Analyst: iTunes to boost Apple revenue by $13B in 2013
updated 02:00 pm EDT, Tue July 5, 2011
iBook and App Store said to be growing by 39%
Apple's iTunes products are on track to contribute approximately $13 billion to the company's revenue by 2013, according to Global Equities Research analyst Trip Chowdhry. Although Amazon's Kindle platform may have an edge against iBooks in the current market, the analyst suggests many publishers are beginning to favor ePub format, used by Apple, rather than the Kindle format. The iPad is also said to be the preferred e-book reader among students.
"Kindle application lacks the finish and crispness of an iBook," Chowdhry added.
Aside from iBooks' contribution to iTunes revenues, the analyst also expects the App Store to continue its rapid expansion. The company's overall revenue from digital products is forecasted to grow by approximately 39 percent across the next three years.
Separate reports suggest upcoming products, such as iCloud and iMessage, will help solidify Apple's dominance in the smartphone and tablet arenas. Adoption rates for iTunes Match remain unclear, however, as early surveys suggest many users may be unwilling to pay a $25 yearly fee for the cloud-based music storage feature. [via International Business Times]
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Online store markup
That $13 billions in sales brings up an important point. I recently heard one of Amazon's leading server-farm experts explain the various factors that were rapidly driving down the cost of running large server farms, including those owned by Apple. That, I suspect, is why Amazon, Apple and Goggle are so eager to expand their online stores and services, as well as why they're squabbling so expensively over names.
It's also why it's time to take a hard look at the 30% of retail charge that Apple adopted for the iTunes Store way back in 2003. It that slice was just past the break-even point in 2003, as Steve Jobs claimed, then it must be enormously lucrative 8 years later.
This means that Apple, Amazon, and Google could be doing quite well with a slice of retail more like 10-15%. And cutting the markup to a more reasonable level would result in both lower prices and more income for the creators, whether developers or authors. By continuing to insist on grabbing 30% (and in Apple's case, trying to grab someone's else's 30%) they're failing pass on those cost reductions to consumers. Why is that?
In part, because the market is distorted and isn't forcing these companies to compete. Each has a monopoly (iPad and Kindle) or quasi-monopoly on app and ebook sales. If you develop an iPhone app or want to buy one, you must go through Apple. You can't go to Amazon or Google. The same is true of commercial books sales for Kindles.
And if competition isn't working, we need to find some other way to put pressure on the locked-in user monopolies.