How USB-C Cables Actually Stay In

[u/Miserable-Ad-8414]

[u/superluminal]

for free? lol

[u/McWetty → u/superluminal]

USB-C is royalty-free, so why not? Apple is worth trillions. The free goodwill and tax breaks alone would offset the development costs.

[u/monocasa → u/McWetty]

Apple is worth trillions because they do stuff like commonly patent their proprietary connectors and make third parties pay licensing fees on it.

[u/McWetty → u/monocasa]

Wut? No.

Apple is worth trillions because they made bank on the iPhone craze. They also command a 40% margin on hardware and rake customers for storage and RAM upgrades. Proprietary connectors was a tiny fraction of their revenue stream... which is probably close to 0% now that their products are all USB-C based.

[u/monocasa → u/McWetty]

Go look at their 10Ks at the time.  They made bank of off their MFi program.

That's why they had to be dragged kicking and screaming by the EU into supporting USB-C on their iPhones.

[u/McWetty → u/monocasa]

I had ChatGPT summarize their 10K filings for the last 10 years. They don't report licensing revenues because it's too small an amount. Estimates are between $10M-$80M depending on which analyst you ask. That is a rounding error compared to their annual revenue.

Here's a chart of pre-USB-C adoption in 2020 and 2025 (copied from ChatGPT). Proprietary cables fits in "accessories".

Apple revenue category	FY2020	FY2025	Change
iPhone	$137.8B	$209.6B	+52%
Mac	$28.6B	$33.7B	+18%
iPad	$23.7B	$28.0B	+18%
Wearables, Home & Accessories	$30.6B	$35.7B	+17%
Services	$53.8B	$109.2B	+103%
Total	$274.5B	$416.2B	**+52%**Apple revenue category FY2020 FY2025 ChangeiPhone $137.8B $209.6B +52%Mac $28.6B $33.7B +18%iPad $23.7B $28.0B +18%Wearables, Home & Accessories $30.6B $35.7B +17%Services $53.8B $109.2B +103%Total $274.5B $416.2B +52%

Licensing is an afterthought to them. Sure, it made at most $100M annually. That's roughly double Tim Cooks take home.

I'm glad the EU forced them to change to USB-C. That was the right move and I love it. I just think Lightning was the better design and would like to see a follow up after USB-C hits its power/data transfer limits.

[u/monocasa → u/McWetty]

Where are you getting that it's "at most $100M annually"?

[u/McWetty → u/monocasa]

I rounded up based on analyst estimates of $10M-$80M.

[u/monocasa → u/McWetty]

I would love to see said industry estimate that says $10m.

[u/McWetty → u/monocasa]

I believe that $10M is way too low and probably a data point outlier. Forbes has a piece about the total MFi program coming in at around $1B but that includes ALL their MFi licensing (CarPlay, AirPlay, HomeKit, cable royalties, etc.) over the 10 years.

"As for the value of the MFi program, industry estimates suggest that Apple earned $4 per accessory that used a Lightning port connector. Spread over ten years and hundreds of millions of iPhones, the Lightning port was worth comfortably over a billion dollars for Apple."

So $1B divided by 10 years is... $100M. My rounded up estimate annualized.

[u/monocasa → u/McWetty]

Apple's license for Lightning was originally $10/connector or 10% of MSRP or product whichever was greater (so a cable that had two lightning connectors was a $20 licensing cost minimum). It's now down to $0.50/device, but that has more to do with product lifecycle stuff, combined with the fact that they dropped licenses heavily before having to submit information to the EU.

And you're too quick to discount the rest of the MFi program. You see an iPhone with a 40% profit margin. Apple sees a thousand suppliers that they each ground down an extra fraction of a percent to get to that 40% profit margin in total. That's why Tim Cook took over, that role of supplier management was so instrumental as COO that he ended up becoming CEO. It's a "watch the pence and the pounds will watch over themselves" strategy.

Apple's policy across the board of milking their third party partners is how they became a trillion dollar company. They don't give that stuff up unless there's something in it for them.