Report: Apple Could Generate $40 Million Per Year in iWork for iPad

| News

Apple could be on pace to generate $40 million per year in sales of iWork apps for the iPad, according to some back-of-the-napkin math by The San Francisco Chronicle. The newspaper based its estimates on the rate in which other Top Ten productivity apps sell, a category where Pages, Numbers, and Keynote has claimed the top three positions since before the iPad even shipped.

The Chronicle’s points out that its numbers are rough and contain a lot of assumptions, but the base assumption based on numbers from other developers is that Apple is selling roughly 7,500 copies of each app on both weekend days, and 2,500 copies of each app per weekday. At $10 per app - an amount that Apple, alone of all the iPhone OS developers, keeps in its entirety - Apple is generating roughly $850,000 per week in revenue.

Obviously those numbers are based only on the initial U.S. market, and expanding global markets, growing iPad sales, seasonal issues, exchange rates, and other factors will have an impact on Apple’s sales going forward. In addition, this is a brand new market, and there’s no way of knowing if Apple’s early success with its iPad iWork apps will continue.

The newspaper made some salient observations about these numbers that we found interesting: For one thing, Google generates only $50 million per year in global revenue from its Google Docs business. It’s easily conceivable that Apple will surpass that mark for iWork sales for just one device, the iPad.

At the same time, even $100 million in revenue would be a relative drop in the bucket for Apple, whose annual revenue should surpass $50 billion for the first time in 2010. That said, at even $40 million, iWork would make Apple easily the largest iPad developers when measured by sales, and it’s likely that the $40 million will easily be highly profitable.

On the other hand, The Chronicle pointed out that Microsoft Office generated $4 billion in revenue and $2.6 billion in profit for Big Redmond in just the last quarter.



I love the back of the napkin math. So, let’s continue this out a bit.

Apple will sell maybe/hopefully 5-7 million iPads and generate this estimated $40 million. The profit margin on that per device is pretty nice, especially considering they’re also making the profit margin ON the device itself, which is approximately 50% or more depending on the model.

Google on the other had is making $50 million, makes no device, gets no revenue from a device. It’s their sole source of income from Google Docs.

Microsoft generates $4 billion in revenue working on 96% of the devices worldwide (approximately) for which I have NO idea if they’re getting revenue sharing or not. Only they know that. And not knowing exactly how many devices that is, getting a $/unit margin on that is virtually impossible.

So, all this means….it means you can’t compare Apples to oranges.
But if Apple continues to expand the use of iWork apps to other devices (just imagine it on the iPhone or iPod Touch!), it’s not like they have any real work to do to enable it. A few minor tweaks and voila.

Have a great day y’all.

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