When iTunes hits wrong note

Has Apple’s cash-cow, iTunes, seen sales plateau? The stylish computer giant does not reveal iTunes results, but analysts Forrester Research seemed to think so.

  • E-Mail
By  Published  December 23, 2006

Has Apple’s cash-cow, iTunes, seen sales plateau? The stylish computer giant does not reveal iTunes results, but analysts Forrester Research seemed to think so. And the Cambridge-based firm cited a 65% drop in monthly iTunes sales for the first half of 2006 as evidence. “With only two years of full data, it is too soon to tell if this decline was seasonal or if buyers were reaching their saturation level for digital music,” wrote Josh Bernoff, analyst at Forrester, in the report based on its analysis on 2,791 US iTunes debit and credit card sales made between April 2004 and June 2006. “During the previous year, iTunes revenue fell during the holidays, but rose significantly in May,” he added. “Although Apple is the dominant leader in the digital music industry, the entire category of digital music made up just 4% of US music sales in 2005,” Forrester stated, and also pointed out that Apple had only sold 20 songs per iPod sale. Bernoff also questioned the profitability of iTunes by pointing out that: “Only Apple knows how much profit there is at the end of the day on a US$1.98 credit card transaction for two songs.” Understandably Apple strongly refuted the claim and got on the phone to Forrester. Especially after Apple shares slid on the back of the reports. The research firm immediately backtracked, claiming the media had ‘misinterpreted’ its report. Forrester said its figures meant that iTune sales were levelling off, but Apple was not in trouble because it made most of its money from iPods. But it also had a dig at Apple, claiming that a lot of the confusion was caused by the firm not giving it a decent comment when the analysts showed them the results in the first place. Console-ation Following on from that, isn’t that the direction that Apple wants to go anyway? “Apple’s profits come from manufacturing trendy, well-designed hardware, not by reselling digital audio,” Forrester’s Bernoff also stated. And there are strong rumours that the firm is considering making a move into the console market. According to newswires, Apple is mulling over the possibility of making a console to compete against the likes of Microsoft, Sony and Nintendo. The rumours follow reports that Apple has been suddenly hiring games developers. It points to either a move into the gaming console market, or the addition of games to the iPod player. Extending the iPod’s range won’t bring in the punters but the games market is already mature and entrenched. It won’t be the first time Apple had a look at the console market. Few people bought the short-lived and unloved Pippin — Apple’s set-top multimedia player and games console that was licenced by Bandai and launched in 1995 — and it duly sunk without a trace. The many reasons for its demise included not enough production of the console itself, lack of software titles and over-production of hardware accessories. PoliceStation3 Contrast that with Sony’s PlayStation 3 launch in the US. Queues formed around the block in US cities when the Japanese electronics giant launched its new games console last month. Now it appears that two police officers are under investigation for allegedly using their influence to jump the queue outside the Sony store at Providence Place Mall, in Providence, Rhode Island. One of the officers claimed he did not do anything wrong, but Providence police chief Dean Esserman was not impressed. “I beg to differ. We think he did something very wrong,” he stated. “He’s been identified and he’s going to be disciplined,” he promised. Robot platform Meanwhile, Microsoft, which has already carved a sizable chunk from the games market with its Xbox products, is forging ahead in the robotics market. Readers may recall Backbyte breaking the news of the software giant’s intentions earlier in this year (See IT Weekly, 1-7 July 2006). Well, it recently unveiled its first commercial operating system for robots in order to steal a march on robotic rivals. Called Microsoft Robotics Studio, it is a Windows-based software platform which lets users programme robots — both real or simulated, reported CNet. Microsoft claimed a preview version of the robot software had been downloaded over 100,000 times since last summer. “We’re giving the industry a means to bootstrap itself,” claimed Tandy Trower, general manager of Microsoft Robotics Group. We haven’t got the foggiest what he means either. However, Microsoft has managed to strike a chord with the robotics industry. Helen Griener, co-founder of iRobot, a tech company that produces a robot called Roomba, claimed the platform would help extend the open interface of its product. “Microsoft Robotics Studio will help ignite the robotics industry and encourage more developers to design new robot applications,” she claimed. The software giant is not just pushing out Microsoft Robotics Studio platform. It is also announced sponsorship of the RoboCup 2007 event.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code