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Apple\'s music biz, iPod share grows

updated 11:35 am EDT, Thu April 20, 2006

Apple\'s music business

Apple's music business posted very strong growth during the March quarter, netting the company about 50 percent of its total revenue and helping Apple post its second best quarterly earnings. The company's iPod continued to gain marketshare, despite slower sales, primarly due to seasonality and lower average selling prices. Apple said its 'Other music revenue' increased 125 percent year-over-year, providing a strong boost to its music business; the company argued that its iPod numbers, which dropped sequentially by about 40 percent in terms of both units and revenues, were actually inline with the projected 30 percent seasonality dropoff expected in the post-holiday quarter for consumer electronics. The company noted that the December quarter had 14 weeks, while the March quarter only had 13, which contributed to the larger-than-expected apparent sales dropoff.

In the March quarter, Apple shipped about 8.5 million iPods compared with 5.3 million in the year-ago quarter and a record 14.1 million in the longer, December-holiday quarter. Cumulatively, Apple shipped an astounding 50 million iPods since the product launch.

Overall, the 79-percent growth in Apple's music business was driven by strong sales from the iTunes Music Store, sales of the iPod Hi-Fi, and "very solid demand" for other iPod accessories. Apple's other music product revenue was $485 million during the March qurater, up 125 percent from the year-ago quarter.

iTunes, iPod marketshare increase

iTunes owns about 87 percent of the U.S. market for legal music downloads, according to yesterday's conference call. The company also noted that it has expanded its content to 2.9 million music tracks, 60,000 podcasts, 9,000 music videos, and 70 television shows from a variety of providers.

Meanwhile, despite a dropoff in iPod sales, NPD Techworld numbers for March show that Apple's share of the MP3 player market has increased. The company garnered 78 percent of the market in March, up from from 71 percent in December. In addition, the iPod ecosystem continues to thrive with over 2,000 iPod accessories available. Apple also noted that there is increasing interest from the automotovie industry and estimates that 40 percent of new cars sold in US this year will feature direct iPod integration.

Apple looks to Europe, Asia for iPod growth

Apple also said that the iPod is the top selling MP3 player by a wide margin in several international countries, including the UK, Japan, Australia, and Canada. The Cupertino-based company told investors that it holds 40 percent marketshare in the U.K., 54 percent in Japan, 45 percent in Canada, and 58 percent in Australia.

"In the rest of Europe and Asia, we do not enjoy the same level of marketshare," Apple CFO Peter Oppenheimer told investors and analysts. "We view this as an opportunity and are optimistic about further market penetration potential globally and our ability to grow international marketshare."

"If you look outside the international countries, such as Italy and Spain, China and Korea, market share is much less than in the U.K., Japan, Canada, and Australia. We are focused on increasing that share by increasing our local advertising and points of distribution," Oppenheimer said.

The company cited data that showed a large potential for greater penetration of MP3 players in the consumer electronics market. Oppenheimer, citing Forester Research data, said that U.S. household MP3 player penetration was less than one-quarter of that of digital still cameras as of the end of 2005, indicating that the company did not see an end to its burgeoning iPod sales.




by MacNN Staff

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Comments

  1. Fast iBook

    Joined: Dec 1969

    0

    Sounds like

    Sounds like sales are slowing in the typical retail slow-down period. I wonder what will happen in the back-to-school period. Will be interesting. Also, i think people are more willing to buy an iPod on summer vacation or before school starts, or even for a reward for a year of good grades than right when they need the least ammount of distraction to get finals and such done. On the other hand mac retail sales would probably remain flat, because people would be less likely to want to spend time indoors in the summer in the northern hemispwhere (where the mainstay of apples' markets are).

  1. phillymjs

    Joined: Dec 1969

    0

    You know...

    ...it seems the percentage of Apple's revenue that comes from the iPod and iTMS just keeps getting bigger. I have to wonder, is that even a little bit by design?

    Will there be a point where they'll be able to say, "Okay, we're making enough money from other things that we can afford/survive the falloff in revenue from computer sales," and start selling a version of OS X for generic PCs?

    Before you flame me, I am not one of those whiners who can't/won't buy Apple hardware. I'm very opposed to OS X for generics because I remember the mid-90s Mac clone disaster-- but what almost did Apple in then was having nothing to replace that computer revenue. The iPod/iTMS might be that missing piece this time around.

    On the other hand, the effect Boot Camp might have on computer sales remains to be seen. If Mac sales suddenly spike because it's the only computer that lets you run Windows and OS X, well, iPod/iTMS revenue will never hit the 85-90%-of-revenue range I think they'd want before sacrificing their computer revenues to increase OS X marketshare.

    ~Philly

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