Forrester's Side of the iTunes 'Collapse' Debate: If Anything, iPod Sales Are Slowing

Josh Bernoff, the source of the Forrester report used to claim that iTunes is collapsing, has written a blog entry about the furor he has created with his report. As expected, much of the heat and light is due to reporters extrapolating single data points into a story.

But even more interesting is the fact that Josh published his graph of iPods versus iTunes sales. Where our graph was an attempt to be conservative and not overhype the growth of iTunes by using a log scale, Josh plotted the data vertically on a linear scale. Anyone who thinks that iTunes is collapsing should ponder the Forrester graph below for a few minutes. If anything, that graphic makes it look like iPod sales are slowing, not iTunes, which appear to be approaching escape velocity.

click charts to enlarge

Forrester's graph of three years of iTunes and iPods sales

Now take another look at my graph below:

Blackfriars' graph of three years of iTunes and iPods sales

One of the things that is more evident from my graphic is that the gap between iPod sales and iTunes sales is actually growing lately. What that means is that the number of iTunes tracks sold per iPod continues to grow. Some articles claimed that iTunes tracks per iPod remain stuck at about 20. That number is presently about 23 and climbing.

The moral of this part of the story is that presentation matters. Differing graphs and graph types will emphasize different pieces of data. If I'd been Josh trying to make my case about sales slowing, I would have used a much less vertically oriented graphic. And given the near exponential growth of both iTunes and iPod sales, I would probably have used a log scale, even though that would be harder to explain, because the variations would have been more proportional to the quantity of sales. The linear scale makes small percentage changes appear larger than they are proportionally.

Meanwhile, Apple (AAPL) has publicly denied the Forrester report, breaking one of their long-standing rules about not commenting on things like this. I do think Josh unfairly blames Apple for some of the brouhaha. Apple has no obligation or incentive to share its internal business data given how many companies would love to replace them at the top of the digital music food chain. And as regular readers will know, I consider Apple's secrecy and close-mouthedness an important part of their product mystique and marketing.

And so the debate goes on. But let's just say that the rumors of iTunes collapse remain exaggerated.