Apple Tops Microsoft

Digital Media Growth Resumes in Q3

Boston, MA - 22 December 2008 - According to the new Strategy Analytics Digital Media Index (DMI), revenue growth in global digital media resumed last quarter with 1.5% quarter-on-quarter growth in Q3 2008, up from minus 0.2% in the previous quarter but down from almost 7% growth in the same period last year. A milestone was reached in the quarter as twelve months of revenue in Apple's 'Music Related Products and Services' segment-which includes iTunes-overtook revenues in Microsoft's `Online Services Business' segment for the first time. Among the five largest companies in the index, Amazon was the best performer while eBay was the worst.

On a trailing twelve months (TTM) basis, the Strategy Analytics' Digital Media Index grew 4.3% in Q3 2008 to reach 156, equal to a 56% increase from the index base year, 2006. Nine companies managed to beat the quarterly index growth: Tencent Online (21.7%); Baidu (20.1%); Netease Online (12.1%), EA Digital (8.6%); Shanda (7.6%); Apple iTunes (7.4%); Google (6.7%); WMG Digital (6.2%); and NHN Online (5.2%) trailing twelve months growth in the quarter.

Jia Wu, Analyst at Strategy Analytics' Digital Consumer Practice said, "While we saw a return to overall growth in the third quarter, it is still too early to talk about a turnaround as many of the leading companies in this index continue to show slowing quarter-on-quarter growth."

Martin Olausson, Director of Digital Media Research at Strategy Analytics, added, "Although it is clear that the digital economy isn't isolated from the offline world and the global financial crisis, the digital media sector has grown an impressive26% in the last 12 months and should continue to outperform most offline sectors in the tough months ahead."

Other findings from the Strategy Analytics Digital Media Index (DMI) Q3 2008:

Baidu, the leading Chinese search engine, was the fastest growing digital media company on an annual basis with a stellar +118% growth in the last 12 months.
Fox Interactive Media (FIM) was the fastest growing digital media company in the Western World with an impressive 40.7% growth in the last 12 months.
Google saw continued growth slowdown in the quarter and has now suffered three consecutive quarters with slowing growth since the end of 2007.

Global Digital Media Index, Top 5 Companies (US$ M)	Q3 '07	YTD	Q2 '08	Q3 '08
Google	$4,231	$20,921	$5,367	$5,541
Change %	9.3%	6.7%	3.5%	3.2%
Amazon	$2,091	$10,772	$2,406	$2,494
Change %	14.1%	3.9%	-5.4%	3.7%
eBay	$1,791	$8,165	$2,060	$1,974
Change %	2.7%	2.3%	-0.3%	-4.2%
Yahoo!	$1,768	$7,234	$1,798	$1,786
Change %	4.1%	0.3%	-1.1%	-0.7%
Apple 'Music Related Products and Services' (iTunes)	$601	$3,340	$819	$832
Change %	-1.2%	7.4%	-7.0%	1.6%
Digital Media Index (Quarter-on-Quarter)	108	+22	128	130
Change %	6.8%	19.9%	-0.2%	1.5%
Digital Media Index (Trailing Twelve Months)	124	+32	149	156
Change %	7.2%	26.1%	5.7%	4.3%

Source: Strategy Analytics


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