Jobs Says iTunes, Apple Retail the Secret to iPad’s Success


Steve Jobs was on stage today to introduce the iPad 2, and took a few moments to talk about why the iPad (s aapl) has been so successful to date. Jobs stressed the role of the App Store in the iPad’s success, but also that of Apple Retail.

Apple’s lead in the marketplace is the result of great products (some might call them “magical”), very competitive pricing, and an active developer community. As Jobs noted at the event, Apple has sold 100 million iPhones to date, 100 million books have been downloaded from the iBookstore, and 15 million iPads were sold in 2010, representing $9.5 billion in revenue and a 90-percent share of the overall tablet market. The App Store for all iOS devices has over 350,000 apps for sale, and more than 65,000 of those are designed for the iPad. That success, in large measure, can be attributed to a very successful retail presence and Apple’s ability to attract registered customers to their online store.

Jobs announced today that Apple has 200 million registered iTunes customers with credit cards on file, capable of one-click purchasing across all three of their online content stores: iTunes, the App Store, and the iBookstore. While Amazon (s amzn) doesn’t publish its numbers, Jobs suggested that this might be the largest collection of accounts with credit cards anywhere on the Internet. One-click purchasing is absolutely the key to success for the iTunes store and its rise to the top of music retailing, and now Apple has paid out $2 billion in revenue to App Store developers, which means its gross revenue take is somewhere around $2.85 billion given its 70/30 revenue split.

Apple’s success also owes a lot to its ability to get products in front of, and into the hands of, customers. Apple Retail finished its last fiscal quarter with 323 stores in 11 countries. Those stores are designed to provide customers with the ability to actually use Apple products and get information from knowledgeable staff. That staff also provides customer support and training for Apple products. No one else in the industry has been able to duplicate this retail strategy, and no amount of boasting about hardware specs will make up for its absence. No matter how good any competing tablet might be in 2011, it will lose because Apple has far greater reach and control when it comes to the retail experience.

And once those customers leave the store with a shiny new iPad 2 under their arm (or even before they do), Apple is ready and waiting to sign them up for one-click purchasing. The cycle continues, just as Apple will continue to dominate the tablet market for the foreseeable future.

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