs, top business execs, even heads of nations state are most often seen with Apple devices in their hands.

I'm sure not in every case, but even as far back as 2018 the trend line of wealth and iPhone ownership was high. Even today most app store developers admit that iPhone users tend to have more disposable income by a good margin.

Really, when I do a cursory google search of wealthy public figures that include them holding their devices, what I can find is they're clearly holding iPhones most of the time.

arealaccount• 6 months ago

IMHO as a user I prefer purchasing via app store because it avoids all of the dark patterns companies use to prevent subscriptions or returns.

I get that it sucks that the honest folks have to pay a 30% fees

I'd be happy to pay a 30% premium on my app store purchases just for the ability to unsubscribe without dark patterns.

ebbi• 6 months ago

I like the fact that when deleting an app, it reminds you about existing subscriptions related to that app, and offers to take you to the subscriptions page to unsubscribe.

In saying that, I don't think I'm personally prepared to pay an additional 30% for that. It should just be what is expected as part of good business practice.

caminante6• 6 months ago

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.

Better to reflect the actual headline and then add a comment.

edit:

This is the SaaS division. Similar at GOOG, MSFT, CRM, etc. have similar gross margins.

BoredPositron3• 6 months ago

I don't understand what you want to say with your comment.

bilbo0s• 6 months ago

Meh.

On one level, it's fair.

If everyone has similar services margins, then it's, at one level, disingenuous to single out Apple.

At the same time, I have to say that, to my mind, the comment is whatabout-ism. Right now we're talking about Apple.

Maybe we can broaden the discussion? I'm fine with that. But we'd still be talking about Apple as part of that discussion.

caminante6• 6 months ago

Have you read the HN guidelines?

javawizard3• 6 months ago

The article and the submitted HN post both appear to have the same title to me: "Margin Call".

What are you talking about? Did one or the other have a different title when you wrote your comment?

caminante6• 6 months ago

Yes, an admin changed the headline.

Original headline was misleading and editorialized.

benoau3• 6 months ago

Not a huge surprise, there's an iCloud antitrust alleging a 78% gross profit margin:

https://storage.courtlistener.com/recap/gov.uscourts.cand.42...

The Epic legal case ruling cites a 75% profit margin on App Store fees:

https://storage.courtlistener.com/recap/gov.uscourts.cand.36...

And of course, their 36% share of Google Ad revenue revealed in Google's antitrust has to be approximately 100% profit:

https://www.cnbc.com/2023/11/14/google-pays-apple-36percent-...

jbverschoor• 6 months ago

Epic should take a look in the mirror first

benoau3• 6 months ago

They'd see a 200x smaller villain that didn't cause 1/2 the world to rewrite competition laws and has only been fined $100s of millions for deceiving consumers, not billions.

zaptrem• 6 months ago

What did Epic do?

echelon• 6 months ago

There are 1,000 ways to get games.

There are over two dozen gaming consoles.

Steam, GoG, Epic, Nintendo, Sony, Microsoft, retro games, in-store games, used games, rental games, you name it.

Literally a billion ways to game. And games are just TOYS. One of many hundreds of totally optional dopamine sinks.

Apple is one of two gatekeepers of the most essential device of modern humanity. They tax it, tightly control everything that happens on it, and edge out every business on it.

This needs to END. The DOJ/FTC/EU/etc. need to strip this from Apple and Google permanently. It's had vast deleterious effects on all innovation and business in the world.

You can't park in my city without a smartphone now.

You can't order food without a smartphone.

You can't bank.

You can't prove your identity on a loan.

Yet these two companies won't let you run your own software on a device you bought and own. They won't let any other businesses have any economic activity that isn't taxed. They force their search, their payment rails, and their customer relations and tracking hooks into everything.

Apple and Google are mega-monopolies and need to be rended apart. Not vertically, but horizontally: the DOJ should split Google into "Google A / Google B / Google C / Google D ..." and force them to compete with each other on all the same platform pieces. Just like they did with Ma Bell back in the day. And slap Apple around until they open up their platform and stop being the defaults for everything.

Call your legislators and demand hyperscaler monopoly breakup.

These companies own mobile internet. These companies own search and the web. They tax trademarks. They don't let you do what you want to do with tech you own. They're removing adblock and making it impossible to repair your stuff. They're shitting up the entire internet.

