Got a tip for us? Share it...

New in OS X: Get MacRumors Push Notifications on your Mac

Resubscribe Now Close

Apple's 500 Million iTunes Store Accounts Offer Significant Potential for Growth in Services

app_store_icon_170Morgan Stanley analyst Katy Huberty released an extensive new report today offering a look at how Apple's base of 500 million iTunes/App Store customers fits in with other services and how Apple can leverage that user base to drive future sales and revenue growth.

Huberty notes that Apple's account base is second only to Facebook's one billion accounts among technology companies seeking to build out e-commerce or subscription services, easily topping third-place Amazon's 200 million accounts. Apple's 55% growth in 2012 also led the field by a comfortable margin, while its users also generate the most revenue per account. With Apple also scoring well in iCloud/iTunes Match adoption and user loyalty, the company is primed to take further advantage of its massive ecosystem with new services. Huberty outlines three possibilities for these new services:

1. Mobile payments. With hundreds of millions of credit card numbers on file, Apple could easily turn iTunes/App Store accounts into a payment service. With rumors of fingerprint recognition and perhaps near-field communication (NFC) coming to future Apple hardware, the company already has a number of pieces nearly in place for such a service.

2. Streaming music. Apple is rumored to be introducing its "iRadio" streaming service next week at its Worldwide Developers Conference, and Huberty suggests that Apple could generate $1 billion per year in revenue from such a service. Huberty's numbers do, however, include both subscription and display ad revenue, while recent rumors have indicated that Apple's service would be free to users with no mention of paid tiers.

3. Ad exchange. Earlier this week, it was reported by a source in the ad industry that Apple is looking to launch its own ad exchange, leveraging its existing iAd business and its massive ecosystem of users and devices to provide targeted advertising.
Developers could potentially charge higher rates than ad impressions on other devices, as Apple could offer better targeting given its insight into the user from information gathered from the hardware (GPS, accelerometer, gyroscope and digital compass), the software (operating system and some applications), iTunes and app stores, user profiles and cloud storage. Of course, some of the data will be stored anonymously and Apple will need to clearly disclose what data is gathered and how it is used.
Apple CEO Tim Cook has been playing up the potential of services, repeatedly referring to the "magic" happening at the interaction of hardware, software, and services. At his D11 interview last week, Cook touted iMessage, the iTunes Store, and FaceTime as examples of how Apple's services are tying Apple's ecosystem together, and acknowledged that the company is working hard on improvements to its services.

Top Rated Comments

(View all)

16 months ago

500 Million accounts is an impressive number. So they actually have more iTunes/AppStore customers than they have sold iOS devices and Macs...?


Makes sense... Part of the iTunes store's success was its availability on Windows. I'd imagine a large percentage of people who use iTunes don't own Apple devices.
Rating: 6 Votes
16 months ago

True, it is set up nicely for exploring.

But the services have to be intelligent, refined and reliable.


Three areas Apple sadly has failed at with every single online service launched so far.

(and no. This isnt a silly 'fanboy/fandroid' troll attempt - I'm being realistic based on...well...facts from what we've seen of Apple online services)
Rating: 5 Votes
16 months ago

500 Million accounts is an impressive number. So they actually have more iTunes/AppStore customers than they have sold iOS devices and Macs...?


Apple has sold well over 600 million iOS devices.
Rating: 2 Votes
16 months ago



With hundreds of millions of credit card numbers on file, Apple could easily


Take over the world!
Rating: 2 Votes
16 months ago

500 Million accounts is an impressive number. So they actually have more iTunes/AppStore customers than they have sold iOS devices and Macs...?


350 million iPods, don't know how many iPhones, iPads, and Macs. There are probably even a few pure Windows users.
Rating: 2 Votes
16 months ago
If Apple or a spinoff associated with Apple were to act as a payment gateway parallel to Mastercard, Visa, and Amex, using bank ACH and "Credit Bank" services similar to what Wal-Mart does in UT, it could start to have a hold in commerce outside Apple itself.

