Apple publicly understating iTunes Music Store downloads?

“Some buzz circulating that Steve Jobs and Apple may be doing a masterful job of understating the success of iTunes to discourage competitive entry. After announcing a 50 million download total, Jobs curiously volunteered the fact that iTunes would fall short of its 100 million total,” Digital Music News reports. “Several months ago, Jobs admitted that the service was essentially a loss leader designed to power sales of iPods, a discouraging note to other potential entrants. Pepsi totals were not layered into recent sales figures, though it is not exactly clear why. Could the download total be much higher than Apple`s published numbers?”

Full article here.

21 Comments

  1. With all of these companies OVERSTATING profits, is it legal to UNDERSTATE?
    And if they are selling more than they are telling and that is still more than 10x the closest competition, then WOW ^_^

  2. Oh, no, Minerva! Another lawyer in our midst. It’s perfectly acceptable to speculate “conservatively” as long as the published repaorts are accurate.

    Or, maybe not…

  3. pkradd:

    Full disclosure of total sales and losses – yes.

    But do they have to be completely accurate as to the attribution of those sales? In other words, once you dispose of the reporting you must make to comply with SEC regulations, I bet everything else is just funny money until you next make a regulatory filing.

  4. I think it is highly unlikely that Apple would downplay the figures. People are just starving for something to talk about because we have had such a dearth of Mac News lately.

  5. Brett, what planet are you on? Apple stock right now is at a 3 year high, and if ya spent 2K about 1 year ago, yu would have a profit of about $700 now. talk about a significant annual growth for the last 52 weeks, and if you spent 1300 back in 2002 you would more than have doubled your investment. by selling now. So don’t think sareholders are upset with apples performance.

    My only beef is that they dont distribute dividends anymore. Haven’t for many many years, if they did I would have it reinvesting in itself, and watch the number of shares I have grow.

  6. Wow, Lokiz! If I ‘spent’ $1 million ~1 year ago I would have a ‘profit’ of $700k. That’s great: so then if I spent $1300 back in 2002 I would have more than 500 times my investment.

    And yeah, I wish they both distributed a real bunch of dividends, and increased share holder equity at the same time. Then I’d really be in the money!

  7. hey man.. why not… isn’t this the perfect business model..? you make a killing on the most elegant electronics on the planet (ipod line) and none of your competitors are impressed w your financials so they don’t jump in..

    furthermore the death of buymusics can only help

  8. Apple doesn’t need to do that. Their competition should be, and is, doing it for them. Anyone thinking about getting into now only needs to look at the (lack of) success enjoyed by BuyMusic, and Napster. There was an article here just the other day about another company (whose name I don’t remember) who was set to launch a service but did not because they couldn’t find anything that would set them apart from the others, and fuel sales. In and of itself, it’s not a profitable venture. You need to either have money to support the loss, as Microsoft does, or have it drive another segment of your business that is profitable, as Apple does. That being said, I hope that when the end of April rolls around SJ is able to say they sold 125 million songs.

  9. The article notes: “Several months ago, Jobs admitted that the service was essentially a loss leader designed to power sales of iPods”

    Then it is a bit “irrelevant” as far as the revenue flow goes if Apple sells more of something that it loses money on each one than it is admitting. If if loses money on each song and has a shortage of ipods and can�t meet demand then that is one bummer.

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