Epic is a puppy by comparison. They've done some lame things, but it pales in comparison.

collinmcnulty• 6 months ago

I’ve seen this argument in a couple places online. Some variation on “both are actually bad so little guy has no one to cheer for”. This misunderstands the system.

You can temporarily ally with the soulless corporation that happens to represent your interests right now even if you’re certain that if they had the chance, they’d be a monopolist themselves. They are using their corporate coffers to take action that helps level the playing field a bit, what an opportunity! Make the alliance, take the win, get the case law on the books, celebrate it.

If you ally only with angels, you fight alone.

CamperBob2• 6 months ago

https://en.wikipedia.org/wiki/And_you_are_lynching_Negroes

bsder• 6 months ago

"He did it, too" is an argument that 2 year old children make and should be accorded the commensurate amount of regard.

Decreasing the number of bad actors by one is is worthwhile even if ninety-nine still remain.

gigatexal2• 6 months ago

Yea. I saw that too. One day all the hardware will be loss leaders for services revenues.

kergonath2• 6 months ago

That would be a shame, because that’d put Apple’s interests completely at odds with mine. Using Linux would not be too much of a hurdle, but there aren’t really any better phones or tablets. I am not going to jump from the Apple pan into the Google fire.

gigatexal2• 6 months ago

Oh don’t get me wrong: I love the Apple hardware. It’s by far some of the best on the market. The attention to detail and workmanship is why I buy them. I just don’t know how they will avoid the push to move everything into services and only see hardware as a means to an end that end being more services revenue. They’ll become IBM then :(

1123581321• 6 months ago

Their hardware margin supposedly averages 40%. A 40+% price drop across the board would be a good outcome for a lot of their customers.

behnamoh• 6 months ago

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).

Can AI level the playing field between users and greedy firms like Apple?

brianwawok• 6 months ago

Nah. They won’t even know it’s a problem to solve.

latexr4• 6 months ago

Most users won’t ever use any AI outside of the big players, and those couldn’t give a flying fuck about user empowerment. They’ll just advertise at you and recommend whatever is popular. It’s unrealistic to believe AI will bring any kind of democratisation or software service independence to regular users.

doug_durham• 6 months ago

Most people don't have the time to "self host". I could easily self host, but I don't because it's not worth my time.

no_wizard4• 6 months ago

The bigger problem is the experience. There are some integrations you simply can't do that Apple and Google, as their respective owners of the platforms, can. Full device backups for instance.

jaccola• 6 months ago

What $$$?! The top tier of apple one is £36.95pm. If I spend 15 mins of time every month extra self hosting then it’s immediately not worth it. (Not to mention self hosting won’t be free).

Also, for that price I get: 2TB cloud storage,Apple TV,Apple Music,news,workouts,arcade most of which cannot be self hosted.

Economies of scale are real, it’s possible Apple makes a ton of money and the user is getting a good deal!

troupo• 6 months ago

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.

https://daringfireball.net/linked/2026/01/30/apple-reports-r...

[1] https://daringfireball.net/2026/01/resizing_windows_macos_26

[2] https://daringfireball.net/2025/03/something_is_rotten_in_th...

cyberax5• 6 months ago

I joked several years ago, that when a software company loses its way, it does UI refresh that makes everything bigger and removes features.

mrtksn• 6 months ago

This screams huge potential for dividing the internet into localities due to new geopolitical situation.

Europe accounts for over %26 of the revenue, for $30B thats close to ~$8B for the last 3 months.

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.

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.

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.

runako• 6 months ago

I think comments focusing on the App Store are way off base.

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.

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.

port11• 6 months ago

Even with ex-partner being on iOS and an amateur photographer, we never paid for more than a bit of storage. I don’t think I know anyone (or ever did) that paid for Apple TV, and I think all our acquaintances have Spotify (we don’t). People fully buying into the Apple ecosystem seem to be fewer in Europe.

So yes, the App Store fees are the problem/big revenue source for now?

raincole2• 6 months ago

Why do people even calculate or care the gross margin percentage outside of manufacturing and retailing?

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?

airstrike• 6 months ago

It doesn't mean anything because you're comparing the plumber with Apple, but if you compare plumbers to each other, or possibly even a plumber to an electrician, it could be useful.

Galanwe• 6 months ago

The plumber hourly wage is to be deducted from his margin. Just as Apple's costs for running the payment system and platform are deducted.

I genuinely don't know why and how it's a number with any meaning.

It has meaning in the context of Apple arguing that their fees are that high because they have to maintain said infrastructure.

