Demand Surge Slowed iTunes Site During Holiday Rush

A massive surge in traffic Free How-To Guide for Small Business Web Strategies - from domain name selection to site promotion. to Apple's (Nasdaq: AAPL) Latest News about Apple iTunes Music Store, driven by sales of new iPods bogged down the store's performance on Christmas and the following day.

Users reported slow downloads and other issues with the music store on Monday and Tuesday of this week. Some single songs reportedly took as much as 20 minutes to download -- compared to a few seconds under usual circumstances -- and others requests to buy songs could not be fulfilled at all.
Popular Gift

The surge in traffic was driven by new iPod owners and those who received gift cards to the iTunes store.

Apple did not return a call seeking comment on the store's performance, but it is possible the site bogged down because of a four-fold increase in traffic.

Web research firm Hitwise said Wednesday that traffic to the iTunes store was up 413 percent on Christmas Day compared to the same day a year ago. Traffic to the Apple Store, where the company sells iPods as well as computers, was up 110 percent. The store was the fourth most-visited site on Christmas Day, Hitwise said.

"For the third holiday season in a row, the iPod has been the must-have Christmas gift," said Bill Tancer, general manager of global research at Hitwise. "Competitive offerings have not yet succeeded in capturing the attention of music listeners, and the surge in visits to the Apple Store shows that iPod owners are also engaged in filling and accessorizing their new devices."
Too Zune to Tell

The increase in traffic to the iTunes and Apple sites is more remarkable given that overall, Hitwise is reporting just a 5.9 percent increase in visits to retail sites during the holiday season.

Apple's newest iPod rival, Microsoft's (Nasdaq: MSFT) Latest News about Microsoft Zune, saw its own traffic surge, with visits to Zune.net increasing more than 1,000 percent on Christmas Day compared to a week before. Still, Hitwise said the iTunes store had 30 times as many visitors as Zune.net.

If its site was briefly overwhelmed by traffic, Apple can take some solace in knowing it was far from alone this holiday season. On the Monday after Thanksgiving, so-called Cyber Monday, a site set up by the online arm of the National Retail Federation was deluged with hits. A few days later, Overstock.com Latest News about Overstock.com was hammered with traffic when it put the "Pirates of the Caribbean: Dead Man's Chest" movie on sale for $9.99 for a limited time.

For many retailers, such delays can be deadly. "If one store can't deliver a positive online shopping Free Download - Look Who's Driving the Next Generation of e-Commerce experience, then a competitor's site is just a click away," said William Agush, vice president of marketing Email Marketing Software - Free Demo at Web performance monitoring firm Gomez. He added that shoppers would abandon a site offering poor performance for a rival even if prices were higher and even if it had positive associations with the brand.
Captive Audience

For Apple, however, the stakes are likely not as high as for other retailers. Whereas customers at Overstock can click to eBay (Nasdaq: EBAY) Latest News about eBay or Amazon (Nasdaq: AMZN) Latest News about Amazon.com for similar merchandise, Apple has a captive audience in its iPod user base.

The only digital downloads that can be played on iPods -- without hacking or workarounds -- are those purchased at the iTunes Music Store, though users can rip songs from CDs to add to their iPod-friendly libraries.

"Apple shows no signs of losing momentum," JupiterResearch analyst Michael Gartenberg told MacNewsWorld. Even with the Zune and other challenges, such as a growing number of MP3-playing smartphones, he added, "the iPod should not lose significant market share in the next 12 to 18 months."

Longer-range, many analysts still believe newer models will emerge that will challenge Apple's pay-per-song and device-specific approach. For now, however, the captive audience will likely take any short-term delays in stride. By Wednesday, the iTunes site appeared to be bug-free again.