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iPod and iTunes are digital music’s top act, but the hip Richard Branson’s marketing muscle makes him a challenger to be feared

The honeymoon was nice while it lasted — Apple’s digital-music honeymoon, that is. On May 8, Brit billionaire Richard Branson jumped into the game with an announcement that his Virgin constellation of airlines, cell-phone networks, and media stores would soon add a digital-music business to the portfolio.

I don’t know the particulars of the reaction at Apple headquarters in Cupertino, Calif. But if I were Steve Jobs, I wouldn’t take this threat lightly. Virgin is the first potential challenger with branding moxie that can match even Apple’s. The group, which posted revenues of $7 billion in 2003, also has far better natural distribution channels for digital music than Apple. The upshot? Steve, get ready to face the A-team.

RULING THE ROOST.? For the last 29 months, Apple has been the uncontested champion of this nascent and increasingly lucrative field. Its iPod digital-music player, introduced in late 2001, is the runaway leader, despite premium pricing. Industry analysts have pegged the iPod as reaping over 55% of all money spent on digital-music players since Jobs & Co. launched the device in 2001.

In the fourth quarter of 2003, Apple sold a whopping 733,000 of these little beauties, bagging $256 million in gross sales. The pace iPods at which iPods is up 216% as of the last quarter. Apple has turned these diminutive devices into a juggernaut, churning out well over $1 billion in sales per year.
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