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iTunes and the Halo Effect

Here's our final excursion into Excel's charting capabilities. Up to this point we've ignored Apple's non-hardware sales. Now we take a look at what we call "Other Music Sales" and what Apple calls in its 10-K filings "Other music related products and services" and defines as "iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories."

Apple Product Line Sales Charted

Apple other

Although Apple's financial reports don't break this figure out in any more detail, we aver that the iTunes Store accounts for the overwhelming majority of these sales. After all, the iTunes Store sold its 5 billionth song on June 19th of this year - it wouldn't have required a lot of help from "Apple-branded and third-party iPod accessories" to reach $2.5 billion in "Other music related products and services" in 2007. (Break-out product-line figures for 2008 will not be released by Apple until it files its 2008 Form 10-K at the end of this year).

Notice also that in 2006 iPod net sales passed Mac net sales before beginning their inevitable market-saturation plateauification in 2007. Apple gambled that the iPod's much-vaunted "halo effect" would begin to drive Mac sales upward before the iPod climbed atop its sales-growth mesa. They won that gamble.

Jobsian Other Growth: A-

One final thought about these metrics: Although the world economy is swiftly flushing itself down the crapper, Apple's impressive $25bn in cash reserves will help it weather the reduced consumer and business spending during the expanding fiscal hideousness. When the current economic tsunami finally recedes, Apple should be in a far better position than many of its washed-out-to-sea competitors, especially in the music-download and smartphone spheres. ®

Rik Myslewski is the former editor in chief of MacAddict and former executive editor of MacUser. He joins The Reg full-time on December 1.

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Latest Comments

Really?

"Apple isn't doing as well as their marketing would have you believe"

Well, far from me defending a company, any company, let alone Apple. All I have ever bought from them is my first gen 4GB iPod nano (I like it), which I plan to retire when (if) I get a Touch. But I dislike Apples dictatorial style and all that.

That said, the article did not present marketing. Or at least not just. As far as I could see, the article presented some charts with not too shabby numbers on them. I wish I had a company doing that badly. Or are you implying those numbers are fake (marketing)? Call the SEC or whatever, then?

@AC "That old trope again.."

Well, but they do not listen with their senses+reasoning, they listen with their emotions... There's serious research about this, "the taste of brand", you know. And they have no clue what you are talking about anyway. Your reasoning is thus wasted on those you're trying to reach, really.

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bloat

"Software for windows platforms tend to be developed with easy ram upgrades considered more favourable than efficient code. Maybe with Macs there's more of an attitude to make it work on the kit that came out of the box"

I don't think it's a case of Apple trying harder to make software work on old hardware. They are primarily a hardware company. If anything making people upgrade more often would be good for their business.

Like OS X, Linux runs on old hardware. I think that's because it's well programmed.

Microsoft has always written bloated software. For example, compare the number of system calls made to serve up one static html on IIS:

http://www.devside.net/blog/wp-content/uploads/2007/09/iis_425px.jpg

and the same thing done by Apache:

http://www.devside.net/blog/wp-content/uploads/2007/09/apache_425px.jpg

Also consider that many applications run faster under Wine than they do in Windows, and that Samba has historically given better performance serving files than native Windows.

Åpple uses Carbon and Cocoa to build OS X . How many platforms and languages does Microsoft use? The more complicated you make things the more likely there are to be failures, and the more "workarounds" that have to be added to address faults.

One other big factor, I think, is Microsoft's staff retention. MS keeps their staff employed even when they are rubbish programmers or have barely any work to do. I've heard first hand from developers sent to coding conferences who log in at the conference, go shopping all day, then log out at the end.

This is an enlightening read:

http://moishelettvin.blogspot.com/2006/11/windows-shutdown-crapfest.html

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Apple properly sliced & diced!

I have used Macs professionally since, well, 1984, and I have survived years of both Apple/Mac zealotry and repeated premature announcements of Apple's imminent demise. Very few biz-tech writers have correctly dissected Apple Computer's inner chronology (and reasons for its recent market success) as well as does this author. The article even has lovely Excel charts! :-)

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