FORTUNE -- In a post titled "What's an iTunes user worth?" Asymco's Horace Dediu used the number of iTunes accounts Apple (AAPL) CEO Tim Cook announced Monday -- 575 million -- to draw the graph at right. It shows user accounts growing nearly six fold since 2009 -- a growth rate of nearly half a million per day, or 44% compounded annually.
He also calculated iTunes revenue per user over the same four years and found it had fallen from nearly $74 per year to less than $40.
"One would expect such a decline as a user base expands," he wrote, "and this approximate 50% decline in revenues per account seems reasonable for a six-fold base increase."
Really? I'm pretty sure that I'm spending a lot more on Apple stuff these days than I was four years ago.
So I asked Dediu the dumb question: Why does a 50% decline in revenues per account seem reasonable for a six-fold base increase?
"I thought it might have been obvious," he replied. "but the latest 500 million users are not the same as the first 100 million. Namely, they are less likely to spend on media (or anything else) because they are less wealthy or live in countries which don't have the same patterns of consumption. The first 100 million iTunes users were in the U.S. and Europe. The latest 500 million are more likely to be in China, Asia the Middle East and Eastern Europe."
OK. That makes sense.
What makes less sense is the precipitous decline in another chart in the same post, reproduced below.
"It shows that for a number of years," Dediu explains, "Apple's users were valued (implicitly by the stock market) as likely to create a net present value of about $1200 in earnings. The current value is about a third of that, or $440 in earnings. Today's expectation is therefore that each current customer will buy the equivalent of 1.8 iPhones. And nothing more, ever. A few months ago it was expected that each customer would buy three times as much.
"Although the rate of spending of each customer is decreasing, the number of new customers is increasing more rapidly. As this is happening the company's equity is being priced such that an Apple user is considered less than half as valuable as she used to be—from 3.2x revenues to 1.5x revenues. This change in user value has been quite abrupt, happening only within the last nine months. What could justify a drop in user value would be a drop in customer satisfaction or loyalty. So far, I have seen no evidence of this happening."
For a lively discussion about why the market values iTunes users the way it does, go to Asymco.com.
In advance of Cook's appearance at D11 next week, a deep dive into Apple's business.
FORTUNE -- For the second year in a row, Apple (AAPL) CEO Tim Cook is scheduled to be the opening night speaker at the annual D: All Things Digital conference, an invitation-only event that prides itself in assembling the people that really matter in the world of high tech.
Asymco's Horace Dediu was not invited.
More's the pity, MOREPhilip Elmer-DeWitt - May 24, 2013 5:10 PM ET
First Bloomberg, now Reuters, have boiled Apple down to a two-word editorial formula.
FORTUNE -- How do you describe a company that grew like gangbusters but has entered a patch of slower growth?
Some desk editors at the business news services have hit on what they seem to think is the perfect phrase: Apple (AAPL) is "losing steam."
Last week it was Bloomberg News with this headline:
Harvard Liquidates Apple Stake After IPhone Sales MOREPhilip Elmer-DeWitt - May 14, 2013 11:13 AM ET
In the U.S., it's everybody's but Apple's according to comScore.
FORTUNE -- It's often been said that Android's share of the U.S. smartphone market has come chiefly out of the hides of Research in Motion's (BBRY) BlackBerry and Microsoft's (MSFT) Windows Phone, but nothing shows this quite as clearly as Horace Dediu's charts at Asymco.com.
Not that Apple (AAPL) hasn't been hurt by the success of Google's (GOOG) mobile platform. Some of MOREPhilip Elmer-DeWitt - May 5, 2013 6:56 PM ET
It may not be the price of the iPhone as much as the economics of mobile broadband.
FORTUNE -- Apple (AAPL) made headlines last month on reports that its iPhone shipments to India tripled in the space of six months. Since then it's instituted some aggressive marketing techniques, including an advertising blitz and a buyback scheme, that could propel the company's sales in the country, according to one estimate, to $1 billion MOREPhilip Elmer-DeWitt - May 3, 2013 11:38 AM ET
Ten years later, it's the sprawling digital mall known as the Apple iTunes Store.
FORTUNE -- Asymco's Horace Dediu contributed to the bouquet of articles celebrating the iTunes Store's 10th anniversary with a story for Billboard magazine and the bar chart above, posted with a score of eye-popping data points in Happy Birthday iTunes Store.
What struck me, looking at Apple's most recent SEC Form 10-Q, is that revenue from the iTunes Store MOREPhilip Elmer-DeWitt - Apr 29, 2013 9:02 AM ET
In the last quarter of 2012, Apple had 5% of the global PC market and 45% of the profit.
FORTUNE -- Everybody who follows the computer industry knows that Apple's (AAPL) Mac trails far behind its Microsoft (MSFT) Windows-based competitors -- Hewlett-Packard (HPQ), Dell (DELL), Lenovo and the like -- in terms of worldwide PC shipments.
But who knew what the market looked like in terms of economic value?
Leave it to Asymco MOREPhilip Elmer-DeWitt - Apr 16, 2013 2:53 PM ET
Horace Dediu invites us to imagine Google netting fish at the mouth of a giant river
FORTUNE -- Asymco's Horace Dediu on Tuesday posted an edited transcript of the part of his most recent Critical Path podcast in which he described Google's (GOOG) business model through an elaborate extended metaphor.
Think of the company, he suggested, as an enterprise that has strung nets across the mouth of the Mississippi and is trying MOREPhilip Elmer-DeWitt - Apr 10, 2013 7:27 AM ET
A $45 million lawsuit suggests that Samsung also spends a fortune on refrigerator ads.
FORTUNE -- We've learned a couple of things since November when Asymco's Horace Dediu surprised us with his estimate that Samsung spends more on marketing than Apple (AAPL), HP (HPQ), Dell (DELL) Microsoft (MSFT) and Coca Cola (KO) combined.
1. We learned that Dediu's estimate was a few billion dollars short. According to the update he posted Tuesday MOREPhilip Elmer-DeWitt - Apr 4, 2013 8:32 AM ET
Asymco's Horace Dediu has a new way to illustrate Apple's profit-making machinery.
FORTUNE -- The chart above, created on an iPad, may be Horace Dediu's the best graphical representation yet of Apple's (AAPL) business model circa 2012. According to his footnotes, the height of the light blue rectangle representing payments to developers (Dev Payments, lower right) equals $1 billion. When zoomed in on a retina iPad, each pixel equals $50 million.
The chart MOREPhilip Elmer-DeWitt - Mar 27, 2013 8:29 AM ET
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