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A more precise measure of Apple's device installed base (and device longevity)

Apple announced that the total number of iTunes account (with credit cards attached) has reached 400 million. This was touted as being the largest collection of credit card accounts for any retailer and I have no reason to doubt it. However, looking beyond the bragging rights, there are more interesting patterns to observe about this asset.

What I plotted was the cumulative number of iPods sold (green), the cumulative number of iPhones and iPads (yellow), the combined devices total (red) and the reported number of iTunes accounts (blue).

The first observation is that the combined total iPhones + iPads have overtaken cumulative total iPods. The iPhone started in Mid ’07, more than five years after the first iPod shipped. The acceleration in that product line is still evident while the iPod decelerates gracefully.

The second observation is that the total device count has reached 680 million in the last decade. It’s a big number but it is still a number that is dwarfed by the overall device market. Apple is still around 10% of the devices market today. It should give an idea of how many devices could still be sold in the next decade.

The third observation is the ratio between the iTunes accounts and the total devices sold. Since iPods, iPhone and iPads have been dependent on iTunes, the number of iTunes accounts gives a rough indication of active users. Combining active users with total devices sold should give a rough estimate of the number of retired devices. In other words, if we assume that account holders typically use one device then by taking the difference between devices sold to date and accounts at that point in time we should know how many devices have been retired.

Dividing that number of retired devices by devices in use should give us the retirement rate and that is shown in the following chart:

Note that as the iPod was slowing and the iPhone was still a small part of the total, the retirement ratio was increasing. As the iPhone accelerated, the ratio began decreasing and is still decreasing.

Projecting the retirement rate should give us a way of more precisely estimating  the addressable market for developers, accessories makers, and other ecosystem participants.  Currently that means that about 60% of all Apple’s devices sold are still in use. We can tune that figure upward in the next few quarters and make better estimates as Apple releases their shipment data.

The iTunes account data is not just a way to calibrate addressable markets but also a valuable method for measuring device longevity. The distance between the red line and the blue happens to be nearly a constant 8 quarters as shown in the following chart (note change to log scale for the vertical axis).

  • Sander van der Wal

    I would suspect that an account would hold more than one active device. In particular, both an iPhone and an iPad. Not everybody will have both, but a lot of people do.

    • nuttmedia

      Agree 100%. You could make a firm argument that an iPhone assumed the job formerly being met by a large proportion of iPods. However, that would not be the case in the purchase of iPads. I recalled and found a survey that Piper Jaffray did at the launch of the first iPad – 66% owned an iPhone, but more poignantly, 1% thought the iPad could replace their iPhone.

      http://tech.fortune.cnn.com/2010/04/05/piper-jaffray-survey-of-ipad-buyers-74-owned-macs-66-had-iphones/

      I submit the bias towards the 66% may have been in the first year; doubtful that figure was sustained in the next two launch periods. But the notion that iPads assume iPhone-jobs is likely to remain low.

      Some additional NPD survey data of interest that gives perspective can be found here:

      http://www.webpronews.com/one-quarter-of-ipad-buyers-are-first-time-apple-customers-2012-04

      Somewhat surprisingly, there is still room for an iPad halo-effect as gateway drug into other Apple products, including an iPhone.

      • Jeff G

        I bought my first ever Apple product in May 2011, an iPad 2. May of 2012 I bought my 2nd Apple product ever, an iPhone 4s. My next computer, whenever it is needed will be some kind of Mac. I have to figure im a fairly typicalmconvert. Apple is only 10 % of total devices? Ya, there’s still a ton of room for halo!!!

    • Joe_Winfield_IL

      Horace, this seems like a perfect opportunity to take a reader poll. The data from Apple are incomplete, and you may learn something from your (admittedly atypical) readers. Of course the results would be less than scientific, but they could inform future articles like this one which require a bit of a leap of faith due to the lack of hard numbers.