Which leads to the question "how come there is no competition to lower such high margins?", which in turns questions whether any competition in unfairly blocked by Apple.

In a totally frictionless market, profit margins are usually low. Very high margins are often a sign of a closed market where _somehow_ competition cannot emerge.

zmmmmm• 6 months ago

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.

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.

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.

PlatoIsADisease5• 6 months ago

Walled Garden is marketing speak. Walled Prison is the reality.

Its always been like this, but I don't think their target demographic cares. I remember 10 years ago I heard something like: "Iphone, the phone your mom uses." Not that its accurate. Blows my mind VIPs use iphones after Pegasus.. How could these people be so unaware?

msy• 6 months ago

iPhones, particularly with the advanced security/hardening turned on are light years in front of Android devices for protection against advanced/sophisticated actors. Which is why VIPs use iPhones.

Apple responded to Pegasus with Lockdown Mode, which is probably the most hardcore security modality that's ever shipped in mass produced consumer hardware.

matthewaveryusa• 6 months ago

Can you elaborate? I own an iphone and pay for zero apple services. I imagine you’re thinking icloud? I have my phone backed up on the 5 gigs they give for free. photos is where data gets heavy. I previously ran things on google photos and paid, but recently moved to immich — either way it’s zero bucks for apple.

wrt hostility: they’re the most privacy focused phone provider out there (which is why they can’t produce an llm from user data)

ashdksnndck• 6 months ago

Are you buying apps in the App Store or paying for digital goods (eg. signing up for streaming services) through iOS apps? Apple charges a 15-30% rent on all of that.

Apple also tracks and charges for conversions on ads for mobile games (eg. purchasing lootboxes on clash of clans) which makes them direct competitors with the other big tech ad platforms.

jongjong• 6 months ago

Yes, Apple's "1984" advertisement is looking extremely ironic nowadays. Reality is stranger than fiction.

didip• 6 months ago

As a shareholder, this is super fantastic.

marstall• 6 months ago

yet tim cook still feels the need to attend the melania premiere

zer00eyz• 6 months ago

For some context:

Nvidia: GAAP and non-GAAP gross margins are expected to be 74.8% and 75.0%,

Micron: MU (Micron Technology) Gross Margin % as of today (January 28, 2026) is 56.04%

TacticalCoder• 6 months ago

Ah. We had:

Margin call (the term):

https://en.wikipedia.org/wiki/Margin_(finance)#Margin_call

Margin Call (the good movie):

https://en.wikipedia.org/wiki/Margin_Call

I guess now we have "Margin Call", the one page long blog entry.

walterbell• 6 months ago

  Products gross margin was 40.7%, up 450 basis points sequentially, driven by favorable mix and leverage.
  Services gross margin was 76.5%, up 120 basis points sequentially, driven by mix.

Apple is paying 50% more for memory, yet maintaining product margin thanks to reduced royalties to Qualcomm for cellular radios and Broadcom for WiFi radio. As more Apple devices switch over Apple modems, margins will increase.

Hardware OEM competitors will likely pay >50% more for memory and continue paying full price for Qualcomm and Broadcom radio IP.

ksec• 6 months ago

Not sure what is new here. It continues to baffles me most analyst still dont get it. ( They are usually not very good with commodity trading )

Actual cost of Apple Silicon is much lower than most expected. Apple has plenty of room to play with those Hardware R&D numbers. Not to mention Modem and Network Silicon.

Apple Services include R&D on Software, development cost of all OS and software shipped by default such as Numbers and Photos. That has been the case since 2014 and again has room for moving margins.

NAND and Memory price dont hit Apple (yet) because Apple sign early contract to ensure supply. Apple is the largest or 2nd largest Smartphone manufacture and if you include all computing devices they are likely number one. Smartphone, Tablet, MacBook and Servers. In commodity market such as NAND and DRAM, not having Apple as base load is equivalent to self destruction. They have a much higher leverage than most people imagine.

Judging from the increase of Active Devices, I would not be surprised if 2025 Google are paying even more to Apple on a per user Default Search engine price.

Apple has been steadily tightening up loops holes or grey area on IAP, especially in China with WeChat and Mini-Apps.

I have been wondering if Apple has increased the usage of Chinese Components for iPhone within China for import Tax deduction. Although no evidence so far have suggested China iPhone 17 are made with screens from BOE only.

I just wish Apple would spend more on fixing bugs.

Margin Call

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