A Brief History of Apple’s iTunes

Apple‘s (NASDAQ:AAPL) iTunes was introduced in 2003 to accompany their still relatively new mp3 player, the iPod, which was first introduced in 2001. In its first week, iTunes sold one million songs, and since that first week, they’ve seen sales soar as they’ve added new content and cultivated users all around the world.

Launched on April 28, 2003, by July of the next year, 100 million songs had been sold and the service had already been made available internationally in the U.K., France, and Germany. The service continued to spread to different countries, and ultimately began offering more than just music, adding TV shows and music videos in October 2005, full-length features films in September 2006, movie rentals in January 2008, the App Store in July 2008, and HD TV in October 2008.

Last week at the WWDC, Apple presented some astounding figures for the download service. So far a grand total of 15 billion songs, 130 million books, and 14 million apps have been downloaded from iTunes by its 225 million users. Developers of the 425,000 apps available on iTunes, the 90,000 iPad apps, and the 100,000 game and entertainment titles have been paid $2.5 billion over the last eight years.

After Apple pays off developers, movie studios, record labels, it’s left with an estimated $113 million a month, or $1.3 billion a year. Of course, a significant portion of that money goes toward operating costs, with any little leftover likely going toward further development. iTunes isn’t a money making venture, at least not for Apple, not directly. iTunes serves Apple best as a marketing tool, promoting their brand and maintaining their dominance in the technology and media markets. As of September 1, 2010, Apple had sold 275 million iPods. Apple shares were valued at $6.68 in the days leading up to the introduction of iTunes, more than doubling by the next year, and now trading at $327.88 a share, a rise of nearly 5000%. iTunes was part of what brought Apple back from the grave and ultimately helped establish it as one of the most desirable technology brands in the world.

Competitors to Watch: Google Inc. (NASDAQ:GOOG), Hewlett-Packard Company (NYSE:HPQ), Dell (NASDAQ:DELL), Microsoft (NASDAQ:MSFT), Adobe (NASDAQ:ADBE), IBM (NYSE:IBM), Intel (NASDAQ:INTC), Super Micro (NASDAQ:SMCI), Verizon (NYSE:VZ) and Research In Motion Limited (NASDAQ:RIMM).

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