The iTunes Store is currently selling over 2.5 billion music tracks per year. (They announce 4 billion sold on Feb 27 and 5 billion on July 19)
Let's round the cost to $1/track, so the current sales rate gives apple gross income of $2.5 billion per year. The music publishers take 70%. That leaves 30% to apple, which is $750 million per year gross profit from the iTunes Store
In the quarter ending June 28, Apple sold over 11 million iPods with gross revenue of $1.57 billion. Of course, the Christmas quarter is the big one, not this one. Let's say current annual revenues of $7 billion from iPod sales. Apple's gross margin is currently well over 30%, but let's take 30%, as iPods are probably lower-margins than high-end Macs.
So that's $2.1 billion per year gross profit from iPods, nearly three times the gross profit of the iTunes Store.
Note also that from that $750 million has to come the direct costs of the store - servers, bandwidth, and cc processing fees - which are considerable when many purchases are just a few dollars.
For Apple, the profit still comes mostly from the hardware (iPods) not the iTunes Store.
Paul
Quote:
Originally Posted by TadW
I think the form of the device is irrelevant. It's even irrelevant if Sony manages to bring out a new device with similar connectivity like the Kindle. Key to success is the store. Why do you think Apple has put so much focus on their iTunes stores? App Store has already been responsible for 60 million downloads! This is where the big money comes from, not from the selling of hardware.
|