iTunes sales numbers surpassing expectations
updated 02:55 pm EST, Wed March 2, 2005
iTunes growing fast
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."
300 million is nothing
03/02, 03:51pm reply
Subscription is the way to go. We support Microsoft technology and everyone knows that to succeed you have to support what Microsoft support. Eventually they will crush our competition for us, and we will start to make money. I just hope Microsoft doesn't turn on us next and snuff us out. --Napster CEO.
koolkid1976
Fresh-Faced Recruit
Joined: May 2003
Clearly...
03/02, 04:02pm reply
...this is the last nail in the Apple corporate coffin. They should be bankrupt in mere days.
(Just thought we'd get that out of the way early on and save everyone else the effort...)
jpellino
Fresh-Faced Recruit
Joined: Oct 1999
Obviously
03/02, 04:15pm reply
All those iPods sold during the Christmas season are having an impact. I wouldn't be surprised if the rate slowed down a bit slightly come mid-summer though.
bigpoppa206
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Joined: Jun 2003
buymusic.com
03/02, 04:30pm reply
Buymusic.com shall BURY the iTunes Music Store, just wait and see!
SomeToast
Senior User
Joined: Jan 1999
A visionary gamble
03/02, 05:24pm reply
Given that Apple clears only a few cents for each song sold ("low single digits" margin), a more conservative company would had said "why bother; even if we sell 100 million songs a year that's only a few mill profit." Good thing no one asked me if it would be worth it. :-) Apple's meteoric stock gain over the past year+ is testiment to the success of Apple's entry into the music biz.
Kirke
Fresh-Faced Recruit
Joined: Oct 2004
Har!
03/02, 05:40pm reply
Humorous quote: "Buymusic.com shall BURY the iTunes Music Store, just wait and see!"
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.
Makosuke
Fresh-Faced Recruit
Joined: Aug 2001
Talk About Sales Volume!
03/02, 05:45pm reply
They're on pace to sell 500 Million songs in 2005. So much for those that said the iTMS would never be a success because it only supports the iPod...
MacnTX
Fresh-Faced Recruit
Joined: Apr 2004
Umm...
03/02, 05:50pm reply
Gee, you don't think that free songs from Pepsi are affecting the outcome do you?
brainiac
Fresh-Faced Recruit
Joined: Sep 2003
The hardware link
03/02, 06:36pm reply
There must be so much pressure on iPod R&D within Apple. If they ever come out with a less cool iPod, then I suspect everthing would crumble badly. Just look at Palm's T5. The only saving grace is on all those locked AAC music files. Those music lovers won't be able to easily abandon their existing music unless they want to start again. Or signing themselves up for a lifetime of monthly subscriptions with Napster and redownload their music collection.
SoGood
Fresh-Faced Recruit
Joined: Dec 2001
Pipe-On, Piper Jaffray!
03/03, 12:11am reply
All of your Piper Jaffray are belong to us!
JEB
Junior Member
Joined: May 2001