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Fortune 130

The increase in net sales of iTunes, Software and Services in the first quarter of 2014 compared to the first quarter of 2013 was due to growth in net sales from the iTunes Store, AppleCare and licensing. The iTunes Store generated a total of $2.4 billion in net sales during the first quarter of 2014 versus $2.1 billion during the first quarter of 2013. Growth in the iTunes Store, which includes the App Store, the Mac App Store and the iBooks Store, was driven by increases in revenue from App sales reflecting continued growth in the installed base of iOS devices and the expansion in the number of third-party iOS Apps available. Net sales of digital content, including music, movies, TV shows and books, from the iTunes Store was relatively flat in the first quarter of 2014 compared to the first quarter of 2013.

Apple Inc. Form 10-Q.

During the last quarter Apple changed the pricing for iWork and OS X to zero[1].

I estimate the net effect to have been a reduction in revenues from those software titles of about $350 million for the quarter. Nevertheless, increases in services and app revenues means that the iTunes total reported revenues increased to a new record.

The total with estimated contributions by media and service components is shown below right.

Screen Shot 2014-02-10 at 10.05.11 AM

Note that revenues do not reflect total billings. As Apple reports only the 30% of App transaction values, the full iTunes/Software/Services transaction values are shown in the above graph on the left.

The “gross” revenues are now nearly $7 billion per quarter. On a yearly basis the iTunes/Software/Services group had gross revenues of $23.5 billion with growth of 34% y/y.

Screen Shot 2014-02-10 at 10.03.28 AM

Other estimates for full year 2013 growth are:

  • Third party content +46.6%.
  • Music downloads -14%
  • Video +19%
  • Apps +105%
  • Books -9%
  • Services +37%
  • Pro apps +29%
  • OS X -8%
  • iWork and iLife -8%

Although iTunes/Software/Services are not usually included in a “sum-of-the-parts” total contributing to Apple’s overall enterprise value, the scale of volume and value of transactions is becoming harder to ignore.

To illustrate this, I plotted the history of gross iTunes revenues vs. Google’s search business[2]

Screen Shot 2014-02-10 at 10.03.55 AM

On a yearly basis iTunes/Software/Services is nearly half of Google’s core business and growing slightly faster.

The iTunes “empire” of content and services would be ranked as number 130 in the Fortune 500 ranking of companies (slightly below Alcoa and above Eli Lilly).

Notes:
  1. OS X server is still priced at $20 and iWork for previously unlicensed devices and computers is still priced above $0 []
  2. Excludes Motorola and “Other” segments as reported by Google []
  • http://www.isophist.com/ Emilio Orione

    Half google and growing faster … uhm … Goog has a market cap of almost 400 billion …
    Say 200 billion the “value” of iTunes, 150 billion in cash, this leaves only 120 billion to arrive to the current Aapl market cap of almost 470 billion and comprise all the iPhone, iPad, Mac, iPod, Apple TV business and all the future innovations.
    I know analyst mathematician will have an answer for that, you know, apple is doomed.

    • Andrew F.

      He’s talking about revenue, not valuation.

      • http://www.isophist.com/ Emilio Orione

        Market cap should be the valuation of the future value of the company based on current revenue and future growth.
        Market should reflect the path of a technology, what path for mobile services is market forecasting?

      • claimchowder

        I’m pretty sure margin plays a role in market valuation, too.

        As an investor, I prefer a company with high profits to a company with high revenue and small profits (yes, I know, that’s not what Wall Street does in extreme cases like Amazon).

        Apple’s margin should hence be calculated relative to the agency accounting numbers, because: why would we count the 70% that are passed through to developers?.

        This yields “only” about 4.5b/Q or 18b/y, which is a lot less than Google but still quite remarkable.

        (Google had $59.83bn revenue in 2013, and 12,93bn (21.61%) net income if I read their press releases correctly)

      • http://www.isophist.com/ Emilio Orione

        I read complains about Apple growth not margin. Apple has remarkable margins, as Horace tweeted yesterday, gross margin is above 40%.
        Revenue is the gross revenue why should it be calculated differently from others? Gross margin for iTunes is about 20%, not bad, everyone else would kill for that margin.

      • claimchowder

        What I meant is that it is better to compare oranges to oranges (to avoid the obvious pun ;).
        On the one hand you have company A (Google), which sells almost exclusively ads in a very conventional business model.
        On the other hand you have (a subset of) company B (Apple), which sells some goods in a conventional way and additionally, sells music, software, and books in an agency model in which they bill 100% but only book 30% (software and I believe eBooks) or something closer to 10% (music).

