Apple serving up 1 million copies of iTunes each day
Apple Inc.'s iTunes digital jukebox software is downloaded 1 million times per day and has an active user base of 500 million users, the company said during annual developers conference on Monday.
The massive install base will work to the Cupertino-based company's advantage when it begins inserting the neawly announced Windows version of its Safari 3.0 web browser alongside iTunes for Windows downloads later this year, UBS analyst Ben Retizes says.
"We believe that this new strategy to give Windows users a taste of Safari will help the mass market become much more familiar with the iPhone interface, driving higher sales long-term," he wrote in a research note to clients on Tuesday. "As a result, this strategy shift seems like a brilliant move?showing how iTunes can be used as a Trojan horse to push the Apple ecosystem into new frontiers."
Reitzes, who had a chance to speak with members of Apple's senior management both before and after Monday's WWDC keynote address, said he also believes the company has a full pipeline of products including new iPods and Macs, as well as additional content and iPhones which could come later in fiscal 2007 into fiscal 2008.
"We would use any weakness in shares due to 'selling on the news' as a good buying opportunity," he advised clients.
During his WWDC keynote, chief executive Steve Jobs noted that Apple has had five major OS releases since March 2001, with Tiger being the company's most successful software product to date. There are 22 million active Mac OS X users right now, he said, with 67 percent of them running Tiger and 23 percent running Panther.
Given all of the improvements in Leopard, Reitzes told clients that he believes the next-generation Apple operating system could experience adoption even greater than Tiger when it starts shipping in October. He noted that in its first quarter of shipping Tiger (fiscal 3Q05), Apple reported software sales of $345 million (+64 percent year-over-year and +44 percent quarter-to-quarter), including Tiger revenue of about $100 million.
"The company indicated that well over 2 million copies of Tiger were sold, resulting in the single largest quarter of sales for any OS release in Apple?s history," the analyst wrote. "With the help of Tiger, Apple grew Mac units 35 percent year-over-year to 1.2 million units (11 percent sequential growth) and was able to boost its worldwide PC market share from 2.3 percent share in calendar 1Q05 to 2.5 percent share in calendar 2Q05."
Given a larger installed base and the advanced features of Leopard, Reitzes said his December quarter estimate for Apple?s software segment growth of 48 percent year-over-year and 44 percent quarter-to-quarter could be conservative, helping support margins. He estimates that gross margins for Leopard "will top 80 percent."
Despite his findings, the UBS analyst maintained his recently raised estimates for Apple's third fiscal quarter ending June, which includes a per-share earnings estimate of $0.71, reflecting projected revenue growth of 19 percent year-over-year to $5.21 billion (down 1 percent sequentially) with gross margin of 32.1 percent and operating margin of 15.1 percent. The estimate factors in iPod unit growth of 19 percent year-over-year to 9.6 million and Mac growth of 25 percent year-over-year to 1.66 million.
Reitzes also held his fiscal 2007 per-share earnings estimate of $3.55, reflecting projected revenue growth of 23 percent to $23.7 billion, gross margin of 32.2 percent, and operating margin of 17.0 percent. It factors in projected iPod unit growth of 34 percent to 52.7 million, while our Mac estimate calls for 6.7 million units reflecting 27 percent growth.
For fiscal 2008, the analyst is estimating earnings of $4.12 per share, based on projected 29 percent revenue growth to $30.6 billion and operating margin of 15.7 percent.
"We believe our estimates may prove conservative given that we think the iPhone launch and associated buzz could create another version of the 'multiplier effect' we introduced in our early 2004 upgrade thesis. iPods multiplied Apple?s revenue streams into accessories and Macs and catalyzed Apple?s retail store revenue," he wrote. "We believe the iPhone could have a similar effect, driving sales of accessories, bolstering retail traffic, and helping drive more sales of iPods and Macs."
The massive install base will work to the Cupertino-based company's advantage when it begins inserting the neawly announced Windows version of its Safari 3.0 web browser alongside iTunes for Windows downloads later this year, UBS analyst Ben Retizes says.
"We believe that this new strategy to give Windows users a taste of Safari will help the mass market become much more familiar with the iPhone interface, driving higher sales long-term," he wrote in a research note to clients on Tuesday. "As a result, this strategy shift seems like a brilliant move?showing how iTunes can be used as a Trojan horse to push the Apple ecosystem into new frontiers."
Reitzes, who had a chance to speak with members of Apple's senior management both before and after Monday's WWDC keynote address, said he also believes the company has a full pipeline of products including new iPods and Macs, as well as additional content and iPhones which could come later in fiscal 2007 into fiscal 2008.
"We would use any weakness in shares due to 'selling on the news' as a good buying opportunity," he advised clients.
During his WWDC keynote, chief executive Steve Jobs noted that Apple has had five major OS releases since March 2001, with Tiger being the company's most successful software product to date. There are 22 million active Mac OS X users right now, he said, with 67 percent of them running Tiger and 23 percent running Panther.
