iTunes sales top $1 billion as Apple beats expectations

Apple (NASDAQ:AAPL) posted revenues of $15.7 billion during its fiscal third quarter, beating Wall Street estimates as earnings increased more than 77 percent year-over-year to $3.25 billion. During the quarter ending June 26, Apple sold close to 8.4 million iPhones--the new iPhone 4, released on June 24, has now sold about 3 million units. The computing giant also shipped 3.27 million iPad tablet devices during the period, although iPod sales slipped as consumers continue to migrate to the iPhone. Sales of the iPod touch nevertheless grew 48 percent year-over-year, and the iPod's overall share of the U.S. MP3 market remains at 70 percent.

Sales in Apple's iTunes digital storefront increased 25 percent year over year, topping $1 billion during the quarter. iTunes now accounts for 70 percent of all premium music downloads in the U.S. according to NPD Group data released in late May. iTunes' growth is slowing, however--NPD notes its share of the digital download market has remained essentially flat since the first quarter of 2009, increasing just 1 percentage point since that time. Rival AmazonMP3 increased its market share by 4 percentage points, and now represents 12 percent of the U.S. digital music market. Sales of digital tracks and albums accounted for 40 percent of overall U.S. music market share in the first quarter of 2010, a gain of 5 percentage points since Q1 2009, NPD said. Adding physical music purchases to the equation, iTunes still leads with 28 percent of all U.S. sales, a 4 percent year-over-year leap.

Apple reports the App Store now offers over 225,000 applications optimized for the iOS platform, including 11,000 expressly optimized for the iPad--downloads now top 5 billion. iOS now represents 24.4 percent of the U.S. smartphone market according to data issued earlier this month by market research firm comScore, trailing only Research In Motion's BlackBerry OS at 41.7 percent.

For more on Apple's earnings:
- read this Wall Street Journal live blog and also check out FierceWireless' Q2 earnings page

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