Analyst: Apple could grow its music business to over $5 billion by 2006

“Apple Computer’s iPod boosted the company’s leadership position in the market for digital music players in 2004 and played a large role in restoring Apple’s legendary shine among technology investors. As a sign of Apple’s digital-music strength, the company shipped 2.7 million iPods in the third quarter alone, and NPD Techworld estimated that iPods made up 66 percent of all digital music player sales in the period. Many industry analysts estimate that Apple will report more than 4 million iPod shipments for its fourth quarter,” Rex Crum reports for CBS MarketWatch.

“Many computing-industry watchers believe Apple will likely take the wraps off a new, flash memory-based iPod when Jobs greets Macintosh fans at the MacWorld show in San Francisco on January 11,” Crum reports. “Steve Lidberg, of Pacific Crest Securities, says that a flash-memory music player, and new initiatives in 2005, should help Apple grow its music business to more than $5 billion by 2006. ‘We look for Apple to introduce a flash-based iPod and wireless accessories and new types of audio content to monetize is customer base,’ Lidberg said, adding that he expects 2005 to be a ‘strong year’ for Apple to set up new partnerships to bring iTunes to more devices.”

Full article here.


  1. I want streaming iTunes from my Desktop at home to my Car. Apple, get with the program!! Launch (or buy) a satellite already! ” width=”19″ height=”19″ alt=”cheese” style=”border:0;” />

  2. Analyst report how many units ship, not how expensive they are. They count a $4,000 G5 tower (with monitor) the same as a $500 Dell in terms of market share, one. It doesn’t mater if the $500 Dell is replaced 6 months later. Actually it does, it counts as two.
    If the iPod flash and headless Mac ships (as rumored) it will put the mac on a level (market share) playing field for the first time.
    Here’s to 2005!

    Brought to you by the word “products” as in iPod flash and headless Mac. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” /> (I know, I know, it’s just a rumor!)

  3. To be honest, this really isn’t that much of a leap.

    Apple could very easily sell 25 million HD-type iPods in 2005 (broken down 4.5/5.0/5.5/10.0 across the quarters), and possibly another several million flash-type units assuming the right price/performance point.

    2006 could see 35 million HD-iPods (6.0/6.6/7.4/15.0) sold at an average of around $225, plus another 10 million flash-players at $125.

    Those figures would generate over $9 billion dollars on their own, not including accessory or warranty sales or music.

    If – for 2006 – you assume an active global audience for iTMS of around 20 million customers purchasing 12 tracks/month, you can see an annual market of over $2.85 billion.

    So now Apple’s music operations are bringing in $11.85 billion in sales, and are possibly bringing in nett profits (after contributions to overheads etc.) of around $900 million.

    Under these circumstances, the spin-off of Apple’s music operations could easily value the enterprise at over $30 billion, so – like I said – not that much of a stretch.

  4. I think 10 and 15 for the final quarters might be a little optimistic.. but I hope I’m wrong. Loaded up with APPL stock 2 years ago and still buying… I’m quite happy!

  5. Sizewell:

    Sadly, that’s the way the marketplace works with this gross distortion of the 4th quarter. However, if you think about it, 35 million iPods “only” requires Apple to organise the production of 3 million units/month which isn’t that big a stretch given the amount of capacity that can be developed either in the PRC or Taiwan given appropriate levels of notice and planning.

    If Apple wants to play in the mainstream CE marketplace, this is what will be required.

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