Why iTunes may be Apple’s biggest asset

By , Jun 4, 2013

Apple iTunes (Morgan Stanley chart 001)

When Apple’s iTunes Store debuted on April 28, 2003, it launched with zero customers. Today, Apple has more than half a billion iTunes accounts. While not every account holder gives Apple his or her credit card details, most do. Therefore, it’s fairly safe to assume that Apple with its online-only content store is the biggest seller on the web.

Indeed, an analysis by Morgan Stanley reveals that not only is iTunes second only to Facebook’s one billion accounts, it also makes more money per account than Amazon. More interesting factoids follow…

Morgan Stanley analyst Katy Huberty shared (via AppleInsider) interesting charts showing just how far ahead iTunes is in terms of revenue and user base.

As seen below, second-ranked Amazon has about 200 million active accounts. Yes, iTunes has more than double the accounts of Amazon.

Even though Facebook leads the pack with its nearly 1.1 billion user base, Apple grew its account base the fastest in 2012 (55 percent) whereas Facebook grew “only” 25 percent (Amazon: 22 percent).

Apple iTunes (Morgan Stanley chart 003)

In terms of money, Apple in 2012 generated an average revenue of $329 per each Apple ID account versus $305 per each Amazon account and $125 and $123 for eBay and Netflix, respectively.

Don’t forget that Apple only sells a fraction of products compared to the likes of Amazon and eBay.

Moreover, iTunes is an online-only store which only sells low-margin digital content. In fact, although it keeps 30 percent of proceeds on digital downloads, Apple’s margins on apps are just two percent and one percent on music.

Apple iTunes (Morgan Stanley chart 002)

Huberty expects that Apple will reach 600 million active Apple ID accounts by the end of this year.

When asked what advice he could give to print die-hards, Steve Jobs quipped “price low and go for volume,” which is saying a lot considering Apple’s strength in selling the world’s content online.

No matter how you look at it, iTunes is Apple’s Trojan horse.

Each time it unveils a brand new device tied to the iTunes ecosystem, Apple leverages the hundreds of millions of existing users whose Apple ID account is enable for one-click purchasing.

And with a rumored iRadio streaming music service and an iPay mobile payment system, if anyone can mainstream music subscriptions and digital wallets, it’ll be Apple. The importance of the iTunes billing system can’t be overstated.

Think about it – you’ve already provided Apple with your billing information. If the next iPhone came with an NFC-enabled mbile payment solution, Apple could theoretically partner with retailers so you could authorize purchases at brick and mortar stores using your device tied to an Apple ID.

Thanks to iTunes.

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  • J M

    If only the windows software for iTunes wasn’t so shitty…

    • Frostybrutality

      Do you expect anything less? Its Windows man.

      • Guest

        It’s still not Windows fault that the software Apple created for it sucks, it’s Apple’s fault. I have way more complex software’s running than iTunes that flow more smoothly.

      • Frostybrutality

        You can argue that all day which may be true. However itunes for the mac has never failed me compared to when i owned windows machines. Now not everyone will agree or have the same experiences.
        Just from personal experience.

      • J M

        That is our point! For Mac, iTunes seems to work smoothly and for a windows computer it does not. Many other applications work without an issue between both Mac and PC, and there are far more demanding programs I run without a problem on my own computer. For whatever reason, Apple seems either incapable or unwilling to invest the time to make an program that runs properly for their Windows customers. Neither of those two reasons are acceptable from my point of view…

      • Frostybrutality

        i wouldve replied quicker but disqus sucks on mobile. Any who and why do you think iTunes runs more smooth on a Mac compared to a pc? Im sure apple invests time in windows iTunes but not as much as the Mac for obvious reasons.
        1. Its apples own products. It has to work regardless.
        2. Software in general runs better on a mac in all aspects. Ex: Office, Outlook, Photoshop, Windows itself.
        3.There are sooo many types of Windows computers out there that it becomes a cat and mouse game for apple. So many different drivers, graphics cards, chipsets, etc. Whereas you have way less Macs out there to deal with. And lets not mention Windows software. We all know Windows 8 shouldn’t have iTunes until Microsoft fixes that crap.

      • Chuck Finley

        Are you actually an idiot? You’re literally a shining example of how to be an idiot Sheeple. Seriously, you’re one of those people who make Mac owners look bad.

        Office runs terribly on Mac. It’s slow and cumbersome. Photoshop works no differently on a Mac or Windows and Windows itself works efficiently on a Mac via Bootcamp because it’s literally working off the hardware, it has nothing to do with the fact that it’s a Mac, it’s just using the hardware it’s been installed on to. It doesn’t even work better on a Mac, it’s the damn same.

        And if a software/computer company can’t deal with the fact that all hardware isn’t unified under one banner then they really are a godawful, utterly terrible software/computer company because frankly, the idea that all hardware could ever be unified is utterly stupid. Seriously, every Windows software company has been able to deal with it since the advent of the PC. It’s not challenging, especially if you consider something as complicated as a computer game works on every different PC and you then consider that you’re banging on about something as simple as iTunes.

        The reason why Office and iTunes don’t work well on OSX and Windows respectively is because they are ports. They were coded for different OS’s and they will never work as well on a non-native OS. Your absolute drivel about how things work better on a Mac is utterly stupid.

      • mehrab

        HOW come my mac book air runs windows app or windows itself better then my gaming desktop with core i7 and nvidia 650 something lol

      • Dan

        I would say that you’ve probably got a poolry build PC or are trying to slander anything that is not Apple like you usually do.

        I have windows 8, i7 cpu, 16GB ddr3 ram, GTX 680, SSD drive. With my setup, everything loads in 2 seconds, never had a crash or lag. I run intensive games (ie: Crysis 3) and use several programs at once (Office, Photoshop, Maya auto desk…).