        I find it obvious that these cannot be compared 1:1. Imagine if you will that they bill 100% of the sale but only keep 1%. If we looked only at revenues, this would yield the same market valuation even if they only make a tiny fraction of the profit.

        Would that make sense?

      • Kizedek

        All businesses have “cost of business or goods sold” to deduct from gross. Google does, too. That is oranges to oranges. Horace has found that Google’s costs are quite high, and they may be inconsistent depending on the partner or customer and the deal they have with them.

        So, yes, gross is 1:1, net is 1:1, and profit is 1:1
        Conclusion: Apple’s iTunes/Media/Software alone is about half the size of Google.

      • 程肯

        How does Amazon account for its 3rd-party pass-thru sales?

      • claimchowder

        Don’t know. Horace was (roughly spoken) comparing Apple’s iTunes results to Google’s results, and Google doesn’t have this kind of sales.

      • Kizedek

        I think Horace discusses it in a Critical Path — Google pays a lot for traffic.

      • claimchowder

        Yes, but that’s booked as (traffic acquisition) costand lowers their margin. The 70% pass-through for sold apps *is not booked at all* inside Apple. Hence why I think it should not be part of its market valuation.

        Although with the stock market as crazy as it has become that may be irrelevant…

      • rattyuk

        “How does Amazon account for its 3rd-party pass-thru sales?”

        It handles the transaction and then takes it’s cut handing what’s left to the seller.

      • pk_de_cville

        Amazon must have very creative accounting which actively delivers their story of continually increasing sales with near zero net profit.

      • Kizedek

        The chart shows 14B for Google and 7B for Apple for corresponding, last quarter on chart. As Horace notes, this puts the Apple business he is assessing at half the Google business.

        Wouldn’t the figure for Google also be gross? As Horace discusses in another article or Critical Path, Google pays a lot of that revenue back out as network costs to buy the traffic that creates the ad revenue in the first place. So, Google’s net, like Apple’s, is going to be much lower than that total figure.

      • claimchowder

        Horace’s figures are fine. What I was arguing is Emilio’s calculation of a market value based on revenues of which only a small portion is actually booked. I was saying one should use the alternative figures (the right hand side graph), which only contain booked revenues.
        That would have been 4,4bn, not 7bn.

      • mshipe

        I believe Horace agrees with your interpretation of market valuation as his tweet for this Asymco entry noted that “said empire has zero dollar valuation”. Yet Apple has stated that ITunes essentially breaks even so shouldn’t that be the case? The cost of iTunes appears to be the expenditures required to maintain the largest unified OS platform. Yet if Apple delves into monetary transactions, then the GM for this entity would likely increase significantly as well as provide Apple with more stable, recurring revenue that will enhance it’s valuation by analysts and Mr. Market.

      • NostraThomas

        Market Cap is also determined by speculation, fear, uncertainty, sentiment, etc.

      • http://www.isophist.com/ Emilio Orione

        Exactly it is more human that what people think, but still there are all that analysts, computer programs and mathematical theories, what for?
        The main reason the portfolio theory for investments fails is that it requires rational investors but yet when you see that poker winner gamblers are the more rational and that most of the market money is managed by professional brokers and by computer programs you have to think rational and analysis has something to do with market dynamics, at least it should.

    • ronin48

      Please read what Horace wrote.

      1) The REVENUE of Apple’s iTunes/Software/Services business alone is about half as big as that of Google’s core business. This is a fact.

      2) The REVENUE GROWTH of Apple’s iTunes/Software/Services business alone is faster as that of Google’s core business. This is also a fact.

      Horace was not discussing market cap anywhere but since you brought it up, Apple’s market cap is bigger than Google’s. Much bigger. 20% bigger. $78 billion bigger. These are facts too.

      • Ted_T

        So what you are saying is that Apple’s iPhone + iPad + Mac + iPod businesses are worth about double that in market cap and you have no objection to this valuation?

      • ronin48

        Where did I say that?

        The discussion is revenue and revenue growth.

        Please read.

      • http://www.isophist.com/ Emilio Orione

        My point is that it should be much much bigger than 20% and only 20% bigger is myope.

      • orthorim

        I am not sure I agree. As long as Apple treats its iTunes business as a small profits business, as long as they’re laser focused on hardware – it doesn’t matter very much.

        But if they say build a global payment platform on top of it – boom it’s going to suddenly be worth a lot of money.

