7/17/08
8:32 am

Apple’s Future: Digital Downloads?

Playing around with the iPhone App Store this week got me thinking about Apple’s revenue streams. It seems that now, in addition to hardware, Apple makes a lot of money through digital downloads: music, movies, TV shows and now software.
In fact, Apple started digital distribution of iPod games a while ago in the iTunes Music Store. But only a small number of titles are available, and the development process includes making a direct deal with Apple. But the iPhone developer process is open to just about any serious developer. There are at least 500 titles available.
So, now that the iTunes Music Store delivers iPhone and iPod software, why not Mac software?
This should be an easy addition, and the pieces are probably already in place. Apple could start with their own applications, like iWork, and then let third-party developers get in on the act, with Apple taking its 30 percent cut. I’d bet developers would jump at the opportunity to distribute this way given that most software stores still ignore the Mac platform.
Come to think of it, they could do this on Windows. The iTunes Music Store, and even the iPhone App Store inside it, works in iTunes for Windows. Apple could become the largest distributor of Windows software.
This goes further than the PC and the iPhone. Apple already distributes to living rooms via Apple TV. So with digital downloads, Apple is taking on Blockbuster and NetFlix, they are already dominating retail music stores, and they could soon be challenging retail and online software stores. Apple could be the next Amazon.com, but for digital products only, which is probably the most profitable type of product — at least from a distribution standpoint.