      • mehrab

        idk man my macbook air is just more responsive, my specs are a 8gb ram 5400 rpm hardrive and windows 8 is a bit slow compared to os x anyway i never meant to say it was slow or something i said it fails to ‘keep up’ when many apps are open

      • Dan

        I’m not overly familiar with a MacBook but I would wager it has a SSD drive. If you put a SSD in your PC, it will keep up ;)

      • mehrab

        Macs have flash

      • Dan

        Ah ok, so that explains it. Flash memory is similar to SSD technology, it has no moving parts and information can be accessed more quickly. Anyhow, like I said, you can’t compare a PC with HD to a Mac with either flash or SSD :)

      • mehrab

        Windows is slower then macs
        That was what i wanted to note.
        Windows is super “clean and smooth for the first few days then it turns itself to pakistan”

      • Dan

        If it does that’s your fault. Haven’t Haven’t had trouble Windows since Windows 7.

      • mehrab

        No as it ages it gets uber “slow”

      • Dan

        Whatever man, I’m arguing with a guy who doesn’t even have the sense to put in a SSD in his system then calls it slow. I’ve been building PC’s for my family and friends for years and I’ve come to realise that people always blame the system when it’s obviously user error. Keep using your 5400 rpm and 650 something vid card and calling it slow. I’m going to keep my using my PC and witnessing its blazing fast speed. Good day!

      • mehrab

        Gooo WINDDOWSSS 8!!!

      • Dan

        Great comment, I’d give you +10 if I could. I was about to reply to this guy then I saw you did it for me. I agree 100%.

      • Damian W

        “The reason why Office and iTunes don’t work well on OSX and Windows respectively is because they are ports. “…….I guess you meant some other programs, not iTunes, right? iTunes is smooth as butter on OSX (it is not a port).

      • J M

        Reread that sentence “Office and iTunes don’t work well on OSX and Windows ***respectively***” meaning Office on OSX and iTunes on Windows.

      • Damian W

        True, my bad. Somehow i skipped the word respectively

      • Damian W

        Office is pretty slow on Mac. I would say PC are actaully faster due to higher specs. Macs run very smooth, but are not as quick as high-end pc.

      • mehrab

        Macs slow? Kill me now

      • Damian W

        Oh boy…I did not say they are slow. I said high-end PC are super fast. Faster than Macs. Let me know when should I kill you.

      • mehrab

        Incase you hadnt noticed that macs are high end pc”s you just cant argue with that macs are much better then windows pc”s the macbook proretina 15 inch has the ratings frm sites like theverge/pcmag on any laptop and the highest customer satisfaction

      • Damian W

        Yes they are high end for first months of the release, however they dont carry the strongest CPU, GPU and etc. Not to mention in one or two years you will start experiencing significant slow downs in certain programs. PC Desktops will always stay ahead in this game of best (or newest) hardware.

        Of course this situation could be easily fixed if you could upgrade the hardware on Macs. But Apple would not sell many computers in this case.

        Satisfaction and benchmarking are two different things. I am very satisfied with my Mac Pro from 2011 (with SSD and 8GB ram, i7), but I am aware of the fact it is much slower (especially when I multitask heavily) than my PC desktop (same SSD, 6GB ram (faster ram), different i7) from about the same year. In terms of satisfaction I put my old mac at the very top, it performs well and i can do everything on it quickly. Yet, my PC desktop is still faster. One time i opened on my PC about 20 programs, and i did the same on my mac. My mac almost died choking, my pc was running like nothing happened.

      • mehrab

        Your something special
        Oh the pc has a faster ram and muititasks better okay?

      • Damian W

        Sure. Better cpu and top quality ram make big difference.

      • mehrab

        No it wont lol

      • Damian W

        Yes it will lol

      • mehrab

        i was being sarcastic when i said no it wont

      • Damian W

        I was being sarcastic too.

    • mehrab

      yet its the most used and downloaded windows app

  • Johnathan Jennings

    I can’t say that I’ve ever used iTunes. The only time I used it was to activate my iPod touch 2nd generation and that was at my grandmas house. I just hate computers. They’re slow and unproductive for me. I use my iPad for everything I would use a computer for. My only wish is that I could jailbreak my iPhone 5 using my iPad.

    • RyanFoley

      Even better: Evad3rs release a usb to lightning storage cable containing jailbreak software. Just press a button and it jailbreaks it, no PC required. That might make some bucks

      • Johnathan Jennings

        Love the idea

      • Mr. E

        You should patent that ;)

  • Jack Wong

    Not that many people know.

  • Rickm_jr

    I’m going crazy over here ever since I somehow screwed up my jailbreak on 6.1.2 and was forced to restore (and upgrade) to 6.1.4. I’m really stuck on this stock OS for quite awhile aren’t I? No way to go back and the Evad3rs clearly aren’t worried about the little update ._.
    This wasn’t even on topic, lol, sorry

    • brooks whiffen seale

      Go to ios 7 beta!

      • Rickm_jr

        Lol are they still signing the betas for people without dev accounts?

      • brooks whiffen seale

        Im not sure.. Its worth a shot since you lost your jailbreak

  • milksop held

    Wrong the letter ‘I’ is apples biggest asset

    • http://twitter.com/aidanharris1 ✪ aidan harris ✪

      That and the patent they own for a rounded rectangle…

      • http://173.58.214.169/ That’s what Siri said!!!

        thats too general

  • Chuck Finley

    No shit does a new piece of software launch with zero customers.

    What a redundant comment.

  • Gorgonphone

    itunes is a great media hub for all ios devices …