Getting to one billion iTunes accounts

There are 225 million iTunes account holders. 25 million joined in the three months. As the iTunes store has been operating since April 2003 it’s possible to step back and look at its history and measure the rate of growth relative to other ecosystems.

The following chart shows various platforms/ecosystems in terms of adoption. In the case of phone operating systems and consoles, the cumulative units sold is shown. The scale is 10 years by 1 billion users with users measured on a logarithmic scale.

What can be easily observed is that iTunes continues to grow on a logarithmic scale even at its advanced age of 7 years. This cannot be said for console-based gaming systems or for some alternative mobile phone platforms (e.g. Windows Mobile or Symbian).

The reason for this prosperity at an advanced age may be due to the fact that iTunes has survived the transition from one device (the iPod) to a device platform (iOS). It also was able to embrace multiple media from music, to movies to TV and apps. iTunes turned out to be far more flexible and resilient given what was technologically foreseeable at its birth.

Looking to the future, is it possible that iTunes could grow in parallel with iOS toward the 1 billion user limit that the slope in the chart implies? Much will depend on gaining users who are unlikely to have credit cards and live in emerging markets. If there is one obstacle to the iEmpire it’s the addressability of markets which lack consumer credit infrastructure. I suspect, however, that these problems are not unsurmountable given that telecom infrastructure leapfrogged credit infrastructure growth with nary a ripple. Apple could certainly offer that service directly to the consumer.

  • You say that "much will depend on gaining users who are unlikely to have credit cards".

    But iTunes already supports users who don't have credit cards. At least here in the UK, my wife, my son and I all have accounts without having credit cards registered. We simply buy pre-pay cards and make purchases on that credit. I'd say that Apple doesn't have to worry about that one.

    Otherwise, keep up the awesome work.

    • macakraca

      Pre-Pay Cards are limited to selected countries and are more obsolete payment medium than credit cards. What I think is going to happen are new payment methods in iTunes Store. Many network operators outside US have mobile payment systems in place and those systems are well adopted by the users, e.g.

      • "Pre-Pay Cards are limited to selected countries and are more obsolete payment medium than credit cards."

        How are they obsolete? They are a convenient gift, even if that gift is for oneself. Perhaps they are obsolete to you or everyone you know, but it's a but much to speak for the rest of the people in the entire world, most of whom don't have credit cards.

        The limitation to selected countries is not an inherent limitation. Anywhere in the world that money is exchanged for goods could potentially have gift cards.

        I think it far better to understand that when gift cards are don't exist in certain countries, this represents an area for growth, an untapped market, not some sort of unchangeable reality.

      • Kizedek

        Gifting is not obsolete, and Pre-pay cards are just one aspect of some of the alternate forms of payment out there: such as Giro, or iClick to Pay type services. These new payment methods to procure cards, or iTunes credit, or whatever, are already here.

        There are several forms of bank payment that don't seem to be available in the US. Here in the Netherlands, for example, kids can add cash from their bank account to a "chip knip" chip card that is used for transportation and all sorts of things. And I have already noticed alternatives for setting up an iTunes account that don't require a credit card. What is obsolete is checks, which I notice are still widely in use in the US.

        Anyway, in general, I find: 1) that credit cards are eschewed in some countries, such as the Netherlands. That's a good thing. 2) We have an ease of commerce and payment between persons throughout Europe, no matter what bank they use, that makes selling and buying online very simple WITHOUT using credit cards. Transferring small amounts of money between accounts for eBay type selling, or classifieds, is secure and very simple.

        It seems like ecommerce in the US is relying far too heavily upon the CreditCard system… Because the US banking system is so obsolete and their online services are far behind Europe's.

  • Xavier Itzmann

    «addressability of markets which lack consumer credit infrastructure»

    Come on, Horace! Prepaid iTunes accounts, baby, prepaid!

    Actually the limit is not going to be the credit infrastructure. Is going to be disposable cash, plain and simple. Even peasants in LDCs need phones to check market prices and make doctor's appointments, but buying $10 worth of songs may be a stretch.

    • Most of the campesinos in the village where I am living don't have mobiles, but the ones that do own land tend to have them and be very interested in other ways of connecting. And while they might lack the disposable income to buy tunes, they'd certainly (I bet) be interested in weather apps.

      Probably the main thing holding them back from the smart phone market is not the cost of the phones but the price of data plans. Most mobile users of feature phones are using prepaid. If the phone monopoly here (Mexico) got their shit together infrastructure-wise and began serving their customers instead of exploiting them (or, if you will, being smarter in their exploitation), I think you'd see market growth explode. This is a poor country, but the middle class and the borderline poor work hard to better their lives. They really need the opportunities to participate in the global economy to prosper.

  • I've always wondered about the accounts that are initiated and maintaing through gift cards and don't have a credit card attached. Apple says they have 225 million iTunes accounts with credit cards; how many more are there without? 1, 2, 5… 20 million?

    PS Love your work and the new show on 5by5.

