updated 08:25 am EDT, Thu October 19, 2006
Apple's music products
Apple's music products generated another quarter of strong results, according to executives. The company's generated 42 percent of its total revenue from the iPod and related products, an increase of 36 percent year over year. iPod shipments also grew 35 percent year over year, to $8.73 million, bolstered by the announcement of our new iPods on September 12th, and the company's "very popular" back-to-school promotion. "Reviews of the new iPods have been very positive, and we are very confident in our new line-up, despite increased competition this holiday season," Apple executives told investors on Wednesday's conference call, echoing Apple CEO Steve Jobs earlier comments on entrance of Microsoft to the music/media player business.
The company said that channel inventory of iPods as of the end of the quarter was within its target range of 4-6 weeks. Apple's recently rebranded iTunes store, which now sells movies from one company, continues to be the world's leading online music store, according to the company.
In addition to movies, iTunes's catalog offers 3.5 million songs, 220 television programs, 9,000 music videos, and 20,000 audiobooks. Apple also said that based on the latest data available from Nielsen SoundScan, iTunes accounts for 85 percent of songs purchased and downloaded in the U.S.
Apple said that the iPod ecosystem continues to thrive, with over 3,000 accessory products currently available. It estimates that over 70 percent of the 2007 model year cars sold in the U.S. will offer direct iPod integration as an option.
Responding to concerns about little-to-no growth in revenue for its music products (sans iPod), the company said a combination of iPod transition and a seasonal demand for music led to relatively flat revenues from the June quarter--although they were up 70 percent year-over-year; however, Apple expects a rebound in the holiday (aka December) quarter.
"Summer is usually not the best quarter for music sales. People are on vacation and it generally is not the strongest quarter for new album releases either," Apple said. "Not providing a quantitative forecast, but qualitatively, seasonally, and with album releases, we have seen that in the past."
In addition, the company said that it moved to reduce our channel inventory on the Apple-branded iPod accessories in advance of the September 12th announcements, contributing to the flat 'Other Music' revenues.