Given all of the improvements in Leopard, Reitzes told clients that he believes the next-generation Apple operating system could experience adoption even greater than Tiger when it starts shipping in October. He noted that in its first quarter of shipping Tiger (fiscal 3Q05), Apple reported software sales of $345 million (+64 percent year-over-year and +44 percent quarter-to-quarter), including Tiger revenue of about $100 million.
"The company indicated that well over 2 million copies of Tiger were sold, resulting in the single largest quarter of sales for any OS release in Apple?s history," the analyst wrote. "With the help of Tiger, Apple grew Mac units 35 percent year-over-year to 1.2 million units (11 percent sequential growth) and was able to boost its worldwide PC market share from 2.3 percent share in calendar 1Q05 to 2.5 percent share in calendar 2Q05."
Given a larger installed base and the advanced features of Leopard, Reitzes said his December quarter estimate for Apple?s software segment growth of 48 percent year-over-year and 44 percent quarter-to-quarter could be conservative, helping support margins. He estimates that gross margins for Leopard "will top 80 percent."
Despite his findings, the UBS analyst maintained his recently raised estimates for Apple's third fiscal quarter ending June, which includes a per-share earnings estimate of $0.71, reflecting projected revenue growth of 19 percent year-over-year to $5.21 billion (down 1 percent sequentially) with gross margin of 32.1 percent and operating margin of 15.1 percent. The estimate factors in iPod unit growth of 19 percent year-over-year to 9.6 million and Mac growth of 25 percent year-over-year to 1.66 million.
Reitzes also held his fiscal 2007 per-share earnings estimate of $3.55, reflecting projected revenue growth of 23 percent to $23.7 billion, gross margin of 32.2 percent, and operating margin of 17.0 percent. It factors in projected iPod unit growth of 34 percent to 52.7 million, while our Mac estimate calls for 6.7 million units reflecting 27 percent growth.
For fiscal 2008, the analyst is estimating earnings of $4.12 per share, based on projected 29 percent revenue growth to $30.6 billion and operating margin of 15.7 percent.
"We believe our estimates may prove conservative given that we think the iPhone launch and associated buzz could create another version of the 'multiplier effect' we introduced in our early 2004 upgrade thesis. iPods multiplied Apple?s revenue streams into accessories and Macs and catalyzed Apple?s retail store revenue," he wrote. "We believe the iPhone could have a similar effect, driving sales of accessories, bolstering retail traffic, and helping drive more sales of iPods and Macs."
Comments
Yeah, I did the same research last night. I watched the keynote and heard Steve Jobs say this.
Given all of the improvements in Leopard, Reitzes told clients that he believes the next-generation Apple operating system could experience adoption even greater than Tiger when it starts shipping in October. He noted that in its first quarter of shipping Tiger (fiscal 3Q05), Apple reported software sales of $345 million (+64 percent year-over-year and +44 percent quarter-to-quarter), including Tiger revenue of about $100 million.
Given a larger installed base and the advanced features of Leopard, Reitzes said his December quarter estimate for Apple?s software segment growth of 48 percent year-over-year and 44 percent quarter-to-quarter could be conservative, helping support margins. He estimates that gross margins for Leopard "will top 80 percent."
After the lackluster Leopard announcements with *NO* secret features worth mentioning, I was thinking I might pass on Leopard. And, that others might do likewise, making Leopard look like Vista.
But, then I remembered that I need to get iChat theater/screen sharing so my remote workers can easily share their screens to be more productive. Looks like one of the 300 features may make me justify buying Leopard for the whole team. I wonder if many folks are feeling the same thing; nothing Wow, but at least one feature that makes the purchase very likely.
After the lackluster Leopard announcements with *NO* secret features worth mentioning, I was thinking I might pass on Leopard. And, that others might do likewise, making Leopard look like Vista.
But, then I remembered that I need to get iChat theater/screen sharing so my remote workers can easily share their screens to be more productive. Looks like one of the 300 features may make me justify buying Leopard for the whole team. I wonder if many folks are feeling the same thing; nothing Wow, but at least one feature that makes the purchase very likely.
For myself, I'm really interested to see how FAST Leopard is or isn't.
Every new release of OS X has been significantly faster than the one before it. Tiger's pretty good, but still not quite 'lightning' like I'd like it.
.
"We believe that this new strategy to give Windows users a taste of Safari will help the mass market become much more familiar with the iPhone interface, driving higher sales long-term,"
And how does safari WITHOUT multi-touch help with this increase in familiarity?
With safari and firefox supporting open web standards, the influence of IE is surely to drop. iTunes was the Trojan horse; safari is the attacking hoards from the belly of the beast!
... I was thinking I might pass on Leopard. ...
But, then I remembered that I need to get iChat theater/screen sharing
Screen sharing is the Leopard feature I've been looking forward to most, but interestingly, it's no longer touted on the Leopard iChat page. It was quite prominent before the web site redesign.