        Is there an iTunes music store for Android? If not, there sure should be.

      • http://www.isophist.com/ Emilio Orione

        I was speaking about the current apple valuation by wall street, it is low since they doubt apple can be a growth company any more.
        Horace shows that in Apple there is an high growth business, app economy mostly tied with mobile media services, that is silently grown to half google size and is growing more than google so the proportion should increase.
        App economy is disruptive by itself, apps are the new media, there is a tremendous potential.
        Revenue is what matter here because profit can be masked by investments for future growth.
        I am sure apple treat the itunes business with great care, it is the motor for the hardware sales and it has the potential, after phone market saturation, to be a long term business able to sustain all future hardware developement.
        My reasoning was something like: given that the market values growth and that the app economy has a great potential, the itunes part of apple could be valued by the market the same way it values google, let say 200 billion, if that is true the current apple’s market cap of 470 billion, given the 150 billion cash, is really really low and so the difference between google and apple should be much much higher.

      • Irrelevant to Google

        Well, comparing revenue of one company to another has close to zero meaning. Profit is what matters. Look at the Berkshire subsidiary McLane. They do many billions in revenue each year, but their profit margin is less than 1%, so it doesn’t really affect the bottom line much. If iTunes margins were even vaguely similar to Google’s, then the comparison might matter.

        Different margins + completely different industries = irrelevant comparison

      • Sacto_Joe

        I agree that profit is what matters. I’m not convinced that comparing revenue has “close to zero meaning”. And by that token, I’d say a more apt comparison would be to Amazon than to Google. Amazon is clearly valued on its ability to grow its revenue, and not valued much at all on its net income. It’s taken a “hit” this quarter since its revenue growth decelerated. I haven’t worked the numbers, but Apple’s iTunes revenue doesn’t seem to be decelerating.

        BTW, one of the arguments one hears from Amazon supporters is that it is continuing to capture market share by folding its profit back into growing the infrastructure, and that eventually it will be able to slow growth in infrastructure and increase earnings. Note that the same is true for iTunes.

      • charly

        Building a distribution center(negative depreciation) is a whole lot more expensive than a server farm(high depreciation) so if Apple can’t make money now on itunes they can probably never make money on itunes

      • Sacto_Joe

        I never said Apple wasn’t “making money” on iTunes. What I said is that it’s definitely making money indirectly, and that I have yet to see any figures that tell me how much it is making directly.

      • Huh??

        Could you please elaborate on your contention that a distribution center has “negative depreciation”, whereas a server farm has high depreciation. Neither point makes sense to me, but maybe I’m missing something.

      • charly

        Building a server farm with the same capacity next year will cost much less because cpu, memory, hard disk etc will cost significantly less money so a server farm has high depreciation.

        A warehouse will very likely cost more to build in 10 years than

        it would now and then it depends on the reduced lifespan etc. of the already build warehouse to see if you had any depreciation.

      • charly

        I don’t want to again go in the discussion that profits don’t matter. Making a (real not $1 out of the red) profit matters but profit share, margin compared to others etc. don’t matter

        ps. Assuming clean sheet

      • ronin48

        No. Revenue comparison is relevant if revenue is what you are interested in comparing.

        If you don’t like the topic of the post, tell Horace or write your own blog.

        If you are interested in comparing profit, revenue is still relevant if you know margins and margins in this case are known. Remarkably, hardware company Apple’s profit margin matches and their operating margin beats software company Google’s. I guess that’s what happens when your business model includes giving away operating systems, buying robot and thermostat makers, and buying and then selling failing chip and phone makers for a loss. Maybe they’ll make it back selling glasses.

        Interestingly, it could even be that Apple’s iTunes/Sofware/Services business, at half of Google’s revenue, has higher margins than Google making iTunes/Sofware/Services even more valuable than the revenue comparison implies.

        So if you want to compare profit you can do your own post but I can save you the trouble. Take Google’s, DOUBLE it, add a few more BILLION, and you’ll get Apple’s.

      • Chill Out Dude

        Dude, chill out.

        First of all, I suspect Horace reads these comments, so posting a comment here IS “telling Horace”.
        Secondly, isn’t that the whole point of the discussion board? To challenge ideas? Or do you prefer mindless cheerleading?
        Third, you have no idea what you’re talking about. The total profit (or revenue) of Apple has ABSOLUTELY NOTHING to do either with the article, nor the comment you’re trying to rebut. The comparisons (whether profit or revenues) were about iTunes vs. Google. No one was ever talking about the whole business of Apple

      • ronin48

        You’re confused.

