CHART OF THE DAY: The Curious Case Of Apple's Flattening iTunes Revenue

Apple, if it were just a media company, would be pretty fearsome. Its iTunes business is on pace to do $8 billion in annual revenues.

But, fund manager Eric Jackson at Forbes noted something interesting about iTunes this quarter. It was flat on a sequential basis, despite the fact that Apple added 75 million new iOS devices. iTunes revenue was $2.1 billion.

Over the last four quarters iTunes revenue is basically flat going from $1.9 billion to $2.1 billion. Meanwhile, iOS devices have gone from 365 million to 529 million, a significant jump. Pulling further back, as we did in this chart, over the last 11 quarters, iOS devices are up 5.3X, while iTunes is only up 2X.

Why is iTunes sputtering relative to iOS? We assume part of it is Apple's international iOS growth where iTunes items like songs and movies aren't available. We also assume services like Netflix and Spotify are cutting into iTunes sales.

What this means for Apple is unclear. But a big part of Apple's strength is its ecosystem. Part of that ecosystem is music, movies, and apps bought through iTunes. If people are buying fewer movies and less music, they will be less locked in to Apple's platform.