According to the results of a study from Asymco researcher Horace Dediu, the revenue from Apple’s (NASDAQ:AAPL) App Store has made the company’s iTunes unit more profitable than Fortune 500 companies including Xerox (NYSE:XRX) and Time Warner Cable (NYSE:TWC). The iTunes unit pulled in $23.5 billion on a yearly basis since 2005 and has shown a consistent 35 percent growth year-over-year.
Asymco found that for the fiscal first-quarter of 2014, the iTunes Store made $2.4 billion in net sales. In the same quarter of 2013, the unit made $2.1 billion. “Growth in the iTunes Store, which includes the App Store, the Mac App Store and the iBooks Store, was driven by increases in revenue from App sales reflecting continued growth in the installed base of iOS devices and the expansion in the number of third-party iOS Apps available,” the report reads.
“The iTunes ‘empire’ of content and services would be ranked as number 130 in the Fortune 500 ranking of companies (slightly below Alcoa and above Eli Lilly),” Dediu says in the report. Dediu plotted the data for iTunes’ revenue next to the revenue for Google’s (NASDAQ:GOOG) search business, illustrating that the revenue of the iTunes unit alone makes up almost half of Google’s search revenue and is growing at a slightly faster rate.
The study backs up recent data from Apple showing that the App Store has been making record profits for the company as more people become engaged with iOS devices and want to buy Apple’s digital goodies. Apple said back in January that customers spent more than $10 billion on the App Store in 2013, the biggest haul since Apple first launched the store in July 2008. In fact, revenue in December alone totaled $1 billion. App Store customers downloaded almost 3 billion apps in December, making it the most successful month in App Store history.
“We’d like to thank our customers for making 2013 the best year ever for the App Store,” Eddy Cue, Apple’s senior vice president of Internet Software and Services, said last month when those figures were announced.
While digital music sales fell in 2013 for the first time since Apple introduced the iTunes Store back in 2010, ushering in the era of digital music, the company isn’t exactly hurting from consumers’ reluctance to legally download music. Some have pointed to the rise in popularity of online music streaming services like Pandora (NYSE:P) and Spotify as well as Apple’s own iTunes Radio that was launched along with iOS 7 back in the fall as the reason for the decline in digital single and album sales.
Dediu estimated that the areas of Apple’s iTunes business that showed the most growth in 2013 were apps, with a whopping 105 percent growth, third-party services, with a 46.6 percent growth, and services, with a 37 percent growth. Apple’s music downloads were estimated to have dropped 14 percent during last year, although Apple is more than making up for that loss through app sales and selling ad space on iTunes Radio.
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