Apple app store with a huge gain

It looks like an awful lot of iPod Touches were given as Christmas gifts, because mobile market research firm Flurry notes that on Dec. 25, Apple’s App Store traffic for the iPod Touch exploded an incredible 1,000 percent.

But Apple’s (NASDAQ: AAPL) iPhone 3GS found its way under quite a few Christmas trees as well, because Christmas Day downloads for the 3GS shot up 900 percent when compared to an average of the three previous Fridays, according to the Flurry report.

In general, it’s been a good month for the App Store, with downloads up 51 percent from November to December. By comparison, downloads only increased by 15 percent from October to November.

"It appears that an influx of new iPod Touch devices has flooded the market over Christmas, and that users of the handset, primarily pre-teen and teen audiences, are voracious downloaders," Peter Farago, vice president of marketing for Flurry, wrote in a blog post.

What’s notable, beyond the incredible jumps in downloads, is that the iPod Touch has surpassed the iPhone for the first time. Flurry previously noted that the Touch was quietly gaining ground to account for 40 percent of downloads from the App Store. But during the Christmas period, iPod Touch downloads exceeded the iPhone by 172 percent.

This is especially good for Apple because iPod sales have been their laggard. In its last few quarterly reports, Apple noted that iPod sales have at best peaked, if not begun to slip a little. Now, though the iPhone had been the App Store’s initial target market, it’s clear that the iPod Touch has very quickly closed that gap.

Flurry’s study is backed up by a report from Thomas Weisel Partners analyst Doug Reid, who said iPhone and iMac sales for the Christmas quarter have been very good.

"Our checks suggest December quarter sales of iPhones are tracking ahead of our prior estimates, driven by increased market penetration in the United States, additional carrier agreements in multiple countries, and first-time launches in Korea and China," he said in a note to investors.

Mid-December Apple Store and carrier checks indicate that the 2009 holiday shopping season has seen a sharp increase in the purchase of iPhone as a gift option, he added. Reid estimates Apple will sell between 8.21 million to 8.89 million iPhones during the December quarter and the company will sell 31.59 million to 32.27 million in fiscal 2010.

Reid also upped his target price for Apple’s stock to $250 and raised 2010 and 2011 EPS estimates to $7.82 and $9.82, respectively.


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