        Facts and objective analysis always trump hunches and feelings. If you want to challenge objective analysis, do it with your own objective analysis or data. You don’t get to do it with “hunches” – even in a discussion board. If you do, you risk getting laughed at.

        I never said total profit or revenue had anything to do with the article. I said the article had only to do with revenue.

  • Luis Alejandro Masanti

    small typo.
    I just check an my old iMac shows in its Mac Store that Mac OS X server is at $19.99-

    • jameskatt

      Yes. Mac OS X Server is $19.99. Quite a bargain. Where were you all this time?

      • marcoselmalo

        I’m still waiting on iOS server. XD (Not really).

  • Space Gorilla

    I’m sure the anti-Apple crowd will arrive soon to explain why this is bad for Apple :)

  • Paul Franceus

    Apple is doomed!

    • jameskatt

      Yep. The ANALysts will say that even though iTunes has half of the revenue of Google on its own and has a higher growth rate than Google, Apple is doomed. Rolling my eyes…

  • Gene Grush

    Is it possible that ITunes made be the best measure of Apple’s installed user base across all product lines and not the quarter by quarter market share that the analysis want to say is dropping. I believe that people that have apple products tend to hold on to them longer and longer. As such, Apple is more dependent on new customers to increase their product sell rates. Thereby generating lower percentage increases on new product sell rates for IPhones and IPads. How else are you increasing the Itunes at greater than 10% a year, other than bringing in many new customers. I have a lot of apple products and I am either buying at the same rate from iTunes or dropping per year. To increase iTunes revenue as fast as it is, it must be driven heavily by new customers which must be a much higher percentage on new sales than existing customers that are refreshing. And if existing customers are holding onto their products longer than android devices Apple’s user base is increasing at a much greater rate than analysis are believe.

    Once the refresh time levels out for existing customers, I would expect that the market share will stabilize or inch upward. For my current IPhone, I am going to refresh after 2 years, when previously I was refreshing every 12-18 months. The next IPhone I may hold onto for 3-4 years unless they come out with a compelling new feature. The Mac is a product line where their refresh time for existing customers is somewhat constant and it’s market share is inching upward.

    Only Apple knows since they have the inside data.

    • Sacto_Joe

      I agree that iTunes is likely helping to measure Apple’s installed base. But recall also that Apple makes multiple products that appeal across the whole installed base. Rather obviously, for example, there is a large chunk of the installed base that doesn’t yet own an Apple iPhone, an even larger chunk doesn’t yet own an Apple iPad, and an even larger chunk doesn’t yet own an Apple Mac. But that doesn’t preclude them from eventually owning all Apple products. That’s the true magic of being a company that serves an ecosystem market rather than a niche market.

    • sne

      That’s an good point, it’d be interesting to see a model of what user share is – most of the reporting is on new phone unit sales, where the data is available, or can be reconstructed from different sources. When I see mobile web usage data, Apple devices are in the majority, and from what I see day-to-day (which, granted, isn’t representative of the market as a whole even in the U.S.) smartphones and tablets are overwhelmingly iDevices.

      If iPhones and iPads have a longer average life – say 3 years of use, either with one owner or two, and Android devices have a shorter active period of use (lack of older hardware support in new versions, lower replacement cost?) then even if unit sales data is accurate, it would not translate well as ecosystem share.

      (I think iTunes revenue can still increase among existing customers – I’ve probably bought more as time goes on and it becomes my default method of consumption. But I agree it might be a better measure of “how Apple is doing” than growth rate in new device sales.)

    • I Doubt It

      “I have a lot of apple products and I am either buying at the same rate from iTunes or dropping per year. To increase iTunes revenue as fast as it is, it must be driven heavily by new customers ”

      Well, sorry, but your sample size of one (i.e., you) is 100% irrelevant. Just as irrelevant as the fact that my family has been steadily INCREASING it’s spend on iTunes. My guess (and it’s just a guess) is that you are more the exception than the rule. For iTunes and iPhone and iPad and AppleTV are all relatively new for the world…even the initial adopters. Seems to make sense that people would spend more as they become more accustomed to the offerings; that has certainly been my case.

      If you are indeed correct (and I doubt that) that iTunes spend generally decreases with time for any given user, that would not be a sign of health (nor profits) for Apple, as it would demonstrate waning interest and engagement is the normal course for any given user; once the number of users peaks, iTunes would be a wasting asset.

