iWork suite for iPad projected to earn Apple $40M a year

Posted:
in Current Mac Hardware edited January 2014
A "rough" estimate of sales of the iWork suite of applications for the iPad predicts that Apple could reach more than $40 million a year in sales of its mobile office software.



Silicon Alley Insider on Monday suggested that Apple has already earned more than $3 million in sales from Pages, Keynote and Numbers, which cost $10 each. That total was based on discussions with developers who have had applications in the top 10.



The report assumes that a top paid iPad application sells about 7,500 copies on a Saturday or Sunday, and about 2,500 on a weekday. Since the iPad debuted in early April, the three iWork applications have remained among the top selling software on the App Store. And priced at $10 each, the applications have also paved the way for other software to have a higher price than the bargain $0.99 applications that dominate the App Store for the iPhone and iPod touch.



With estimated revenue of $825,000 per week, that works out to more than $40 million a year earned from the three applications, assuming sales maintain the same pace. Of course, sales could go higher too, as currently the iPad is only available in the U.S. Apple has just begun accepting preorders in nine additional countries in preparation for a May 28 launch. Nine more countries will have iPad availability come July.



"It shows there is a real appetite for serious apps on the iPad, a device that many have shrugged off as a toy," author Jay Yarow wrote. "It also suggests that Microsoft and Google may want to make sure their office suites -- whether Web-based or apps -- work well on the iPad."



For comparison, Silicon Alley Insider noted that Google generates about $50 million a year in sales from its Web-based office applications around the world, on a whole range of devices. The undisputed market leader, Microsoft, sells $4 billion of its Office suite each quarter, bringing in $2.6 billion of profit.







In addition to keeping all of the proceeds from its own applications, Apple also takes a 30 percent cut of paid software sold by third parties on the App Store. Apple has said that while the App Store has been very successful, it is not a big revenue generator for the Cupertino, Calif., company.



While iWork for the iPad has had a strong start, Apple has also found success with its iWork suite on the desktop, which saw a 50 percent increase in sales in 2009. The sales spike was credited to the $169 box set that includes Mac OS X 10.6 Snow Leopard, iWork and iLife.





The figure was estimated by SAI using sales reports by other top ten developers, and makes lots of assumptions about the run rate of app sales. It doesn't figure in the iPad's international expansion or the potential for iPad sales to either level off after satiating demand, or expand dramatically over the course of the year.



Software sales a small part of Apple's revenues



Apple reported net software sales of $634 million in the first calendar quarter of 2010, or roughly $2.4 billion per year, making software sales and particularly the $10 iWork apps a very minor part of the company's overall business, now reaching toward $50 billion in revenues. Still, Apple's ability to deliver its multitouch productivity suite on time at the iPad launch, and its decision to take on that task itself, indicate an interesting new direction for the company.



Apple's reported earnings for software sales include Mac OS X and its own applications, sales of third party software, as well as sales of AppleCare, MobileMe and other Internet services.



In contrast to its $634 million in quarterly software sales, Apple reported $3.8 billion in Mac hardware sales, $1.9 billion in iPod sales, $5.4 billion in iPhone sales, and $472 million in peripheral sales in the first quarter. Apple also reported quarterly sales of $1.3 billion in "other music related products and services," which includes iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories.



Sales of iWork apps for iPad are therefore likely to be included in the company's reports for "other music related products and services" rather than being grouped in with its conventional retail software earnings.
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Comments

  • Reply 1 of 37
    foo2foo2 Posts: 1,077member
    Just shows to go that the big money isn't in the software itself, although the software is necessary to drive the sales of hardware.
  • Reply 2 of 37
    stevetimstevetim Posts: 482member
    Quote:
    Originally Posted by Foo2 View Post


    Just shows to go that the big money isn't in the software itself, although the software is necessary to drive the sales of hardware.



    Yes, the iWork suite also gives the device credibility. 40 Million is petty cash for a company as big as apple.



    Wow 4 billion a quarter revenue for office! Not sure if 40 million is attractive enough for them to enter the app store any time soon.
  • Reply 3 of 37
    therobintherobin Posts: 11member
    These number seem WAY LOW to me:



    I can see Apple selling 15-20 million iPads per year. I can also see 50% or more users eventually buying iWorks because it makes the iPad so much more versatile (and laptop-like).



    This translates to $225-300 million per year.



