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Last quarter iPhone revenue quietly eclipsed the iPod

Not long ago, the iPod was the product that dominated Apple's revenue stream. In fact, it is the product primarily responsible for the company's big financial turnaround earlier this decade.
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Written by Jason Hiner, Editor in Chief of ZDNet on

Not long ago, the iPod was the product that dominated Apple's revenue stream. In fact, it is the product primarily responsible for the company's big financial turnaround earlier this decade.

However, as FORTUNE's Philip Elmer-DeWitt pointed out on Wednesday, in Apple's Q3 (it's most recent quarter), the iPod fell to Apple's No. 3 revenue stream, as the iPhone took over the No. 2 spot and Mac sales held on to the top spot.

DeWitt wrote, "Think of Apple's business model - as Steve Jobs often does - as a three-legged stool: Mac, iPod, iPhone. As recently as 2006, the iPod leg accounted for 55.5% of Apple's revenue. By last quarter, its share had shrunk to less than 18%."

Part of the change is due to the iPhone cannibalizing some of the iPod's sales and part of the it is due to the successful iPhone 3GS launch last quarter. While iPod revenue is definitely losing some steam, the bigger story is the strong iPhone revenue growth and the steady strength of Mac sales (despite the fact that Mac sales have leveled off in recent quarters because of greater price-consciousness from consumers due to the global recession).

Here's the revenue comparison chart that DeWitt published from blogger/analyst Andy Zaky:

Dewitt's article also includes several other interesting charts from Zaky on iPhone revenue that are worth a look, especially the one showing raw iPhone revenue growth.

For now, this may be a short-term blip. The iPod will likely see stronger sales in the next two quarters because of the back-to-school and holiday seasons, while iPhone sales will likely cool off following its big launch in June. Nevertheless, look for iPhone to potentially become Apple's permanent No. 2 revenue stream in 2010.

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