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Apple itunes. John estimates gross margin from iTunes at about $900 million
from the 3 billion songs sold at the iTunes store to date. ...
... Apple's iTunes software "was good enough to persuade (HP) . . . to switch. ... Apple's
iTunes success was helped by the smash success of the iPod. ...
... A version of Apple's iTunes music store has been developed for the phone
so users can manage the tracks they store on it. Downloads ...
... A version of Apple's iTunes music store has been developed for the phone
so users can manage the tracks they store on it. Downloads ...
... A version of Apple's iTunes music store has been developed for the phone
so users can manage the tracks they store on it. Downloads ...
Submitted by baller420 on February 4, 2008
Category: Miscellaneous
Words: 366 | Pages: 2
Views: 124
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John estimates gross margin from iTunes at about $900 million from the 3 billion songs sold at the iTunes store to date. Our estimate just for FY07, which ends September 30, 2007 is that iTunes revenue just in this fiscal year is $2.1 billion, with gross margin of $630 million just in this fiscal year.
Just to put those numbers in perspective, it was only about three or four years ago that $600 million was a respectable gross margin number for Apple's entire business, Macs to iPods. And the $630 million in gross margin from the iTunes Store this year is about 1/4 of Amazon's gross profit for its entire business.
And the whole, "Amazon's DRM-free MP3s will give it an advantage over Apple's DRM-laden music," doesn't play either. 95% of consumers never experience Apple's DRM in any way shape or manner. They buy their music from the iTunes store, load them on their iPods, play them on their computers, and never give DRM a second thought. The convenience of one-stop impulse shopping from their iTunes music player vastly outweighs the lower prices and DRM-less features of the Amazon store. Further, Apple itself sells DRM-free music and will increasingly benefit from Amazon's negotiations for that format. So while that vocal minority of music purists who insist on DRM-free music may flock to Amazon's new store, they will only be helping Apple maintain its music dominance with the vast majority iPod owners and music buyers.
The bottom line: Amazon's new MP3 store is great for everyone, and it lends choice to the digital music business. But don't make the mistake of thinking that Amazon's music business threatens iTunes dominance. Amazon's music business will simply put pressure on music labels to reduce their cut of the digital music distribution pie (since Amazon is undercutting Apple in price and can't do that indefinitely) while expanding choices for consumers. Meanwhile, the vast majority of consumers will...
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