“Apple Computer and its CEO Steve Jobs have a long history of turning other people’s clumsy innovations into useful products. Apple was not the first company to build a personal computer, but the Apple II was the first one that was user-friendly enough for average people. Apple didn’t invent the graphical user interface, but the Macintosh — back in 1984 — showed the rest of the industry how to do it right,” writes Larry Magid for CBS News.
Magid continues, “Apple certainly didn’t invent music downloading, but its new service, the iTunes Music Store, is the best effort yet. The service, introduced on April 28, is the first to have the blessings of all five major record labels and it’s the first commercial service to sell songs a la carte without the user having to pay a monthly subscription fee. Users pay 99 cents for each song they download.”
“That’s the good news. The bad news is that most people won’t be able to use this service right away. For now, it only works on the Macintosh, which represents about 3 percent of the PC market. A Windows version, however, will be out by the end of the year,” writes Magid.
Full article here.
“For now, it only works on the Macintosh, which represents about 3 percent of the PC market.”
Why don’t these guys get it? That’s 3% of sales LAST YEAR. The installed user base is much higher, probably between 35% to 40%, and also, a very important point when talking about things like the Music Store, or other home user activities, a LARGE number of the Wintel machines out there are business machines that would never access this type of service anyway, so if you want to look at the percentage of total computers that WOULD access the iTunes Music Store, it’s way higher than 3%.
WRONG. I believe the total Mac installed base is around 10-15%. But what percent of that is OS X? 25% at best. So that means that Mac OSX is around 2.5% of the PC world right now. What percent of that downloaded iTUnes already? Maybe 50%? So that takes us down to 1.25% of the computer world. So when we read that 275000 songs were bought by 1.25% of the computer world, we have to really think about the profits Apple will get when iTunes hits the Wintel world. Apple stock anyone?
Off-topic: Marketshare Decreasing – Is that bad?
Several corporate warehouses I’m familiar with recently bought 30 new computers to use as dumb terminals for inventory. They bought them from Dell and all had Windows (of course). That’s 30 more PC’s than were in the market last year so if this same trend is applied to many other corporations that’s going to look like a huge increase for marketshare and windows that Apple can’t keep up with. It’s not; None of these PC’s will ever log into any website, burn music, run any app other than a terminal emulator, or play games. But the statistics make it look like the Mac numbers are pitiful. I don’t doubt the 3% number is probably true, but to me it just reflects that the home/small office market is a diminishing part of what people use “computers” for.
lets do the maths: lets say 200.000 downloads a day. with 1 percent of all computer-users using the service today. that is 6 mio downloads a month and 72 mio downloads a year. if all computer-users would use it (100%) that is 72 mio x 100, which is 7,2 billion (!) downloads a year. apple has a revenue of 33 cent a track. that makes around 2,4 billion in additional revenues a year. apple now has 6 billion revenues a year.
The other restriction is of course that so far, this service is only available to users in the US.
If they rack up 200.000 downloads with US customers only, (that will drop significantly, though), they have a very major source of revenue at hand!
Please let the sort out international support as soon as possible!
You need a US based Credit Card at the moment.
winmx is free
Kazaa is free too
As John has pointed out, the audience producuing these numbers is much smaller than people think as related to market share / installed base numbers alone. To review: in addition to being constrained by availability to Mac users only, the service is also currently limited to:
– Mac users running OS X 10.2 or higher
– Mac users that had actually managed to download iTunes 4
AND lest we forget
– Mac Users in the US
The US only thing means that whatever number for Mac marketshare or installed based share needs to be knocked down by 50%. The OS X aspect means that number in turn probably also needs to be knocked down another 50% or at least 25%. Finally not all of the eligible users certainly actually had iTunes 4 yet during that period.
Geeze, once this gets to all of the mac market much less just 20 to 30% of the Windows market. Katie bar the door.
In terms of expenses… I wonder if the Akamai expense is a sunk cost (for current online ops) or how much is incremental with the MusicStore. It might not be much more incrementally given the massive online bit pushing Apple does with software update and movie trailers. Data center expense for actual Application Servers probably is a sunk cost that was expended long ago for AppleStore, .Mac, and other online efforts. There is the amortization of the R&D for the online presence and the iTunes client development but it doesn’t seem like that would be orders of magnitude more expensive than efforts Apple has already done. I guess the bottom line is that moving forward, the incremental additional net income to Apple through each song sale is going to be pretty close I figure to the .34 cent margin over the royalty. That margin would get wiped out for people that just buy one song. But most people seem to buy more than one at a time, and Apple appears to be billing CCs in chunks when possible.
dn
You can run iTunes 4 on 10.1.5. 10.2.5 is just “recommended” but it works with 10.1.5, so the itunes web page says.
All the media outlets listen to IDC when quoting ‘Market Share’. It’s, of course, a completely ignorant way of calculating real market share. It is a well accepted fact that Mac customers buy new machines only 1/2 to 1/4 as often as Wintel customers. Thus, true market share (or installed base) is totally different than sales in any given year. Somehow, someone needs to get to all these Journalist who don’t know this and just go with IDC’s numbers. Personally, I write ever author I can to explain this to them, whenever I see an article quoting it. If everyone that knows better did this, maybe this would start qualifying their figures. Saying 3%, when it’s actually closer to 10-15% is a huge change in the eyes of executives making decisions on producing games and other software, not to mention the fact that it’s a great way for Wintel guys to show their bosses that buying Macs will cause problems because of it’s low market share.