      Like many other commenters, I have several devices tied to my iTunes account – 3 iPhones (one now an “iPod touch”), an old iPod classic, 2 PCs, and an iPad. My iPad also has a second iTunes account for business applications purchased by my employer. I don’t know how common the corporate iTunes account is in this world of BYOD, but I’m guessing my company isn’t alone.

      • Francisco Moreno

        2-person household
        2-iphones
        1-Mac Mini
        1-MacBook Pro
        1-MacBook Air
        1-Cube G4
        1-iPad Original
        1-iPad 2
        3 or 4 iPods laying around

        One iTunes account

      • Spackler

        5-person household
        3-iPhones
        4-iPads
        2-iPod touches
        1-MacBook Air
        1-iMac

        1 iTunes account

      • Admittedly atypical

        4-person household
        4-iphones (2x3GS,1×4, 1x4S)
        Three iTunes accounts (mine, wifey’s and a corporate iTunes acct.)

    • Oak

      I agree, though I think it’s changed over time. In the early stages, it was one device per account. I expect that has gradually, increasingly diluted over time to now (and the growth of 2-device accounts is probably exponential).

    • mailermax

      I have an iphone but still use my 2008 ipod nano at the gym. wife does the same. If/when I get an ipad, I’ll have 3 devices for my account (plus my imac).

    • Richard

      My wife and I also have multiple devices attached to one account: an original iPod Shuffle, an old iPod nano, an iPhone, an iPad, and a couple of MacBooks. So six devices total, four of which get used all the time.

    • Es

      Our family has 3 iPhones and 2 iPads in use. And only one iTunes account. If we had 5 accounts we would have to buy every app 5 times.

  • http://twitter.com/MarkHorner Mark Horner

    I have an iPhone, an iPad and an iPod, and a few retired iPods. Not everybody will have more than two iDevices, but a lot of people will.

  • http://twitter.com/PatrickIgoe Patrick Igoe

    I also question: “if we assume that account holders typically use one device…” I have four active mobile devices on my account, iPhone and iPad 3 for me, Touch and iPad 1 for my son, plus three aTVs. Each of my three brothers and my mother have an iPhone/iPad/aTV combo. I’d be surprised if even half of iPad sales are to non iPhone users.

  • http://twitter.com/interealtime Chris/interealtime

    As an iOS dev I’m obviously a rarity (with my 5 active iDevices), but I think the average devices per account is something that needs attention. There are 2 sides to it:

    1. Lots of people have multiple devices. Many buy an iPod, then later upgrade to an iPhone. Many have an iPhone and also an iPad. And a lot buy an iPhone, then a year or two later upgrade and pass on their old device to a family member – and it stays on the same account. I’m pretty sure this is common enough to push the average quite far above 1.

    2. Some people use iTunes but *don’t* use an idevice – they use it to purchase content only. I suspect this is rare, but I don’t know for sure. This would pull the average back down of course.

    My guess: the average is ~1.25 devices per account.

  • RobDK

    We use my Apple-ID as a family account. We have 3 Macs, 2 iPhones and 2 iPod Touch’s on this account.

    Typically older iDevices get given to the kids. But they often drive the sales of apps – especially games…

  • Sharon_Sharalike

    Every friend of mine that has an iPhone also has an iPad. 100%. No doubt this is not typical, but certainly some reasonably large percentage of iPhone users also have an iPad.

    The reverse, not surprisingly, does not hold. I know many people with iPads that do not have an iPhone.

    It seems to me that there is something funny about that 400M number. There must be a lot of “dead weight” accounts.

    Also, if *I* had 400M credit card users on file, I’d start my own CC company. Why doesn’t Apple? Seems like a no-brainer. Mastercard has only a small fraction of that many accounts and is worth $50B.

    • Aaron Pressman

      Mastercard had 672 million ‘Mastercard’ branded cards that did $2 trillion of transactions last year. Worldwide, they processed like $3.2 trillion. I think Apple might have a ways to go to catch them, although it could be a lucrative business.