    Add to this the inevitable major upgraded versions (most likely not free) and you have the potential for many times more income than this "Silicon Alley Insider" has predicted.
  • Reply 4 of 37
    dcj001dcj001 Posts: 301member
    Why is it that AppleInsider's home page is being overwhelmed by flash based advertising that takes up over half of the width of the home page?
  • Reply 5 of 37
    stevetimstevetim Posts: 482member
    Quote:
    Originally Posted by DCJ001 View Post


    Why is it that AppleInsider's home page is being overwhelmed by flash based advertising that takes up over half of the width of the home page?



    they dropped horizontal flash ads into the space designed for verticle
  • Reply 6 of 37
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by DCJ001 View Post


    Why is it that AppleInsider's home page is being overwhelmed by flash based advertising that takes up over half of the width of the home page?



    HTML5 is broken
  • Reply 7 of 37
    SpamSandwichSpamSandwich Posts: 28,371member
    Now how about some serious Adobe apps for mobile workers?
  • Reply 8 of 37
    cgc0202cgc0202 Posts: 624member
    Yes, this will surely make a significant difference in the earnings of Apple. One of the reasons why its stock rose by almost 7.5%, as of this writing. Maybe if they itemize the Apple TV, it would have gone back to the record high of $270.



    CGC
  • Reply 9 of 37
    webheadwebhead Posts: 75member
    I don't care for the iWork apps (which I Love) being referred to as "mobile office software", sounds too much like Microsoft Office. Maybe I'm too picky. Why not mobile creative software, I don?t use iWork for office work at all, creative is where it?s at.
  • Reply 10 of 37
    dcj001dcj001 Posts: 301member
    Quote:
    Originally Posted by DCJ001 View Post


    Why is it that AppleInsider's home page is being overwhelmed by flash based advertising that takes up over half of the width of the home page?



    Quote:
    Originally Posted by stevetim View Post


    they dropped horizontal flash ads into the space designed for verticle



    Thanks for the response.



    But here's a more curious question:



    I went to their contact page at:



    http://www.appleinsider.com/contact.php



    Why were my e-mails to the editor and for submitting feedback regarding errors rejected as invalid e-mails?
  • Reply 11 of 37
    christopher126christopher126 Posts: 3,877member
    Quote:
    Originally Posted by DCJ001 View Post


    Why is it that AppleInsider's home page is being overwhelmed by flash based advertising that takes up over half of the width of the home page?



    I use ClicktoFlash...clicktoflash.com
  • Reply 12 of 37
    zoolookzoolook Posts: 657member
    It's just a shame iWork on the iPad is a pile of crap. Office HD is so much better.
  • Reply 13 of 37
    cgc0202cgc0202 Posts: 624member
    Quote:
    Originally Posted by Foo2 View Post


    Just shows to go that the big money isn't in the software itself, although the software is necessary to drive the sales of hardware.



    If I were Apple, they should invest more money, billions if needed to significantly improve iWorks or their Office suites so that it would not only be compatible with MS Office, but evenntually rival it.





    The focus would be to make it even more "feature efficient", i.e., avoid the bloat of the MS Office -- but still contain the essential features -- including spell check, scientific notation and mathematical equations, a separate library that will call a dictionary (online if in the internet), special characters database, etc.



    Moreover, they should improve upon the version offered in the iPad to correct issues raised by early users.





    Quote:
    Originally Posted by webhead View Post


    I don't care for the iWork apps (which I Love) being referred to as "mobile office software", sounds too much like Microsoft Office. Maybe I'm too picky. Why not mobile creative software, I don’t use iWork for office work at all, creative is where it’s at.



    You may not need it but many people use word processing expecially, a select group the "Presentation" and then spreadsheet. All three I use, especially word and speadsheet. I would gladly replace MS Office completely once the iWorks become more improved.



    Jf I were Apple, I would even consider giving it for free, as much as their iLife software is free (???) The iLife is also another area where the software could be improved even further, especially the iPhoto. If Apple would really want to compete further with Adobe, tbhey should include more "advanced" photo editing in the iPhoto.



    CGC
  • Reply 14 of 37
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by AppleInsider View Post


    The report assumes that a top paid iPad application sells about 7,500 copies on a Saturday or Sunday, and about 2,500 on a weekday. Since the iPad debuted in early April, the three iWork applications have remained among the top selling software on the App Store. And priced at $10 each, the applications have also paved the way for other software to have a higher price than the bargain $0.99 applications that dominate the App Store for the iPhone and iPod touch.