    • Same here. I know it's a lot. I know of few people that do this, especially those who are anti-credit card. iTunes cards are sold everywhere. It's near impossible to visit a consumer staple store and not see the cards on a rack. So, there isn't much inconvenience in obtaining cards. Prepaid route is preferable for those that want to keep track on spending- whether it's their own or their kids who aren't old enough to have credit cards. Kids are certainly heavy iTunes downloaders whether it be games or music.

      I would guess there is possibly another 25-50 Million in accounts that are currently funded, and about that many that have zero balances yet have been funded in the past 6-12 months. Just a guess.

      I also suspect that a number of accounts with credit cards aren't truly active in the sense of no purchases over the last year. In addition, the attrition rate has to be close to nil since after signing up an CC account there is no cost to keep it open even if never used. It would be nice to know the number of accounts active in the past month, both for CC and prepaid credits.

      I think the true significance of this astounding number is what it means for developers. 225M users can buy your content with one-click. This explains why iOS absolutely destroys Android when it comes to app monetization. 2.5B paid-out, 500M in last 3 months, It makes me laugh when people try to argue that if Android has more market share then developers will focus on the leader in place of iOS.

  • Rob Scott

    The emerging market is a prepaid market. For iTunes to reach1 Billion accounts Apple needs to figure out how to do prepaid. We still do not have iTunes gift cards here, meaning most of us cannot buy apps. And the excuse for Apple partners is that we do not have iTunes music store and because of that we cannot have iTunes gift cards. This defies logic because we are buying iPads and iPhones that are worth thousands more!

    • 21tiger

      "The emerging market is a prepaid market" you're high

    • handleym

      "We still do not have iTunes gift cards here"

      It is a little hard to complain about Apple's parochialism when you litter a post with statements about "here" and "we" yet do absolutely NOTHING to let us know where "here" is.
      As a general principle, you will find that your posts are usually better understood when you do not make the assumption that your readers are psychics.

  • "The reason for this prosperity at an advanced age may be due to the fact that iTunes has survived the transition from one device (the iPod) to a device platform (iOS). It also was able to embrace multiple media from music, to movies to TV and apps. iTunes turned out to be far more flexible and resilient given what was technologically foreseeable at its birth."

    This is especially true when you talk about gaming consoles, where the account is usually connected to the lifespan of the console itself and the fact that it's not the only way to get content for them. Consoles have always been narrower in scope, even if they have a movie store (not a music one, at least not a mainstream music one). As for apps, just some mediocre browser and some basic video editing where you need extra hardware (PS3).

    Consoles have also a smaller audience: despite what anyone can say about the Wii and the expanded casual gaming audience, an iOS device is more "general purpose" by definition.

  • I think it's safe to say that Apple is keenly aware of all the issues involved in expanding it's reach with accounts. We're unable to see their internal Gantt charts of what it will take to get there. Infrastructure would be a key word here, in addition to working quietly and catching the competition off guard. We know that Apple has been working on being their own operator, for instance. And because they're global, they understand the issues involved with emerging markets such as India where (I think) limited 3G access makes having an iPhone a less than optimal experience in many areas. "All in good time my, pretty. All in good time." 🙂

  • Shrike

    I'm quite amazed by that Windows Mobile line because if it was true, MS would never have deprecated WM and restarted with WP7. This has got to be due to WM being in embedded devices like from the Fedex/UPS folks. If so, I'm not sure it would be really be proper to include those types of sales in the chart. (I don't know how you would get this data other than through surveys and some form of web usage statistic.)

    Secondly, I wonder if there is some way to normalize the plot to account for differing sizes of markets through time. Part of the visual distinction in the plot is the steep rise in iOS and Android compared to the others. But the cellphone market in 2008-2011 is probably 4x to 5x bigger than the cellphone market in 2003-2007. Successful systems sold in the later time frame should have bigger sales than successful systems in the earlier time frame.

    When plotting for total users, the steep ramp may be illusory. Obvious analogy: inflation reduces our buying power through time.

    • I love log-scale charts for this but think you're maybe tricked by the appearance: Windows Mobile is essentially stalled out, adding something like 2-3 million users per quarter and even that rate declining in the face of increasingly aggressive competition.

      Windows Mobile was not extensible to compete in the touchscreen / app-centric / GHz+ era, just as the BlackBerry and Symbian OS's needed a much broader base on which to build. All are very efficient at what they do, and so were market leaders when the economics favored much less capability, but intentionally, all were designed with limitations designed to optimize under (now, long ago passed) economics.

      These limitations are hardly black eyes by the named companies; Apple imposed a limit of 8GB RAM on this laptop, just to shave costs a bit. The difference is that there's lots more headroom in the OS design that is ironically more expensive to change than the (next-gen) hardware.

      • Shrike

        Yeah, a slight downward change in slope on a log plot essentially means a huge change in uptake. But my remark was also based on WM having 70m "users". That's a considerable number. It's maybe not that big as MS is taking in $20/user for the WM license, while Apple is taking in $600/user. In a licensing model, in today's market, it'll take a large amount of sales to keep up and pay for the evolution of the product.

        That's if you are relying on sales to fund the next update. But MS and Android are special cases who are using money from their respective monopolies/dominance to fund their mobile operating systems.