    • Jeff G

      I think maybe there is an AAC Apple Acceptance Corporation in the distant future, although some investors will hate the idea, it will addmsignificantly toprofits

  • http://twitter.com/tingilinde steve crandall

    I did a survey of 700 college students last year that showed about 1.1 active iOS devices per iTunes acct. People with iTunes accounts and no iOS device were rare – under 1% in this group.

    • http://twitter.com/qka qka

      Rare but we exist. I use iTunes for apps for my Mac.

      • bbrewer

        Try using the App store for that and getting music from iTunes. LOL

    • Frank

      I know it is rare but most of my friends own non-apple devices and have iTunes accounts (at my house we had Four iTunes accounts and no iOS Devices). I do believe though that the number of iTunes account holders without iOS devices is decreasing. (because iTunes is getting much worse and bulkier)

  • modnerd

    Do you have considered Apple seems to report only account with a credit card connected, but there are a lot accounts in use, which are billed via gift cards or other payment services? Here in Germany is the adoption rate of credits cards still slow. Many people dont habe one or dont want to have one. These people are buying a lot of gift cards to pay the iTunes ecosystem. I suppose, there are many devices in use, which aren’t paied vay credit card and thus their accounts aren’t counted by Apple. So, the retirement rate of old devices could be lower.

  • oases

    Your graphs don’t look so great on a retina iPad screen. The fonts looks slightly blurry (though perfectly readable). Bars and lines look fine.

  • http://twitter.com/e_orione Emilio Orione

    5 iDevices, one account. You could adjust numbers a bit assuming say 1.1 devices/account. Nevertheless numbers are so big that your device retirement rate diagram is still significative. 8 quarters seems incredibly right to me.

  • Imjustabrian

    Even during the iPod era, I knew a lot of people who picked up an iPod nano for running/gym/mobility and kept their big iPod for the car, or for when they wanted to travel with all of their music. I just saw someone at work recently using a 3rd gen iPod with the odd row of buttons below the display.
    That trend seems strong with apple gear, the older models stay in use as second devices or as a hand me down to family members, both often staying on the same account.

  • echotoall

    This is what will make iAd a real force in mobile. Don’t think apple gets enough credit on this front yet. I wouldn’t be surprised if we start hearing about a mobile-iAd-exchange to leverage total devices in the coming months.

  • kevin

    My family of 4 has 3 iPhones (4S, 4, 3GS) and 3 iPods still in use. (We also have four computers with iTunes on it.) But we only have one shared iTunes Store account and only one credit card number on file. Clearly, many people have multiple devices per account.
    People can also have multiple accounts per device, but I think this is far less likely.

  • WoD

    Adding to the chorus of “have more than one device per account,” in our household, we currently have 2 iPads, 2 iPhones and an iPad Nano, for a total of 5 active devices on one account. We also have two semi-retired iPads that are still in occasional use.

    Then, adding to the poster who mentioned people who use iTunes with gift cards instead of credit cards, I just passed on an iPhone and an iPad to an uncle and aunt, both of whom use their devices with gift cards. And my mom bought her own iPad, but she also uses gift cards.

    So 60% of devices still in use seems to be a conservative estimate. By how much is hard to say, but in any case, that’s a lot of devices still in use!

  • gbonzo

    The red line goes about +45% per year for the last four years.

  • Predrag

    For developers, the number of devices per one account is less meaningful than it seems. While it does encourage purchasing of more apps (some for small screen, some for big), every app is purchased only once, and then delivered to all the devices linked to that account. So, while there may be a family of five, all of them with iPhones, they all paid for only one copy of Angry Birds.

  • danilko1

    i have had an iTunes account, from day one. Over time, I have accumulated about 5 separate iTunes accounts, for various functions. Only one of which had ever had a credit card attached. Since the first iPhone came out, I have purchased 11 personal Apple devices. 2 were broken and returned to Apple, for exchange. 2 were sold and ultimately replaced. 5 devices, were handed down to other family members, where 3 of those are still attached to my Apple ID. I maintain two devices myself.

    My original impetus for creating an iTunes account, was to store and manage music on my computer, both Mac and PC. Non-portable devices should account for something in your report. Still it’s all guess work.

