Apple iTunes More Profitable Than Most Smartphone Vendors

Asymco iTunes analysis

Research firm Asymco recently released a report on Revenue generated by Apple’s iTunes store and it turns out that the company is doing remarkably well in the software department. So well, in fact, that iTunes alone is Apple’s fourth largest revenue generator, above the iPod and combined with Apple-built accessories, is a bigger business than all other smartphone vendors except Samsung.

According to Asymoco analyst Horace Dediu, Apple’s gross margins for iTunes are estimated to be between 15 and 17 percent and have grown by 30 percent over the past two years. Absolute revenue was approximately $13.5 billion in 2012, an increase of $3.3 billion from 2011.

Even more interesting, iTunes overtook iPod sales to become Apple’s fourth largest “business” two years ago. At the rate that iTunes is growing, Dediu estimates that it will overtake the Mac to become Apple’s third largest business by the end of this year.

When you add Apple–built accessories into the equation (Dediu considers Apple TV an accessory in this analysis), the combined business of iTunes and accessories make it a larger business in terms of revenue than any other phone vendor except Samsung.

Not bad for a leg of the company’s business that was once considered a “break even” revenue model combined with such devices that were also once considered nothing more than a hobby.


About Lory: Writer of all things app related, traveler of the space-time continuum, baker of really great cookies. Follow me @appaholik