iTunes: 5 Billion Served
News Analysis. How many millions—it is millions, right—for the Zune Marketplace? |
This morning Apple announced that iTunes Music Store sales had topped 5 billion songs. The real question: How quickly will sales reach 10 billion? After five years of phenomenal growth, iTunes sales growth is slowing down.
Here's the progression to date:
- April 28, 2003: iTunes Store opens
- Oct. 16, 2003: iTunes for Windows releases
- July 12, 2004: 100 million sold
- Dec. 16, 2004: 200 million sold
- March 2, 2005: 300 million sold
- July 18, 2005: 500 million sold
- Feb. 23, 2006: 1 billion sold
- Jan. 9, 2007: 2 billion sold
- July 31, 2007: 3 billion
The July announcements are most revealing of a trend: 400 million from 2004 to 2005; 700 million from 2005 to 2006; 2 billion between 2006 and 2007. But there's a definite slowdown to today's announcement, with 2 billion more in about 11 months between 2007 and 2008. The numbers are still amazing, but steep growth has reached a plateau.
Apple is the No. 2 music retailer, behind Wal-Mart, and selling a phenomenal amount of music. Slowdown in growth isn't the same as a sales slowdown. Still, the question "Why?" is important to ask.
Early analyst sales estimates don't show rivals like Amazon or Napster as making huge gains against Apple, nor even Microsoft. But competitors could be capturing some sales from Apple. Amazon and Napster offer huge DRM-free libraries, while Apple's catalog is mostly rights-protected content. I only buy DRM-free now. If Apple doesn't have the DRM-free version, I go to Amazon or Napster. Who else does that?
The reason may not matter, because of iPhone 3G. Apple offers over-the-air iTunes Store buying from iPhone and iPod Touch. 3G and eventual availability in 70 countries will make iPhone one of the easiest ways to buy from iTunes Music Store.
Apple will launch iPhone 3G in 22 countries (officially, but 23 by my count) on July 11: Australia, Austria, Canada, Denmark, Finland, France, Hong Kong, Germany, India, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Philippines, Portugal, Singapore, Sweden, Switzerland, United Kingdom and the United States. The overlap among countries with iTunes Music Stores and getting iPhone 3G is simply amazing: 17.
Countries where iTunes Music Store content can be purchased: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and the United States.
July 11 is a long way off, with iTunes 7.7 coming to support iPhone 2.0 software and the 3G device. Apple could easily offer iTunes in Hong Kong, India, Mexico, Philippines and Singapore, which would pretty much align iPhone 3G and iTunes Music Store availability.
Then there is video, for which iPhone is Apple's most capable portable device. The company claims customers are renting or purchasing 50,000 movies a day. I keep wondering how much bigger other content would be if Apple rented music, or even audio books.
If I'm right, iPhone 3G will get iTunes Music store off the plateau and going back up the mountain.
Comments (1)
Joel:
I just came across this article. I don't understand the point that you think you are trying to make:
"The July announcements are most revealing of a trend: 400 million from 2004 to 2005; 700 million from 2005 to 2006; 2 billion between 2006 and 2007. But there's a definite slowdown to today's announcement, with 2 billion more in about 11 months between 2007 and 2008. The numbers are still amazing, but steep growth has reached a plateau."
Really? for this analysis [?] you conveniently lumped 2 billion units into a single 11 month period and claim that this is plateau. A modicum of real analysis would show that Apple announced 4 billion songs sold on 27 February.
That is 1 billion since the prior report on 31 July 2007. That is 7 months, the same as the prior period from January 6, 2007. So perhaps that is the plateau to which you referred.
However, the latest report covers approximately 4 months [121 days assuming closeouts on the 15th of each month prior to public release of data]. So sales are accelerating.
Just to recap in case you didn't get it the first time; as reported in Fortune:
"It took Apple (AAPL) nearly three years to sell its first billion songs (Feb 23, 2006), ten months to sell its second billion (Jan. 6, 2007), seven months to sell its third (July 31, 2007) and fourth billion (Feb. 27, 2008), and only three and a half months to sell its fifth (June 19, 2008)."
Now I want to know why you wrote the article with this slant.
Posted by Daniel Reiss | July 2, 2008 2:58 PM