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October 14, 2003

Still nervous

Over in comments Steve talks about why the Windows version of iTunes and the Apple Music Store might be an OK thing.

The "Trojan Horse" theory is the only thing I've come up with that seems to make this a good risk. The idea would be that exposing alot of Windows users to iPods, and the Apple Stores, would create more Switchers. That would be good.

Steve also suggests that the additional revenue from selling more iPods and more song downloads would be good for Apple's bottom line. This one, I'm not so sure about.

Remember that Apple's main business is selling computers and copies of the Mac OS. Last year Apple had gross sales of $5.7 billion. I haven't done a detailed analysis on this but... suppose iPod sales jump alot. Steve says that they have now increased to a rate of 700K units a year, and let's say that the new Windows thing DOUBLES that. 1.4 million units of iPods, at $400 each, would be gross sales of $560 million, or still only 10% of total sales.

So it seems to me that this very generous income projection only gains us 10% on existing sales (actually it only GAINS 5% since we're already at the 700K rate), while risking weakening the main product line.

These numbers are really quick-and-dirty. I'd welcome some feedback on a better/different analysis. My main desire is a healthy Apple, promoting an increasingly large Mac user-base.

But the Windows iTunes, makes me nervous.

Posted by jghiii at October 14, 2003 10:31 AM
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