July 30, 2012

It’s a pundit’s cliché to prognosticate something like “this will be the last generation of game consoles” or “Blu-ray will be the last physical format” (maybe not). If you want to go out quite a bit further into the future, though, you can listen to the likes of OnLive CEO Steve Perlman, who says that, eventually, virtually all computing devices will go away in a world that can take advantage of ultra-high-speed wireless technology like DIDO.

Are these the ramblings of a mad scientist? Not for Perlman’s former employer, Apple, which has traditionally made money from devices supported by software and content. The latter has historically represented relatively little of the company’s revenue when compared to its well-known hardware products.

But that is starting to shift, at least on a relative basis. In a charting of Apple’s YoY third-quarter revenue shares, Stuart Carlson shows the growing  influence of the iPhone and iPad over time. But look a bit further down the Y-axis from those ascendant lines and you will see that revenue form the iTunes store, while down on a percentage basis from a few years ago, now accounts for more revenue than desktops and the iPod, two products that are still strongly identified with the company. This has more to do with cannibalization of these products by notebooks and iPhones than a particular surge in digital sales. I wouldn’t expect this revenue stream to overtake iPhones or notebooks any time soon. Still, it demonstrates that Apple is positioning itself for a world in which bit distribution may pick up growing importance versus devices.

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