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The Steve Jobs Reality Show: Time To Dissect Numbers from Apple's Event

The Apple (AAPL) product announcements yesterday -- new iPods, Apple TV, and the walled-garden iTunes social network called Ping -- had, as these events always do, an air of reality television. Like Survivor or Big Brother, the Apple show was a specially constructed experience that offered verisimilitude -- the quality of seeming like reality, even though wholly artificial. So a little deconstruction of the many numbers that Jobs tossed about is in order.

Start with the retail store count: 300 now, with as many as 1 million people walking into them a few days a month. That's an average of 3333 people per store, which doesn't seem that amazing. I'm sure it's highly skewed, with the showplaces in major cities like New York getting far more than their share of the hustle and bustle. The number also says little in and of itself. After all, Walmart has 8,416 stores that see more than 200 million customers a week. That's an average of 3394 every single day, not a high water mark.

Jobs mentioned the million number because it helps create the sense of a bandwagon â€"- look how many people buy from Apple! From a business view, the important number is one that the company doesn't parade so much. Last summer I did an analysis that found a level of sales that blows the doors off any other chain store, including luxury categories like jewelry. Apple stores saw annual sales of more than $4,600 per square foot of store space on the average. Now that is a stunning number, but Apple won't trot that out because it emphasizes the perception of high prices.

The number of sold iOS devices -- iPhones, iPads, and iPod touches -- is more interesting from a business perspective. But even this gets a bit misleading. Jobs announced a total of 120 million iOS devices sold, which includes everything from the first iPhone off the line. Given the growth of the mobile market, I'd say that number is of questionable use as an analytic tool, especially as iPhones in particular have a high repeat purchase factor, so a good many of these device sales are effectively upgrades that didn't necessarily increase the total pool of users.

And then Jobs mentioned sales of 230,000 iOS devices activated daily and took a jab at Google (GOOG), trying to suggest that its claims of 200,000 Android activations a day included operating system upgrades. Google immediately shot back, saying that the 200,000 number was new units, not upgrades, and that it didn't include Android devices that don't use Google services, so the actual number might be higher. And Apple didn't specify whether it included OS upgrades in its count.

But say for a moment that it doesn't. Is the 230,000 surprising? Not at all. That's roughly 21 million devices a quarter. Subtract the 3.5 million iPads that Apple seems to sell every quarter and you have 17.5 million iPhones and iPod touches. Take out the Piper Jaffray estimate of 5 million iPod touches a quarter (even though the analyst is often inaccurate in his estimates, it's at least a starting point), and that leaves 12.5 million iPhones a quarter. That's in the 13 million ball park I expected -- about 141,000 iPhones activated a day. It still means that Android smartphones -- for all their many faults and limitations -- continue to move past their major competitor and that the gap appears to be widening.

It was nice to see app and music downloads numbers separated for a better understanding of what goes on inside iTunes. Clearly music, at 11.7 billion downloaded songs, is the big seller, although 6.5 billion apps is quite a number. The question is whether the latter also includes app updates, app reinstallations onto an upgraded version of iOS, and iOS and firmware updates, the very sort of hand-waving that Apple accused Google of. I've asked Apple before, which has refused to answer, and that leaves me thinking that it's probably so.

For those who are interested in other takes on the event, I'd point you to my BNET colleagues Damon Brown, who wrote that a lack of surprises created an opening for Google (GOOG) and Microsoft (MSFT), and Chris Dannen, who thought that Apple TV's design simplicity made it a winner.


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