Everyone has been giving praises to Apple for its amazing success on the iPod line. However, all this talk about Apple turning into a multimedia company may actually be a death wish for it. According to Forbes, Apple"s profit margins are declining, not fattening as one would expect. Why? While Apple will not discuss how much it makes on the various iPods, it is estimated that Apple gains about 20% profit from each DAP sold. With 33% of total earnings coming from the music player, the 45% number from the computer side of Apple is shrinking which is not good since that"s where the bulk of the profits come from for Apple.

Now it"s not all the iPod"s fault, either. iTunes Music Store gives even a slimmer return for Apple. Eugene Munster of Piper Jaffray says that Apple is only making 4 cents per music download. Ya, 4 cents! It"s about the same for the video side as well.

So what"s an apple to do? I would caution those suggesting Apple shed its computer line to rethink this suicidal plan. While Apple has taken the audio market by storm with its iPod, it hasn"t been able to make much money from it. Good companies continue to innovate but they also keep the bread and butter on the table. With its new Intel line of Mac"s coming, I think the butter will just become richer and the bread more tastier for Apple. The iPod will continue to be used to brand Apple"s name more stronger then ever and entice people to purchase an Apple computer. At this point, it"s the only way Apple can survive.