Apple Inc. (AAPL) iTunes is almost as large as Windows

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The Apple Inc. (NASDAQ:AAPL) iTunes, software, and services group made almost as much revenue in 2013 as Microsoft’s division for licensing Windows to PC and smartphone companies.

Apple generated $16.8 billion from sales in its iTunes, iBooks, App Store, Mac App Store, AppleCare extended warranty program, iCloud, and other services last year. During the same period, Microsoft reported revenues of $18.4 billion for the Devices and Consumer (D&C) Licensing group. This division oversees Windows licensing to OEMs including Windows Phone, perpetual licenses of Office to consumers, and the multi-billion dollar income that the company generates from licensing patents to Android manufacturers.

The difference in revenues between the Apple and Microsoft divisions is $1.6 billion. This means that Apple iTunes recorded 91% of the revenue that the Microsoft D&D Licensing division did throughout 2013. In fact, Apple would have closed that gap if they did not lower the price of the iWork apps and OS X Mavericks.

The install base of Apple devices are estimated to be at around 600 million, which is a large market for the goods that are sold by iTunes. The iTunes division at Apple grew 19% in December compared to the same period a year earlier. The Microsoft Licensing division dropped 6% in the fourth quarter compared to 2012.

Even though Apple iTunes revenue is high, it is believed that Microsoft’s profits are higher. The D&C Licensing gross merging for December is believed to be at 92.5% with around $5 billion in gross profit. Apple does not report gross margins on financial statements so comparisons cannot be made. Apple iTunes profit is most ignored because it is not responsible for significant profit contributions, according to Technology Business Research analyst Ezra Gottheil.

[Source: PCWorld]

This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at
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