Apple Inc. (AAPL) Plans To Bring Down The Cut Percentage Of 30% For Developers

Apple Inc. (NASDAQ:AAPL) is working out a strategy that could see the company taking a smaller cut of revenue from iOS developers. The report about App Store revenue reforms comes just as Apple starts meeting with developers from across the world under the auspices of the WWDC. Apple’s cut of App Store revenue generated nearly $4 billion for the company last year.

 Since the launch of iOS in 2008, Apple Inc. (NASDAQ:AAPL) has been taking a 30% cut on revenue made by app developers on its iOS platform. The company said it paid out $10 billion to developers last year, possibly taking $4 billion for itself that year for simply operating the App Store. Developing apps for the App Store has generated a total of $25 billion for developers since the platform was introduced.

Apple is ready to take a smaller cut so that developers can enjoy a larger percentage of the revenue they generate through the Apple Store. The company has reportedly been engaging developers like Time Inc (NYSE:TIME), Netflix, Inc. (NASDAQ:NFLX) and Spotify in talks that are likely to yield App Store revenue sharing reforms.

Unanswered questions

What remains unclear is what percentage of revenue Apple Inc. (NASDAQ:AAPL) will take in the new App Store revenue sharing dispensation. Additionally, it is cited that just a portion of App Store developers may benefit from the revenue reforms, but it remains unknown which companies will qualify for the larger revenue share.

Wooing developers

However, what seems clear is that with the App Store revenue sharing reforms, Apple Inc. (NASDAQ:AAPL) is trying to give developers a reason to stick with it or defect rival platforms to join its network. Apple is battling stiff competition for developers from Google Inc (NASDAQ:GOOGL)’s Android platform.

Making a case for Chinese developers

At the WWDC, Apple Inc. (NASDAQ:AAPL) is expected to make a strong pitch for Chinese developers as the company tries to monetize the App Store in China. Although China is increasingly becoming a crucial iPhone market, beating the U.S. in revenue terms in Apple’s second quarter 2015, app revenue in the market remains pretty low. Apple wants to get more Chinese paying for apps, and that starts with getting them to appreciate the value of apps, which explains the reason to engage Chinese developers more closely.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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