    • orthorim

      Not sure people are holding on to their iTunes stuff longer.

      But what I do know that iTunes is completely underdeveloped in much of the world – what you see above is only the west, and mostly the USA. In SE Asia where I live iTunes is too hard to deal with – almost nobody has a credit card, for one. And then, how do you buy anything even if you want to?

      If Apple solves this problem it’ll mean hundreds of millions of $ in additional revenue, as well as a better product.

  • charly

    The development of music sales look bad and those of video don’t look health

    • jameskatt

      Music is going downhill because the music industry is committing suicide by giving product away at all-you-can eat prices.

      The video industry has tight control over its content. It doesn’t want to play with Apple yet. The all-powerful cable companies who pay the video industry billions have strong control. So Apple is playing with the scraps it can get. However, even with the scraps, Apple is second only to Netflix in streaming videos. So not bad.

      And as the industry evolves, AppleTV and iTunes will be the conduit for the video industry – from which it would regain much revenue. This is particularly true since the other channels like Amazon and Google want their content for pennies. Apple is willing to give the lion’s share of revenue back to the copyright holders, unlike its competitors. Apple can be looked at as a partner to the copyright holders – many whom are cable companies.

      • orthorim

        YouTube is killing Music revenue. If my wife starts doing something with a computer, you just know it’s a mass trend because she has absolutely no clue.
        My wife started creating YouTube playlists, and listening to various YouTube channels on her phone. This is how people listen to music now. It’s like MTV and radio packed into one, except you can choose what and when to listen.
        Everybody does it. Why buy music when you can do that just as easily?

        Downloading music via torrent would be way over people’s heads. YouTube – everyone can do it. This is where the losses are coming from. Not from a nerdy teenager in their basement.

      • charly

        All-you-can-eat is the only logical, fair and economic way to sell music as music

      • assertion

        “All-you-can-eat is the only logical, fair and economic way to sell music as music”

        Baseless assertion.

      • charly

        Not really

        All-you-can-eat is just an economic way to have pay-per-play which is fair and its close to $10 a month is close to what cd sales delivered to the record companies.

      • assertion

        A lot more assertions here. Why is “pay-per-play” fair? And to whom is it fair?

      • charly

        Paying more for a peace of music that you play a million time than for one you play once is fair.
        $15 billion is about the maximum of cd sales in the US. My guess is that $10 billion of that ended up by the record companies so you need to sell around 80 million subscriptions per year. I think that that is doable. But with the lower margins required to be health (No need to produce a whole record and cd’s don’t need to be pressed) i think that 40 million is only required to get health. IIRC 40 million is close what they have now.

        ps. For the life of me i don’t get why Apple doesn’t have a spotify clone

  • jameskatt

    Go iTunes!

  • Kyjaotkb

    Hi Horace, why are you gross-upping Apps revenue and not Music revenue when going from the agency view to the gross revenue view on your first chart? It is well known that Apple takes a ~30% cut on music too. Your graph is thus totally misleading – or did I miss something? Thanks

    • iObserver

      The disconnect comes in how Apple reports it’s revenue. It reports 100% of the revenue from music (For example a song is sold costing 0.99 it will report as 0.99 even though its cut is 30%). On the other hand when Apple reports App revenue it only reports it’s share of the pie (so when an app sells for 0.99 Apple reports 0.33 in revenue).

  • Sacto_Joe

    We need to keep in mind that this huge amount of revenue doesn’t directly net Apple much income. Apple has generally touted its 30% as basically a break-even cost. Has this changed? I don’t believe it has. That is not to say that Apple doesn’t receive a huge reward from iTunes. But the reward is not direct. Rather, it is the indirect reward that accrues from creating both a satisfied customer base and satisfied developer base, thus increasing the attractiveness of their platform. In modern parlance, the iTunes store is a loss leader. It gets customers in the store to buy the product Apple actually makes its net income from.

    • Apple vs Amazon

      First of all, are there any reported NUMBERS (rather than comments) that would substantiate this oft-repeated “loss leader” concept?
      Secondly, why does the market drool over Amazon selling so much digital content, but then treat Apple’s selling of the same as irrelevant from a profit standpoint? Is there some reason to believe Amazon’s economics are completely different on this front?

      • Sacto_Joe

        I think your comments about Amazon are very on point.

        As regards your first comment, perhaps the term “loss leader” is used too loosely by me. I did not mean to imply that Apple makes no profit or even loses money, but that iTunes is used primarily as a magnet to attract customers to its money-makers. As regards numbers, I don’t really think Apple provides that information, nor is it likely to do so.

