Shane Cole
The explosive growth of Apple's App Stores has made the company's iTunes unit one of the most valuable businesses in the world, driving more revenue than old warhorses like Xerox, CBS, and U.S. Steel.
If the iTunes business were spun off, its $23.5 billion in gross yearly revenue would be good for 130th place on the annual Fortune 500 list, according to data compiled by Asymco's Horace Dediu. The iOS and Mac App Stores alone, with more than $10 billion in sales last year, would themselves slot in at number 270 ahead of credit firm Discover and casino giants MGM and Caesar's.
Dediu estimates that App Store revenues grew by 105 percent last year while sales from the iTunes Music Store declined by 14 percent, helping apps leapfrog music as Apple's largest source of content revenue for the first time ever. Revenue from software and services is also growing quickly, despite the fact that many of the company's software products are now free with new devices.
Overall, the iTunes business is growing at approximately 34 percent year-over-year.
The growth is likely to march on as Cupertino, Calif.-based Apple continues to post record-breaking hardware sales. The company sold 51 million iPhones and 26 million iPads in the just-finished holiday quarter.
Launched in 2008, the App Store now boasts more than 1 million apps in 24 categories with over 500,000 optimized for the iPad. Apple has served more than 65 billion cumulative app downloads in that span.
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16 Comments
Steve Ballmer was going: "come on, Windows App Store! Make daddy proud!" Right before the Surface RT cratered.
Very impressive. DOJ to investigate the success of the iTunes Store.
And what is really amazing is how they operate it at pretty much break-even overall, according to what Apple has said.
It’s now illegal to partner with music companies to set the price of a song at 99¢.
It is always interesting to read Apple Insider's spin on stories. Early this morning when I read a different version of this story, the focus was on analysts having to actually start considering the App Store as an Apple growth engine instead of ignoring it!
In the other version of the story, Horace Dediu provided perspective of how big the App Store is by comparing the App Store's yearly growth to Google's yearly growth. The App Store's yearly earnings had grown to reach half of what Google's core business earns in a year. Horace Dediu had even projected the App Store's earnings were growing faster than Google's!!
Instead of just writing this response, I decided to read what Horace actually wrote just to make certain the other version of this story chose not to mention Xerox and CBS. To my surprise and dismay, Horace never mentioned Xerox and CBS. This site chose to edit out the references to Google and put in references to companies not in direct competition with Apple.
For a site that is focused on providing Apple news, I wonder why this site chose to not give credit to Apple's accomplishment especially since it made the effort to write an article about Google speaking with Foxconn concerning robotics.