    With estimated revenue of $825,000 per week, that works out to more than $40 million a year earned from the three applications, assuming sales maintain the same pace. Of course, sales could go higher too, as currently the iPad is only available in the U.S. Apple has just begun accepting preorders in nine additional countries in preparation for a May 28 launch. Nine more countries will have iPad availability come July.



    People who don't understand business finances shouldn't be writing about them.



    That number (even if all your guesses is correct) is REVENUE, not EARNINGS. You start with revenue. Then you subtract all the direct costs (mostly hosting costs in this case). Then you subtract all the indirect costs (marketing, product development, support, admin overhead, etc). Whatever remains is earnings. Clearly, that's a much, much smaller number than the revenues number you're citing.



    In fact, it wouldn't surprise me if Apple doesn't show ANY profit (earnings) on $40 M in sales for this product.



    Quote:
    Originally Posted by DCJ001 View Post


    Why is it that AppleInsider's home page is being overwhelmed by flash based advertising that takes up over half of the width of the home page?



    Because they're click wh**es. I really miss the days when the Internet was about offering a service to our customers or providing information rather than making all your money on advertising.
  • Reply 15 of 37
    Someone explain to me how Google makes money off of Google Docs, which I assume is what we're talking about?



    No really, I want to know how they are making money. Search and ads are one thing, but all this free stuff? I don't see ads in Google Docs.
  • Reply 16 of 37
    stevetimstevetim Posts: 482member
    Quote:
    Originally Posted by MightySpitz View Post


    Someone explain to me how Google makes money off of Google Docs, which I assume is what we're talking about?



    No really, I want to know how they are making money. Search and ads are one thing, but all this free stuff? I don't see ads in Google Docs.



    They give free to consumer market and sell to business at a nominal rate.
  • Reply 17 of 37
    bowserbowser Posts: 89member
    I checked out the iWork apps for iPad last week, and for the usage I'd have, they don't cut the mustard (keynote anyway).



    The capabilities of the iPad version just aren't comparable to the Mac OS version that I use daily for teaching. While I don't make use of a lot of the fancy transitions and the like, I do use presenter notes all the time, which aren't supported on the iPad version.



    Also, the iPad itself can't simultaneously do video out of the presentation and show the presenter display on the iPad because of its video processor limitations. Once it can do that I'll be much more likely to buy one.



    Here's waiting until V2 to see if they get it right.
  • Reply 18 of 37
    stevetimstevetim Posts: 482member
    Quote:
    Originally Posted by Zoolook View Post


    It's just a shame iWork on the iPad is a pile of crap. Office HD is so much better.



    People who have bought it only give it 2.5 stars. Can you tell me why it is better before I plunk over the $8.
  • Reply 19 of 37
    stuffestuffe Posts: 391member
    Quote:
    Originally Posted by stevetim View Post


    People who have bought it only give it 2.5 stars. Can you tell me why it is better before I plunk over the $8.



    Because people have unrealistic expectations for a piece of V1 software that is priced less than most shareware.
  • Reply 20 of 37
    zoolookzoolook Posts: 657member
    Quote:
    Originally Posted by stevetim View Post


    People who have bought it only give it 2.5 stars. Can you tell me why it is better before I plunk over the $8.



    2 main reasons



    1) You can load and save files directly to iDisk in the cloud. Why you can't do that on iWork is baffling, given the $99 or $149 we pay for MobileMe.



    2) You can load and save files directly to googledocs.



    So on both services, you can open a file from MobileMe/Googledocs, edit it and resave. You can also move files from you iPad to either of those services, or vice versa AND you can load/save files on a LAN in the same way, and again move files from the iPad to your Mac or PC via WiFi. You can also load and save the files in native .doc and .xls rather than converting them to iWork format and then back again.



    With iWork, you can't do any of this... why anyone at Apple thought it'd be easier to drag documents into iTunes, sync, edit and then email them to someone (usually yourself) is anyone's guess.



    I am looking at the ratings now on my iPad (by most recent).



    5 Stars - 21

    4 Stars - 22

    3 stars - 35

    2 stars - 22

    1 star - 44



    Ordering by most critical, the one stars are all things like "doesn't support tables, no good for me" but the one comment that keeps coming up is the "save as" issue, which is a pain and will probably be fixed really soon. But one star for that? People are stupid.



    The Googledoc bug was fixed ages ago.
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