        By the way, one inference one can draw if in fact Apple is making little net money from iTunes is that it is negatively impacting overall margins. A second inference one can draw is that such a negative impact would be increasing as time goes by, all things being equal. That is, if Apple’s revenue growth from other sources continues to decrease while its revenue growth from iTunes continues to increase or stay the same, then a theoretical low margin from iTunes will more and more decrease the overall margin for Apple.

        Countering that, of course, is the possibility of new disrupting products. And in addition, margins are only part of the story. For an investor, growth in earnings per share is more important.

      • Gotta Be High Margin

        I guess I’m just not seeing how iTunes–at its current scale–is not a very high margin operation. What are the costs for Apple? There is zero inventory cost. Sure this requires a lot of servers, but that must scale pretty well…in other words, the cost/unit must go down significantly over time. They’re taking in many billions and billions every year; certainly they’re only spending a fraction of that on infrastructure. Add in some small costs for administering the sites. Again, I just don’t see how this isn’t very high margin, and likely to steadily increase in margin going forward.

      • Sacto_Joe

        When you get right down to it, there doesn’t appear to be any data that’s easily available to track iTunes operating margin. Here’s an old article of Horace’s, but it’s out of date, since Apple now gives away a lot of its software. Thus, not only is it forgoing revenue, but the costs associated with that missing revenue will need to be absorbed by the remaining iTunes revenue.

        http://www.asymco.com/2013/03/22/so-long-break-even/

      • marcoselmalo

        We really need Horace to get in on the next conference call and ask pertinent questions on iTunes/software/service.

        Horace, have you ever tried to contact anyone at Apple regarding being in on the call and being allowed to ask questions?

  • synthmeister

    Whoa, that’s amazing. Apple doesn’t report iTunes revenue?

    Perspective: Amazon net sales were $25.59 billion in the fourth quarter. Operating income was $510 million in the fourth quarter.

    So iTunes generates almost 5X the profit of ALL of Amazon on less than 1/3 of the revenue.

    (I think I stated that correctly.)

    • Sacto_Joe

      I don’t believe we know the net income Apple gets out of iTunes, so we can’t really make that comparison.

      • synthmeister

        Apple states it pretty clearly in their Quarterly report:

        “The iTunes Store generated a total of $2.4 billion in net sales
        during the first quarter of 2014 versus $2.1 billion during the first quarter of 2013.”

      • Sacto_Joe

        Thanks for that info! So we’re looking at $23.5 in “gross revenue” and $2.5 billion in “net sales”. Assuming Apple’s “net revenue” was (23.5×0.3=) $7.05, and the “margin” could be seen as (2.4/7.05=) 34%. Or is the “gross revenue” the determiner? In that case, the “margin” would be (2.4/23.5=) 10.2%.

      • Sacto_Joe

        I think Apple means “net sales” as differentiated from “gross sales”, that is, 30% of gross sales approaching $7 B last quarter. That’s different from “net profit” or “net income”.

  • lrd555

    Apple’s #1. In music, movies and soon to be e-books. Like it or not.
    It’s that simple.

    • Barchiel

      eBooks? You sure?

      • lrd555

        My point is that Apple sold 26 Million iPads last quarter. If the current pace continues, eventually Apple will sell more ebooks per quarter than Amazon. At the current pace, this can happen by the end of this year.

      • charly

        You can’t read Amazon ebooks on ipads? Really?

        ipads are also not ideally suited for reading. E-ink is better for reading and AFAIK none is compatible with itunes

        ps. 25 million sounds great but that is about the same as first brand Android.

  • synthmeister

    Horace, why does the Form 10-Q list $4.397 Billion in the table but then says $2.4 billion in the body text for “net sales of iTunes.”?

  • obarthelemy

    Totally off-topic, but at last the first data point in a very old, and up to now rudderless, discussion:

    “Subscribers with flagship phones from Apple, HTC, and Samsung have an average monthly usage within 10% of each other” ( https://www.sandvine.com/pr/2014/2/11/sandvines-device-insights-dashboard-reveals-that-iphone-users-love-itunes.html ).

    It’s not Android phones vs than iOS phones, it’s entry- to mid-range phones vs high-end phones. iPhones don’t sell more data, high-end phones in general do.

    • gaps

      For this to be true, “flagship” and “high-end” Android phones must sell in very small proportion to iPhones, in order to explain the usage gaps.