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Apple: Wow, thanks for the $10bn-a-year App Store. We'll be on the beach with our 30%

Revenue from software souk set to crush iPods in 2014

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Apple claims its App Store racked up $10bn in sales in 2013.

And in December alone, the online shop brought in $1bn in revenue and dished out three billion downloads, we're told.

"We’d like to thank our customers for making 2013 the best year ever for the App Store,” Eddy Cue, Apple's senior vice-president of internet software and services, said today. We note that there are no figures for 2012 to compare against the year gone.

Developers of iOS apps submit their gear to the store, set their own prices, charge for in-app purchases, and keep 70 per cent of the revenue. That means, according to Apple's figure for last year, $7bn went into programmers' pockets, leaving $3bn for the iThing maker.

By contrast, the company's annual 10-K filing to US financial watchdog the SEC declared that iPhone hardware sales for the 12 months to September 28 hit $91.28bn; iPads raked in $31.98bn; and "iTunes, software and services" collected $16.05bn.

The vast majority of App Store downloads are free – the rest costing a few bucks apiece [PDF] – so given that iPhones start from $199 a throw, it's not surprising to see phone and tablet sales dwarfing the App Store. After all, hardware is expensive to design, manufacture and distribute, and Cupertino's margins are legendary.

But even though the software bazaar is way down the list, in terms of revenue, it's a moneymaking machine: Apple estimates that since its launch in 2008, the App Store has paid out more than $15bn to iOS developers from $21.4bn total revenue. That means it's generated $6.4bn for Cupertino in five and a half years, or $1.16bn every 12 months – minus the costs of hosting and managing the service.

Given this incoming tide of cash, we expect the App Store to outperform, or at least match, the entire iPod line in 2014: sales of the pocket music players dropped to $4bn in the 2013 financial year.

Meanwhile, arch-rival Amazon, in a bitter fight against Apple's App Store, is apparently taking a small hit on its Kindle tablets sales in hopes of flooding the market with cheaper gear and making its money back by flogging software and ebooks. ®

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