financial/investor
03/02/2005, 2:55pm, EST
Wednesday, March 2nd
iTunes sales numbers surpassing expectations
Apple has sold approximately 85 million songs in the first two months of 2005, surpassing Piper Jaffray's initial estimates for the entire March quarter. Based on Apple's earlier announcement of 300 million total tracks sold, Senior Research Analyst Gene Munster says that iTunes sales could account for $83.2 million in revenue in the March quarter--or about $35 million more than the firm has been estimating. The firm also believes average daily sales rate has been 1.35 million per day since late January, which very similar to the 1.43 million daily run rate (i.e., sales of songs) in the weeks following the holidays. "We had been anticipating a more significant drop off in iTunes sales from the levels seen in the weeks following the holidays."
In addition to driving iPod sales, the firm says that Apple's iTunes Music Store will also contribute significantly to the company earnings: while it estimtates that the current operating margin on iTunes is in the low single digits, Piper Jaffray says it believes iTunes profitability will begin to increase throughout 2005, with operating margins reaching 5% to 10% in 2006.
"We believe the profitability of iTunes will begin to increase throughout 2005 as fixed costs are spread across greater volumes."
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(Just thought we'd get that out of the way early on and save everyone else the effort...)
Even more ironic is that if you go to Buy.com's site, #1 on their "What's Hot!" list is the iPod store. Even funnier is that if you go to their new Yub.com online mall venture, you'll see the iTunes Music Store featured prominently.
More on topic: Looks like things are going well. It's no wonder the record labels are now trying to milk more money out of this venture, now that they realize that people are quite willing to go for an online venture that isn't too restrictive.