Not saying it's been axed, just curious why Apple isn't even mentioning it today.
(On other forums, posters are adamant that one of the buttons pictured on an iChat window is the "screen sharing" button, so of course the feature is still there. There's also a "screen sharing" button in finder.)
After the lackluster Leopard announcements with *NO* secret features worth mentioning, I was thinking I might pass on Leopard. And, that others might do likewise, making Leopard look like Vista.
But, then I remembered that I need to get iChat theater/screen sharing so my remote workers can easily share their screens to be more productive. Looks like one of the 300 features may make me justify buying Leopard for the whole team. I wonder if many folks are feeling the same thing; nothing Wow, but at least one feature that makes the purchase very likely.
Does anybody remember last year's intro to Leopard? Major upgrades to Mail, iChat, etc.. and newbies like Time Machine. Okay most of the "secret" stuff at WWDC was GUI improvements, most notably the Finder and it's new supporting technologies. There is a LOT of new stuff and even more refinements in Leopard that makes it a worthy upgrade. Mac OS X has been evolutionary since version 10.1 and if you were to use a machine still loaded with 10.1 you would be shocked how far Mac OS X has come.
After the lackluster Leopard announcements with *NO* secret features worth mentioning, I was thinking I might pass on Leopard. And, that others might do likewise, making Leopard look like Vista.
Yeah, you and the "others" you speak of avoiding an upgrade to Leopard will totally make it look like Vista.
Also, I didn't see your post where you informed us of the Secret features (that evidently you already knew about?) that were revealed at WWDC. New unified desktop, new finder, stacks, quick look, time machine working with a hard drive connected to a Airport Extreme just to name a few
Mac OS X has been evolutionary since version 10.1 and if you were to use a machine still loaded with 10.1 you would be shocked how far Mac OS X has come.
As far as I was concerned, 10.0 and 10.1 were just public beta software, not worth considering as final release products. I didn't feel like OS X was "real" until Jaguar came along -- at which point I happily dropped OS 9 and made OS X my full time OS.
As far as I was concerned, 10.0 and 10.1 were just public beta software, not worth considering as final release products. I didn't feel like OS X was "real" until Jaguar came along -- at which point I happily dropped OS 9 and made OS X my full time OS.
I'd have to agree... X wasn't really usable until 10.2/Jaguar. Even 10.1 was simply too slow, no matter what anyone says.
The nice thing, though, is that I'm hearing that Leopard is really really FAST.
The new finder is absolutely the best part. How many years have we wanted a cocoa finder? It's HERE!!!!! Browsing network shares is no longer met with delays, it's using the fast Unix finally. I can try to mount 10 shares without every seeing a cursor.
Proper multi-threaded support. No more pauses when clicking on the menubar or anything else. Apps keep chugging along.
No more beachball so far.
It's the perfect OS for productivity. No crazy changes, just refinement to the extreme.
It's a beautiful thing!
DVD player has been able to play HD-DVDs for a long time. It has blu-ray and HD-DVD settings in prefs now.
--- And, from the same user (who apparently is using the WWDC beta of Leopard):
# Spotlight, completely re-written with faster database, and backend
# Finder, did I mention it's completely new? Networking, browsing, anything that used to beachball is SUPER FAST. The finder doesn't beachball on large folders, nor do you wait for thumbnails to come up, or wait period. You can try network shares as fast as you can click them.
# The entire system has new underpinnings, that are better threaded. No pause if you click on a menu. THIS IS REALLY, REALLY big deal, as it takes months to rewrite that code that handles this sort of thing.
# Redesigned printing servics, and dialogs, no more of that HORRIBLE 60 dropdown items. Preview of your document (thumbnail) is in every print dialog, and page setup can be reached from this window. Also printing does not put up a dialog covering the screen while it spools pages. No more stopping your productivity, while you wait to spool.
I'm just getting warmed up. It's extremely fast. This alone is worth $129
I'm just surprised that Steve didn't make more out of how much faster Leopard apparently is. If he had, we might be hearing significantly fewer "WWDC was a disappointment" complaints.
.
The nice thing, though, is that I'm hearing that Leopard is really really FAST.
The new finder is absolutely the best part. How many years have we wanted a cocoa finder? It's HERE!!!!!
According to Apple engineer Eric Schlegel posting on Apple's Carbon-dev mailing list, the Finder in Leopard is a Carbon/32-bit app:
Question: "So, 64 bits Carbon ... is even used by Finder."
Answer: "The Finder in Leopard is a 32-bit app. The only Leopard app I'm aware of that ships as a 64-bit app is Xcode."
Question: "It [the Finder] was reportedly rewritten in Cocoa for 10.5"
Answer: "The Finder is still largely a Carbon app in Leopard although it does use our new HICocoaView capability to allow embedding NSViews inside a Carbon window to implement the coverflow view."