Running the Numbers with Steve Jobs

Benjamin Disraeli famously said, “There are three kinds of lies: lies, damn lies, and statistics.” I certainly can’t quibble with the sentiment, but just about the only time we get any numbers out of Apple at all is when Steve Jobs shares them on stage at an Apple event. Of course, Steve shares only good numbers, and even then, only numbers that support what he’s about to announce. There’s no way to verify Apple’s numbers, so we have to take it on faith that as the head of a publicly traded company that appears to mint money he’s not just making this stuff up. Let’s look at what Steve shared at last week’s “Let’s Rock” event.

iTunes Store Stats — According to the NPD Group, the iTunes Store in 2008 became the number one music retailer in the United States, taking over the top slot from Walmart, and followed by Best Buy, Amazon, and Target. Amazon jumped from fifth to fourth place thanks to Amazon MP3’s sales of unprotected music downloads – MP3s without DRM encryption – and due to a lower rate of erosion for online CD sales than music sold at brick-and-mortar stores. Regardless, the iTunes Store numbers are impressive:

• 65 million accounts with credit cards in iTunes. That’s a huge number, but what’s more impressive in my mind is that as of February 2008, Apple had 50 million customers. Adding 15 million customers in seven months is astonishing. In comparison, Amazon, selling atoms since 1995 and bits over the last few years, has 81 million customer accounts used for payment.
• 8.5 million songs. As of the last report, in June 2008, Apple was reporting “over eight million songs,” indicating that the company is still adding significant numbers of new tracks.
• 125,000 podcast feeds. This sounds like a big number, but Apple was reporting over 100,000 different podcasts back in May 2007, which would seem to indicate that the number of new podcasts is increasing slowly. The fact of the matter is that creating a regular podcast is a fair amount of work, and the quantity of podcasts has never mattered as much as quality, as there’s little filter for getting a podcast listed at the iTunes Store.
• 30,000 episodes of TV shows. That’s up 10,000 episodes from June, perhaps in part due to NBC rejoining the iTunes Store with its collection of shows. Amazon now has 1,200 TV seasons, which – with 20 to 30 episodes per season – could be a roughly comparable number of episodes.
• 2,600 Hollywood movies. June’s number was “over 2,000,” which is a nice increase, but it still pales in comparison to Amazon, which claims 14,500 movies available for purchase or rental. Amazon includes all manner of items in its “movies” listing, so the unique film count is somewhat lower.

iPod Stats — Although the Mac still doesn’t have a particularly large market share (I’ve seen 11 percent bandied about recently), the numbers for the iPod are stunning, so much so that if I were Apple, I’d be taking pains to avoid activities that could be seen as monopolistic.

The iPod now has 73.4 percent of the music player market share, with the lumped-together category of “Other” hitting second place, sharing 15.4 percent of the market among a large number of companies. In third place with about 9 percent of market share is SanDisk, which has some well-reviewed music players, and in fourth place, with a minuscule 2.6 percent market share, is Microsoft’s Zune. (On 16-Sep-08, Microsoft will introduce revised Zune firmware and hardware, which includes FM tagging: listen to a song via a built-in FM receiver on certain radio stations, push a button, and instantly purchase the song if the Zune is on an active Wi-Fi network.)

Apple has sold 160 million iPods so far, and according to Edison Media Research, 37 percent of U.S. consumers as of April 2008 own a portable MP3 player; that carries the implication that 27 percent of U.S. consumers own an iPod. I don’t know how many “consumers” there are in the United States, but with that number it would be possible to split out U.S. versus international iPod sales.

What’s almost more impressive is the ecosystem support that Apple has encouraged around the iPod. According to Jobs, 90 percent of cars in the United States offer iPod integration. I assume he means new cars currently being sold, but even still, that level of support makes it much less likely that any other music player will be able to dethrone the iPod any time soon. (Plenty of inexpensive car stereos can be retrofitted into autos to add iPod support, too.)

Similarly, Apple claims over 5,000 iPod accessories are available, and since there aren’t that many categories of accessories (cases, speakers, headphones, FM transmitters, etc.), that says to me the accessory field is plenty big enough for numerous competitors.

App Store Stats — These numbers are harder to evaluate. According to Apple, there are now 3,000 applications available for the iPhone and iPod touch on the App Store, but there are still programmers who haven’t been able to get into the iPhone developer program, and I’m sure plenty of people are still working on their iPhone apps. I’m surprised that only 700 of those 3,000 apps are games, but Apple differentiates between “Games” and “Entertainment,” which seems like a slippery distinction. I’d be more interested to see how all the different App Store categories broke down.

The problem of abundance has clearly hit the App Store, too: with 3,000 programs and very simple broad categories and poor sorting abilities, most applications will wind up lost in the fray, while finding a particular program to solve your needs or interests remains hard.

Apple’s other big number related to the App Store is that 100 million apps have been downloaded so far. A followup discussion with Apple revealed that the number includes both free and paid applications, but does not include downloads of application updates. Nevertheless, that’s an awful lot of downloads – I wonder how many of those apps are actually used. I use only a fraction of the apps I’ve downloaded, almost all of them free.

Tune In At Macworld Expo — I doubt we’ll see any more numbers from Apple until the Macworld Expo keynote, so until then, ponder all those zeroes in front of the decimal point and if you remember the bad old days of being snubbed as part of the Macintosh minority, you can now enjoy being part of the iPod majority.