New market analysis from Asymco claims that Apple’s iOS platform generates 2.3 times the amount of profit that Windows musters.
Apple’s Mac platform now accounts for just 13% of the company’s profit, 20% if software as part of the OS X franchise is included. However, iOS now accounts for more than 75% of Apple’s profit. The result is 96% of Apple’s profits are generated from OS X and iOS together. Apple’s Mac OS X profit hovered at around 50% between Q4 2005 and Q2 2008 before dropping steadily and reaching just 25% in Q4 2010.
The shift is an alleged example of the “post-PC era” that both Apple and Steve Jobs allude to. Microsoft’s Windows and Windows Live Division generated sales of $4.445 billion in the most recent quarter, with an operating income of $2.674 billion. Asymco claims that the Mac generates half the profits of Windows but that iOS generates 2.3 times Windows profits.
“The end of an era is the end of growth in one dominant business model,” said Asymco’s Horace Dediu. “The PC era was epitomized by the concentration of profits in a dominant operating system vendor. That growth has slowed if not ended. The post-PC era is being kicked off by a new business model where profits are being concentrated in a hardware+software+service integrator.”
However, Asymco’s figures do not combine profits from other PC makers including HP, Dell, Lenovo, Asus etc. Microsoft simply sells software to run on partner hardware, a different approach to Apple’s tight integration. IDC previously revealed that for every $1 that Microsoft makes, its partners generate $8.70 in revenue. If Microsoft had as much control over its ecosystem as Apple then its revenue would be considerably more. The report does highlight Apple’s massive gains and profits in its iPhone and iPad business though, ones that Microsoft will be hoping to compete against with its strong business partnerships. The software giant has inked tight deals with RIM and Nokia recently, both are struggling to compete against Apple and Google in the mobile smartphone market. Microsoft’s strategic partnerships will help the firm spread its Windows everywhere message and will ensure that any profitability from those partners efforts with Microsoft software will also earn Microsoft revenue.
Microsoft is also set to reveal its Tablet strategy fully in September. The company is planning to unveil its next-generation of Windows, set to run on ARM based chips. Microsoft is currently developing a touch centric user interface that is expected to run Windows Phone applications. The “Immersive” user experience that Microsoft is developing has leaked several times but has so far only shown a glimpse of what Microsoft is planning. Who really knows what September will bring?