View Full Version : Downloads Will Intensify Shine on Apple

Jan 17, 2006, 11:13 PM
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Category: Apple Services
Link: Downloads Will Intensify Shine on Apple (http://www.macbytes.com/link.php?sid=20060118001347)
Description:: For nearly three years, I've been writing that there are so many ways to win with Apple (AAPL:Nasdaq - commentary - research - Cramer's Take) and that iTunes will displace Wal-Mart (WMT:NYSE - commentary - research - Cramer's Take) as the largest retailer of music on the planet.

Posted on MacBytes.com (http://www.macbytes.com)
Approved by Mudbug

Jan 18, 2006, 08:00 AM
Even getting to 5% market share for Apple would entail nearly a doubling of its computer sales. Oh my, indeed.

Umm suposedly, according to Jobs they just reached that. How about 7%? That sounds like a better number. 7 by '07.

Jan 18, 2006, 03:00 PM
The problem with getting excited over itms sales is how much Apple actually makes from it. According to Jobs, its basically a breakeven venture, created just to move ipods. If Apple only makes .02 per song net, profit from the itms has almost zero impact on the bottomline.

Now I think that Apple makes more than that per song. I think that the itms has basically fixed costs and that above a certain volume, the margins ramp up. Unfortunately, since Apple doesn't really break out the numbers, its hard to figure out what that number is. But even if Apple's net jumps to .05/song, that only translates to 50 million on sales of 1 billion songs. Net margins would have to jump to .10/song to become materially significant.

Now in terms of mindshare, the itms is huge. Apple is now a major player in the music/media industry. And having the itms, iTunes, AAC, fairplay, quicktime, and the ipod become the industry standard is valuable in its own right.