1 Business That Could Cost Apple Billions

After surpassing 100 billion downloads this year, can Apple's  (NASDAQ: AAPL  ) iTunes business continue to rake in $17 billion a year?

In a recent Fortune article, Asymco analyst Horace Dediu says that iTunes music sales are lagging. While its video and e-book sales rose 90%, the company saw its music sales increase only 10% last year. Worst of all, Apple is just breaking even on music. So what's the main culprit? Well, it seems like fulfilling millions of micro-transactions (each download from every iTunes user) costs Apple a handsome some. 

It costs Apple so much, in fact, that it's a reason why music-streaming competitors may soon surpass iTunes' popularity. In less than two years, top dog Spotify has reached over 24 million active users in the U.S. And realizing this huge opportunity, Google  (NASDAQ: GOOGL  ) and Beats Electronics -- which makes the Beats by Dr. Dre headphones -- will soon launch their own music streaming services. 

However, Apple still has a chance to turn its iTunes business around. In the video below, Fool contributor Kevin Chen explains the one option Apple has left to disrupt its disruptors. (Hint: It has to do with the company's iPhone and iPad sales). To learn more, watch the video below.

Of course, Apple's iTunes isn't the only area of the company that's in trouble. While Apple has handsomely rewarded longtime shareholders with over 1,000% gains, the company continues to see its profit margins shrink. It's no wonder why there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

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