The App Store will overtake iTunes in terms of revenue by 2015

Over the past few  years, one of Apple’s sources of revenue was from selling music via their iTunes store. However it seems that either our consumption patterns have changed, or if rivals are stealing Apple’s business, but it has been noted by Morgan Stanley analyst, Katy Huberty, that sales from iTunes have been declining, and that Apple’s App Store has been growing in its place. In fact as you can see in the graph above, it is estimated that come 2015, sales from the App Store will be greater than iTunes. This appears to be the trend which we can see taking place over the years.

“Online services is an underappreciated growth and margin lever for Apple,” writes Morgan Stanley’s Katy Huberty in a note to clients Wednesday. It’s all the more unappreciated because music streaming services like Pandora and Spotify have been cutting into iTunes music downloads. Last quarter, each of Apple’s (AAPL) iTunes accounts spent an average of $3.29, down 24% year over year. “At a high level,” Huberty writes, “this raises concerns about Apple’s ability to monetize the new base of emerging market customers.” But by the end of the year, App Store sales will have more than taken up the slack, Huberty predicts. And she sees several ways Apple could tap into one of the company’s great unheralded resources: 800 million iTunes accounts, most of them attached to credit cards.

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Written by Chastity Mansfield

I'm a writer, an amateur designer, and a collector of trinkets that nobody else wants. You can find me on Noozeez, and Twitter.

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