Services like Paypal, Google Wallet, Dwolla, Square, and others try to act as alternate payment gateways, with interaction at the edges with existing credit cards, debit cards, checking accounts, etc.

Apple could offer retail POS hardware and services, online POS software and services, and peer to peer payment services.

I don't think I have seen even two retail POS machines with the same method of use or UI ever!

Imagine having an account that takes and makes payments, has minimal transaction fees, is international, pays interest on large balances, and has a built-in credit line to prevent overdrafts and further fees. Maybe even a built-in business and mortgage loan service. That would be magical.

By not relying on the Federal Reserve for overnight liquidity, it could bypass the morass of regulations and restrictions that prevent credit worthy businesses and persons from gaining access to low cost credit in this record low interest rate environment.

Apple can issue paper at 2% and could make a large profit offering finance at between 6% and 10% to users. Credit card companies and consumer credit firms currently offer credit at between 18% and 635%!! Blessed by NEW REGULATION under this administration.

Rocketman

Cites:

http://www.checkngo.com/stateDisclosures/Michigan/StoreScheduleMI1.jpg

http://www.checkngo.com/stateDisclosures/Tennessee/StoreScheduleTN1.jpg

http://www.checkngo.com/stateDisclosures/Ohio/license3.jpg

http://paydayloanfacts.org/category/fees-and-aprs/

http://www.fdic.gov/news/news/financial/2005/fil1405a.html
Rating: 2 Votes
16 months ago

I'm really starting to be reminded more and more how I liked things better when Apple just made computers, nicely integrated software and iPods.


The thing I really noticed with Cook's interview and language in general is that it's no longer hardware and software; it's about hardware, software and services.

He's been really careful to add that mention of services every time.
Rating: 2 Votes
16 months ago
.

Wow. Imagine how much money apple could have made if their online services were done really well.


:apple:

----------

Take over the world!


Hey kid, this is not likely given the state of their online services.
Rating: 2 Votes
16 months ago

Three areas Apple sadly has failed at with every single online service launched so far.

(and no. This isnt a silly 'fanboy/fandroid' troll attempt - I'm being realistic based on...well...facts from what we've seen of Apple online services)


Why do some people seem to think that "services" are solely defined by areas that Google excels in? Services is a broad term. iTunes and the whole online storefront happens to be a pretty significant service that all of Apples competitors have yet to come close to matching. Not just in terms of scale and reliability, but the whole negotiation process of setting the rules and securing content from content owners (which is the most challenging part).

Apples push notification service is another thing that has done a pretty fantastic job. All these different apps sending billions of notifications every single day, calling on Apple push notification servers to do this. Remember, Apple was first at the gate here in terms of applying push notifications not just to mail, but any third party app that wanted to send an update or an alert. And they've scaled the service very well and competently.

Can Apple improve? Always. But lets not kid ourselves and act like Apple is completely incompetent. I'd say they're doing a much better job than most of their competitors. Everyone acts like Apple is so clueless just because ONE of their competitors has a broader lineup of excellent services (but not ALL of their competitors).

I imagine mobile payments will once again be an area where Apple dominates the competition when Apple decides to launch. Will all the bashers come back and praise Apple then when they do launch a new service and set new rules for the industry? I doubt it. They'll just be there to complain about Maps or Siri for not being flawless. Yet they'll never praise the things that Apple DID do right. Just look at Google Maps new update. They've taken a page out of Apples maps design, and made POI's on the maps look remarkably similar to how they do on Apple Maps.
Rating: 1 Votes
16 months ago

500 Million accounts is an impressive number. So they actually have more iTunes/AppStore customers than they have sold iOS devices and Macs...?


They don't mention that you should divide that by 3 to 4 because so many of us have multiple accounts thanks to not being able to merge them :P
Rating: 1 Votes

[ Read All Comments ]