Downloads Will Intensify Shine on Apple

Discussion in ' News Discussion' started by MacBytes, Jan 17, 2006.

  1. macrumors bot

    Jul 5, 2003


    Category: Apple Services
    Link: Downloads Will Intensify Shine on Apple
    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.

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  2. macrumors 603


    Jun 19, 2003
    Chicago, IL
    Umm suposedly, according to Jobs they just reached that. How about 7%? That sounds like a better number. 7 by '07.
  3. macrumors 6502a

    Aug 13, 2002
    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.

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