A couple of days ago I, like millions of others, downloaded the latest update to Apple's iTunes. The format of my iTunes windows immediately changed. Instead of seeing three windows when viewing the song library, there were now four. The new one? The iTunes "MiniStore", a small-window version of Apple's music store with prominent placement of newly released music and "Today's Top Songs" or "Today's Top Albums".
Two points to note: First, the iTunes MiniStore appears as the default in the new update. And second, there's now a button at bottom right of iTunes to "show or hide the iTunes MiniStore". Even if one hides it, that button adds another prominent promotion for the iTunes Music Store.
We're interested in stocks, so let's focus on the financial impact. Apple just had a blow-out quarter, driven by more sales of iPods than ever before. (Read Apple's Q4 conference call transcript to get the gory details straight from the horse's mouth.) That means that more people have iTunes than every before.
In contrast to iPod sales, iTunes deployment leads to ever-increasing media sales for Apple. At some point iPod sales will plateau; but any incremental iPod sales should lead to a constant increase in Apple's sales on its iTunes Music Store, because the customer base for iTunes grows cumulatively as more iPods are sold.
That's why the quiet introduction of the iTunes MiniStore matters. Sure, it's a tweak. But many more people will buy from iTunes because of the tweak. And that tweak could be worth a million song sales to Apple over the next year.
AAPL 1-yr chart:
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