    I forgot 2 AppleTVs.

  • bregalad

    Older iOS devices may still be in use and may continue to accumulate music or video content, but their owners likely aren’t buying apps. Older devices are relatively slow with limited RAM and have been abandoned by Apple for OS upgrades and consequently abandoned by many developers.

    The original iPhone, iPhone 3G, original iPod touch, 2nd gen iPod touch and “3rd gen” 8GB iPod touch (really just a 2nd gen sold for a second year in a row) can’t run anything more than iOS 4.2.1.

    The real 3rd gen iPod touch and original iPad will join the deprecated group when iOS 6 is released this fall. The iPhone 3GS will only support some iOS 6 features.

  • Swamp Head

    I expected this article to talk about the longevity of the devices – i.e. how much longer they remain in use than many other consumer electronics devices. My wife and I each have an iTunes account. She has a Macbook, an iPod Nano, and an iPhone 3G. My iPod Mini just died after 8 years of service; my iPhone 2G is now functioning as an iPod Touch at the brewery; current devices include an iPhone 4 and Mac Mini.
    Many analysts and non-fan-boys assume that these devices die when the next generation comes out . The big problem is authorizing all of these devices in iTunes…

  • melgross

    I also think that the numbers of accounts doesn’t jive with the numbers of devices in use. I, my wife, and my daughter all have iPhones, iPads, and Macs (my daughter has two).

    This would give a serious undercount. I read somewhere that most Apple using households have several Apple devices.

  • Francisco A. Hirsch

    Older iOS devices retire when their batteries die. Also, in many countries (like my own Argentina), it is only recently that music can be purchased via iTunes. And books in some countries (including Argentina), cannot be bought thru iTunes.

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  • http://financial-alchemist.blogspot.com Turley Muller

    Yeah you can’t assume that account = 1 device. I have owned 6 iPhones, 3 iPads, 6 or so iPods (~15 devices) and had the same account ID for years. I think whats more interesting is looking at how the difference between devices and accounts changes. iPod sales were 3x accounts initially, and then began to close the gap with iOS devices. Looking at the rate of change, new iOS devices sales tracked new accounts until 2010 to mid 2011, when unit sales were more than twice new accounts. This is expected since many of those sales were iPhone replacements or iPads to current
    acct holders. However, since last fall up until now, accounts absolutely exploded. Equal to rate of device sales. Also, we know that a good number of those device sales were additions to current iTune accounts, thus new accounts actually exceeded new device sales to first time owners. What appears to be an explanation was Apple expanded the App Store & Music Store to 30 new countries last fall. Thus, there had been many Apple device owners with no access to iTunes creating massive pent-up demand for iTunes Store access. For developers and media publishers, addressable market increased significantly

  • sameer_singh17

    Most apple device owners tend to own more than one device, but will still hold one iTunes account. I know people that have multiple iPads (unretired), an iPhone and an iPod touch all under the same account.

  • http://www.florence-journal.com/ af

    My two cents here which seems to be sort of common – 2 adults, 2 kids in the house. 2 accounts – but – 3 iPhones, 5 working laptops (all Macs), 2 iPads, a mini, and too many iPods to count. I have an account, as does my wife – but the kids buy stuff solely on her account. They also have one of the three phones, which was an old hand me down, and so was jail broke to use here (in Italy). I think the iPhones that are still in use around the world and not attached to any iTunes account could easily be in the millions or tens of millions.

  • nerd6

    I have an iTunes account but have no credit card associated with it. I just redeem iTunes gift cards when I need to buy something. So, do I count as an active iTunes account?

  • nerd6

    I have an iTunes account but have no credit card associated with it. I just redeem iTunes gift cards when I need to buy something. So, do I count as an active iTunes account?

  • CAJeepBoy

    As a point of reference, I have 3-4 active iOS devices bound to my one account and have retired more than 8 other iOS devices. Most accounts are bound to multiple devices, especially in families, as you only need to make one purchase to get it on all of the family’s devices. Cheers!

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