Davis Freeberg

CES Brings Internet Capabilities to TV

That's because you are an Apple fanboy Tom. Normal people won't be buying Apple TV. How is the Apple Dongle even slightly better then Netgear's fully function HDTV PVR that supports, DivX, Amazon, iTunes, WMV, & just about every other codec you can come up with? It's not. Given the lack of titles that iTunes has, I would never lock myself into their media universe when there is so much content out there. Consumers are much better going with something where they can get YouTube and iTunes onto their home theater systems. Steve Jobs really dropped the ball on this product. He could have made it awesome, but went mediocre just so that he can try and maintain a monopoly on the content that you can play with Apple products. In the long run Apple's proprietary nature will very much work against the company.

High School Math 101: iTunes Sales Not Collapsing

I think to say that Apple is bringing in a billion in revenue mischaracterizing the real success or failure of the iTunes music store. The truth is that they immedietely give a large chunk of that billion dollars to the media companies for the content and by the time they pay their bandwidth bill are left with 15 cents on the dollar. While adding 150 million in net income to the bottom line is certainly not a failure, when you look at it in the context of the 2 billion in net income that Apple brings in, it's really not all that significant. I've heard a lot of people talk about Apple as a media powerhouse, but this really isn't all that impressive given the number of iPods that they've sold. Deep down inside, they will always be a gadget company, iTunes exists so that they can make their bread and butter by selling high margin iPods. The question in my mind is whether the success of their iPod is really all that sustainable. We've seen fads come and go and while there is no doubt Apple will sell these babies like hotcakes this holiday season, if you would have look at this market twenty years ago you would have said that Sony's Walkman was going to dominate forever. In the end, $150 million in revenue is impressive and what the strategic relationship contributes to gadget sales is important, but deep down inside Apple will always have to keep selling hardware and I doubt that iTunes will ever turn out to be the annuity stream that many investors think that it will be. Considering that the cable companies make twice as much in one month, that iTunes makes over the life of an iPod owner, I'd question how you are defining success and failure for this business model.

No Growth In Digital Music Sales?

It would be interesting to see this same graph only for the sale of CDs instead of digital files. Somehow I doubt that people are shifiting back to discs, which really makes you wonder why there would be a drop in demand.