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

ConCat Avatar
104 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.
Score: 6 Votes (Like | Disagree)
rmwebs Avatar
104 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)
Score: 5 Votes (Like | Disagree)
iChrist Avatar
104 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.
Score: 2 Votes (Like | Disagree)
springsup Avatar
104 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.
Score: 2 Votes (Like | Disagree)
Rocketman Avatar
104 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
Score: 2 Votes (Like | Disagree)
gnasher729 Avatar
104 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.
Score: 2 Votes (Like | Disagree)

Top Stories

tracking disabled ios 14 5

Analytics Suggest 96% of Users Leave App Tracking Disabled in iOS 14.5

Friday May 7, 2021 1:51 am PDT by
An early look at an ongoing analysis of Apple's App Tracking Transparency suggests that the vast majority of iPhone users are leaving app tracking disabled since the feature went live on April 26 with the release of iOS 14.5. According to the latest data from analytics firm Flurry, just 4% of iPhone users in the U.S. have actively chosen to opt into app tracking after updating their device...
macbook colors 3d black bezels

Prosser: Next MacBook Air Could Come in Colors Similar to iMac

Friday May 7, 2021 6:55 am PDT by
According to Apple leaker Jon Prosser, Apple's upcoming release of the MacBook Air will feature various colors, similar to the colors in the newly released 24-inch iMac. In the latest video of his YouTube channel Front Page Tech, Prosser says the same source who accurately provided him information on the first Apple silicon iMac coming in colors has told him that he recently saw a prototype...
tile amazon sidewalk integration

Tile to Leverage Amazon Echo and Ring Devices to Better Compete With AirTags

Friday May 7, 2021 2:07 pm PDT by
Amazon today announced that it is teaming up with Tile to add Amazon Sidewalk integration to Tile's Bluetooth trackers. Amazon Sidewalk, for those unfamiliar, is a network of Amazon Bluetooth devices that's designed to improve the connectivity of devices like the Ring and Amazon Echo. Tile will now be joining Amazon Sidewalk, and through this integration, Amazon Echo and Ring devices will be ...
Top Stories 59 Feature

Top Stories: Epic Games vs. Apple, Hidden AirTag Mode, Apple Music Hi-Fi, Colorful MacBook Air?

Saturday May 8, 2021 6:00 am PDT by
While we wait for the newly introduced iMac, iPad Pro, and Apple TV models to launch later this month, this week saw the kickoff of the big Epic Games v. Apple trial, with lots of juicy tidbits coming out as the two sides make their arguments. This week also saw some rumors about a Hi-Fi tier for Apple Music, more biometric sensing capabilities for Apple Watch, and timing for the...
zoom app icon

Apple Gave Zoom Access to Special API to Use iPad Camera During Split View Multitasking

Sunday May 9, 2021 2:00 am PDT by
Zoom, a hallmark platform used by millions during the global health crisis, has been given access to a special iPadOS API that allows the app to use the iPad camera while the app is in use in Split View multitasking mode. This case of special treatment was first brought to attention by app developer Jeremy Provost, who, in a blog post, explains that Zoom uses a special API that allows the...
snapchat dark mode

Snapchat Rolls Out Dark Mode on iOS

Wednesday May 5, 2021 1:17 am PDT by
Nearly two years following the release of iOS and iPadOS 13, which included native, built-in, and systemwide dark mode, Snapchat, one of the world's most prominent social media networks, has finally rolled out a dark mode theme for iOS users. Snapchat began testing a dark mode theme of its app design late last year with a small group of iOS users. Now, Snapchat says that as of this week, it...
tile sticker e1570533758981

Tile CEO: 'We Welcome Competition From Apple, But We Think It Needs to Be Fair'

Tuesday May 4, 2021 9:51 am PDT by
Just after Apple announced its AirTags, Tile CEO CJ Prober relayed his concerns about competing with Apple in the tracking space, and said that Tile would ask Congress to investigate Apple's business practices specific to Find My and item trackers. Prober this week did an interview with Bloomberg, where he further expanded on Tile's complaints about Apple and why he feels that Tile is...
fortnite apple logo 2

Epic CEO Tim Sweeney Admits App Store's 30% Cut Is Similar to Consoles, Would Have Accepted Special Deal With Apple

Tuesday May 4, 2021 1:54 pm PDT by
Apple's legal battle with Epic Games is continuing on, and during the second day of the trial, Epic Games' CEO Tim Sweeney continued his testimony against Apple. Sweeney was grilled by Apple's lawyers, and made several points seemingly favorable to Apple. In addition to mentioning how he prefers Apple's iPhone and values Apple's privacy policies that he's aiming to dismantle, Sweeney...
signal instagram ads3

Signal Shares the Instagram Ads Facebook Doesn't Want You to See

Wednesday May 5, 2021 1:29 am PDT by
Encrypted messaging app Signal has had a series of Instagram ads blocked from the social media platform, after it attempted to show users how much data the Facebook-owned company collects about them and how it's used to push targeted ads. In a blog post, Signal described how it generated the ads to show users why they were seeing them, simply by declaring upfront the information that the...
iphone 12 preorder purple

Apple Begins Transition to Randomized Serial Numbers With Purple iPhone 12

Wednesday May 5, 2021 9:17 am PDT by
MacRumors previously reported about Apple's plan to switch to randomized serial numbers for future products starting in early 2021, and this transition has now started with the new purple iPhone 12 model in multiple countries. With assistance from Aaron Zollo, host of the YouTube channel ZolloTech, we can confirm that the purple iPhone 12 released last month has a new 10-character serial...