      • asymco

        Also WM has been around much longer so many of those devices are no longer in use.

      • Let's take your $20/user estimate times my 10MM / year SWAG* and guess that WP7 is on a roll to take in $200MM/year of revenues.

        Meanwhile, they are rumored to have spent $500MM on Danger. They have built their own, larger team at greater expense and they have all sorts of marketing and other expenses to come out of the $200MM.

        No, it won't happen, but if I were advising Mr. Ballmer, I'd tell him to look at spinning out the phone division to Nokia before the latter runs out of cash, and get into the business of selling services, especially office and Azure or sharing or whatever, tuned to the mobile platforms that are succeeding, rather than encourage Apple to make Numbers or Pages the de facto standards.

        = = = = =

        * Horace, it'd be great to see a link to an XLS or CSV for your charts!

  • relentlessfocus

    I'm not sure what data you're looking for but I recently read thatAmazon has 137 million active users with active being defined as having purchased within 1 year.

    • Hdufera

      Thanks. Can you site the source because I don't think Amazon publish their user base. I wanted to compare how Amazon's user base stacks up against the 225m users Apple has and the growth rate. As roomer has it, if Amazon is working on a tablet, in addition cloud computing, Amazon Music and recently movie rentals, they become a more credible threat to Apple I believe.

      • Hdufera

        not roomer, rumor rather…:-)

  • This is not displaying well for me. I cannot tell which points/curves are the consoles. Using Firefox

    • Niilolainen

      Thumbs down for giving potentially useful technical feedback? Sheesh… tough room

  • Union Bank of Cupertino = iTunes + NFC

  • I think, that most serious problem of iTunes – copyrights. It is impossible to buy music, movies in large part of world even with credit cards etc. The same problem with iBooks. So, if that would be solved, there would be a lot of sales generated even with the same user base.

  • sam Doji

    Can anyone tell us how much it cost to fully on board of Icloud in term of data plan cost for Ios devices owners?

    Here in Canada it cost me 30$ for 1Gb data plan. i cant see how i can be on board of cupertino jambo jet if i want pay less than that.

    Does it require to have expensive plans to fully profit itunes MAtch?

    • Waveney

      You can set syncing to just wifi to protect your data cap.

  • asymco

    Lines connect only adjacent data points (i.e. 1 quarter apart). The lines connect points but we don't have all the points. Data is sometimes sparse.

  • yet another steve

    As a resident of a country with a very mature credit infrastructure (the US), I've personally given up all credit cards… don't trust iTunes with a debit card… and iTunes works great. I can buy a prepaid/gift card at the local supermarket. Great solution for kids too. Apple's got this covered just fine.. in fact in my case they get the money up front!

    btw love your new podcast

  • Nalini Kumar Muppala

    If iTunes accounts were to grow 4x-5x, will the economies-of-scale kick in? Will revenues from iTunes be better than the current break-even? Will Apple leverage this and increase the share to content creators?

  • highroller

    What would interesting to see is the monetization ratio. That is, the iTunes revenue in comparison to the number of iTunes accounts. I also have an iTunes account, which was set up almost automatically when I bought an iPod a few years back, though I haven't really bought anything from there. I suspect that the ratio will decline, as the number of accounts grows. Would be easy to chart this.

  • The iTunes headcount is interesting in defining the total reach of Apple, but the fascination with it as a standalone profit center keeps mystifying me… Apple repeatedly, and happily cites it as an about-breakeven operation. It's clear that Apple sees the combo of media plus computers as MUCH more valuable than either alone, so works hard to integrate the two.

    It's true that I follow Apple more than the other computer co's combined, but am hard-pressed to cite a close second to iTunes' reach for music, rental movies, TV and books. Yes individual services such as Netflix are wonderful and pretty ubiquitous but don't keep the kids in the back seat happy and other services lack coverage, usage scenarios, etc in a way that keeps iTunes at the top of the game.

    (Can you imagine how antsy you'd be about your job if it was to make profitable the music purchases on whatever service Microsoft offers?)

    • Morten Davidsen

      Well, Amazon is the most obvious candidate. They will most probably build their own devices based on Android, but they also have the option of going with webOS and WP. Either way, they will most likely be on all available platforms like we've seen with Kindle. They know online shopping probably better than anyone. They have one big advantage over Apple, they sell "everything" online, and their comments, reviews and recommendations online is actually useful when you want to find out what you should buy. Apple knows this. That's why they just mentioned Google, but spent some time on Amazon claiming that they had more credit card registered than them on the iPad 2 launch. Apple is stronger than Amazon in some areas, weaker in others, and some areas where they have nothing comparable. Amazon can be more agnostic. Still there are vast areas in the global market that none of them have adressed yet.

      The soscial aspect is a big unknown too. As of now, MS and Facebook is in bed with each other. Apple and Twitter seems to be working closely together. Well, a wast open landscape right now…

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  • Coryschaeffler

    Does anyone know how many US iTunes accounts there are, not worldwide? 

  • TheGiftCardCentre UK

    they’ll run out of people soon! itunes is our number one gift card at