Horace Dediu/Asymco

Asymco’s Horace Dediu has done the math and come up with a number: About $40 per year, on average. Seem low to you? Does to me, but that’s from my own cord-cutter perspective. But taken together with all gross content revenues — including services & software — Apple’s iTunes business cleared over $5.5 billion in the last quarter (Caveat 1:That big number is as large as it is thanks to significant growth in app sales; Caveat 2: iTunes’ sales growth may be slowing).

Not bad for what Apple conceived as a “break-even” business, one that it doesn’t yet view as a leg on its three-legged stool. Perhaps it’s time for the company to upgrade that analogy to four-legged chair — or throw in the iPad as well and make it a recliner …

Horace Dediu/Asymco

While Apple’s margins on music, video, book and app sales through iTunes remain in the low single digits, the margins on software like the iWork and iLife suites, Final Cut Pro, Aperture and the like are much higher.

Now that Apple has folded its software group into iTunes, those products — which were once sold as boxed software — are sold though the Mac App and iTunes App stores. And, as Asymco’s Horace Dediu notes, that has significant implications for iTunes margins.

Dediu figures that Apple-made software sales were about $3.6 billion in 2012. If Apple’s profit margins on those sales is in line with industry norms — about 50 percent — then the profit margin for the iTunes business overall increases to the point where it’s no longer simply breaking even. Said Dediu, “iTunes inclusive of Apple’s own software generates as much as 15 percent operating margin on gross revenue.”

According to Dediu, iTunes had $13.5 billion in revenue in 2012; 15 percent of that is a little more than $2 billion.

Hell of a way to break even.

Apple and Samsung tower over the fortunes for software-only Microsoft or service-oriented Google and Amazon. Although all companies are growing, the value, as defined by the buyer, resides in the whole product.

– From Horace Dediu, writing about hardware and the “value chain evolution” in the tech industry

“Google buys Motorola for its patents.” How is that working out?

–Horace Dediu, via Twitter

That’s an aggressive price cut for a flagship smartphone, particularly one newly launched. What’s the rationale for it? Nokia insists that the halving of the Lumia 900’s price is simply part of its standard smartphone life cycle. “This move is a normal strategy,” said a company spokesperson. “It allows a broader consumer base to buy this flagship device at a more accessible price.”

Perhaps, but clearly there are other things at work here as well.

Microsoft said last month that while the Lumia 900 is upgradable to Windows Phone 7.8, it does not support the company’s forthcoming Windows Phone 8 operating system, which is expected this fall. In other words, Microsoft has effectively declared the device obsolete. Windows Phone 7 is a solid OS, but the announcement that the Lumia 900 can’t run its successor has almost certainly slowed its sales.

And those sales weren’t so great to begin with. Though they seemed strong initially, recent analysis suggests sales have slowed significantly. Extrapolating from smartphone market data compiled by comScore and Nielsen last week, Asymco’s Horace Dediu figured that Nokia may have sold fewer than 350,000 Lumia 900s in the U.S. If that’s accurate, Nokia presumably has a sizable inventory of the device that it needs to get rid of while it still can. Halving the Lumia 900’s price is obviously a good way of doing that.

Nokia reports second-quarter earnings on Thursday, following an ugly financial decline that has left its shares trading at a 16-year low.

GigaOm, referencing a UBS research note, points out that $900 million will go into Apple’s retail outlets. The company says it will open another 40 stores in the next year.

Apple is vague, of course, about where the rest of the $7.1 billion will go, but references “product tooling and manufacturing process equipment, and corporate facilities and infrastructure, including information systems hardware, software and enhancements.”

So: Lots of places.

It’s tempting to assume that the bulk of the money goes into more iCloud projects, like its North Carolina data center. And we do know, for instance, that Apple is now building a giant solar farm to help power that data center.

But Apple really isn’t in the habit of hand-tipping, and all we really know is that $7.1 billion is a lot more than $4 billion, which is what Apple spent on non-retail capex last year.

Alternate reading: Aysmco’s Horace Dediu.

Nokia spends about five times as much on mobile R&D as Apple. In fact, Nokia has nearly as many engineers working on its smartphone software platforms as Apple does for its entire product line. Says Dediu, “Symbian alone may cost twice as much to develop than the iPhone (including the hardware).”

A shocking metric, if correct. And a pretty dismal return on investment–unless there’s another version of Symbian in the pipeline that will best iOS.

PREVIOUSLY:

• Not Seeing Much Return on That Massive R&D Spend, Are You, Nokia?
• Nokia: Big and Slow

Indeed. What was it Bill Gates said about the iPad? “It’s a nice reader, but there’s nothing on the iPad I look at and say, ‘Oh, I wish Microsoft had done it.’”

Mmhmm.