TMO Reports - Analysts See 3.3 Million iTMS Sales As Download Explosion

Apple Computer announced Wednesday it has sold 3.3 million songs on its iTunes online music store since its upgrade one week ago. Industry analysts see the Apple news as a strong indication that growth in the online music industry is exploding each and every week.

The 3.3 million downloads compare to a previous peak download count of 2.7 million a week. On April 28, Apple said it had sold 70 million songs on the store in its first year, well short of its original goal of 100 million in the first year.

The company also confirmed to The Mac Observer that iTunes 4.5 had been downloaded some three million times since its upgrade April 28.

"iTunes remains the service to beat in the downloadable music space and this announcement proves that," Rob Enderle, principal analyst of The Enderle Group in San Jose, Calif., told TMO. "They have beyond a doubt, demonstrated that Apple can perform and perform very well in the Windows space - perform to a level of dominance."

"3.3 million songs sold in a week is pretty good," Phil Leigh, an analyst with Inside Digital Media, told TMO. "If you annualize that, itis over 170 million song a year. That indicates further growth from their last annual rate, which was 130 million. Theyire continuing to grow this business month over month."

"Even for this small download market in its early infancy, these numbers show dominance by Apple," commented industry analyst Mike McGuire of GartnerG2. It also shows there is room for other players to grow market share."

Based on its own internal, proprietary numbers compared to the total number of downloads, Apple estimates it controls 70% of the legal download market for singles and albums. In its most recent report, Nielsen/SoundScan reported 2,003,000 digital tracks were download via online music services, a change of 1.1% from the pervious week.

Mr. Enderle believes Wednesdayis announcement further proves Apple is becoming more of a "software services company" as its leading role in the music download and portable music player market grows.

"I think weire at the cusp of (Apple) deciding whether they want to be an iAppleis-onlyi vendor for the rest of the business or whether they want to move some of these properties cross platform as well. If nothing else, it shows where their market is. They now have to just get to it.

"This market is on fire and the Apple announcement proves that," said Mr. Enderle. "87 percent growth is incredible growth out of a recession and the fact that Apple grew 900 percent is unprecedented. This is a phenomenal market, and Apple owns it right now."

On the heels of Sonyis announcement Tuesdayis of its own online music download service, Mr. McGuire said the timing of Appleis announcement Wednesday is interesting. "Iim not inferring they released this news to out-play Sony, but timing is everything," he said.

Apple also announced its free song promotion and new iMix playlist feature have been popular with consumers as well. Users have downloaded more than 500,000 free songs of popular artists including Courtney Love and Nelly Furtado. Users have published and shared more than 20,000 iMix, or custom playlists, through the music store in the week since the feature was added and have rated iMixes more than 50,000 times.