Jobs: Apple 'not going to make a lot of money' on iAd

Apple is "not going to make a lot of money" on its upcoming iAd mobile advertising network according to CEO Steve Jobs, who contends the effort is instead designed to improve the financial fortunes of the iPhone developer community. "People are using apps way more than they are using search," Jobs explained Tuesday during an appearance at The Wall Street Journal's D8 conference. "So if you want to make developers more money, you've got to get the ads into apps. But the mobile ads we've got today rip you out of the app." That "sucks," he added.

iAd could yield developer revenues reaching $825 million this year, according to a research note published in early May by Bernstein Research analyst Toni Sacconaghi. Estimating that iPhone developers presently generate $1 billion to $1.8 billion in annual App Store sales, Sacconaghi notes that iAd revenues will herald an annual increase between 40 percent and 80 percent. Sacconaghi anticipates Apple will collect about $815 million from iAd this year: $550 million from apps and $265 million from media providers like publishers and television networks. He adds Apple will generate roughly $58 billion in total worldwide sales this year.

In late April, The Wall Street Journal reported Apple is planning to charge close to $1 million dollars for mobile advertisements included in iPhone applications when iAd launches this summer. Citing ad executives briefed on the computing giant's plans, the Journal reports Apple could charge marketers as much as $10 million for inclusion in the first wave of iAd promotions when the service goes live on iPhone and iPod touch devices in June. By comparison, ad execs say they typically pay between $100,000 and $200,000 for similar mobile deals. The Journal adds that in addition to the exorbitant price tag, Apple is also demanding greater control over campaigns that run on the iPhone platform. Apple declined comment, but reiterated that developers will receive 60 percent of all iAd revenues, with Apple keeping the remaining 40 percent.

Jobs' D8 appearance also included additional thoughts on his decision to ban Adobe's Flash multimedia solution from the iPhone platform. "We didn't set out to have a war over Flash," Jobs said. "We made a technical decision. And it wasn't until the iPad that Adobe raised a stink. They came after us... That's why I wrote ‘Thoughts on Flash.' We were getting tired of being trashed by Adobe in the press... We don't think Flash makes a great product, so we're leaving it out. Instead, we're going to focus on technologies that are in ascendancy."

Also in the mix: Apple's iPad tablet. "I'll tell you a secret. It began with the tablet," Jobs said. "I had this idea about having a glass display, a multitouch display you could type on with your fingers. I asked our people about it. And six months later, they came back with this amazing display. And I gave it to one of our really brilliant UI guys. He got scrolling working and some other things, and I thought, ‘My God, we can build a phone with this!' So we put the tablet aside, and we went to work on the iPhone."

For more on Jobs' D8 comments:
- read this AllThingsD article

Related articles:
Apple's iAd could generate $825 million for developers this year
Apple to demand $1 million for iPhone mobile ads
Apple tempers revenue expectations for iAd's first year
Apple enters mobile ad space with iAd launch
Ads in apps signal Apple's next revolution