Apple is still breaking even on the iTunes Store – and the App Store for that matter – according to recent disclosures by Apple CFO Peter Oppenheimer.
“Regarding the App Store and the iTunes Store, we’re running those a bit over break-even, and that hasn’t changed,” Oppenheimer stated during a recent quarterly financial call. The break-even status remains despite paid download volumes approaching 2.5 billion songs annually.
The comments support a longstanding Apple model that places hardware above content. At present, iTunes Store downloads are at best a bait for iPods and iPhones, and financially a sideshow.
Actually, the Oppenheimer comments were themselves a sideshow to much bigger developments. Apple posted its best financial quarter yet, thanks to relatively robust sales of iPhones and Macs. The iPod continued to slide, specifically 7.5 percent to 21 million units, though the iPod touch boomed 55 percent. Earnings jumped to $3.4 billion, up from nearly $2.3 billion during the year-ago period. Revenues rose to $15.7 billion from $11.9 billion, and annualized, Apple is now producing more than $50 billion in sales.
But a far bigger thud lies ahead. Apple is widely expected to deliver its tablet this week, something Steve Jobs – and the world – is “very excited about.” Stay tuned.