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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-...

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.

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.

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.

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.

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.

  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.

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?

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

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.

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?

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

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%

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...

As a shareholder, this is super fantastic.

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.