iTunes, iPhone accessory sales more lucrative than most smartphone vendors
Horace Dediu has created an eye-popping chart about just how big Apple's iTunes revenues and iPhone accessory revenues have become. iTunes was once considered a "break even" business model for Apple, meaning that the company wasn't too concerned about making a profit on iTunes sales, but using the media sold through iTunes was a way to sell more iPhones. Likewise, Apple's iPhone accessory business was modest compared to sales of Macs, iPhones and iPads. However, when both businesses are taken into account, iTunes sales and iPhone accessory sales generate more revenue than all other smartphone manufacturers except for Samsung.
In the fourth quarter of 2012, Nokia -- third-largest smartphone vendor -- had almost US$5.4 billion in smartphone revenues. Sony had $4 billion, and RIM and LG had close to $2.8 billion. Those are impressive numbers until you realize that revenues from Apple's iTunes and iPhone accessory sales reached almost $6 billion combined. The reason these two businesses exist is now primarily as support ecosystems for the iPhone, which reinforces how huge the iPhone is for Apple -- and how much "catch up" the others have to do.
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