Apple (NASDAQ:AAPL) Tops in Online Movie Sales, Microsoft (NASDAQ:MSFT) Distant Second

Apple (NASDAQ:AAPL) continues to be the No. 1 seller of online movies, finishing in the top spot in 2010, although competitors like Microsoft (NASDAQ:MSFT) have started to make some inroads into Apple's market share.

For 2010, Apple had a 64.5 percent market share in online movie sales, dominant by any metric, although losing almost 10 percent in market share, dropping from 74.4 percent in 2009. Microsoft made a nice move though, jumping from 11.6 percent in 2009 to 17.9 percent in 2010.

Arash Amel, research director, digital media, for IHS, noted, “The iTunes online store showed remarkable competitive resilience last year in the U.S. EST/iVOD movie business, staving off a growing field of tough challengers while keeping pace with a dramatic expansion for the overall market. Apple faced serious competition from Microsoft's Zune Video and Sony Corp.'s PlayStation Store, as well as from Amazon and—most significantly—Wal-Mart. However, iTunes managed to grow because of the introductions of the iPad and the second-generation Apple TV, which have spurred the company's movie rental offerings and have invigorated the iTunes multi-screen ecosystem."

Taking into account the number of growing rivals and big-name entries in the online movie market, Amel thinks it could be sleeper Wal-Mart (NYSE:WMT) which ultimately may by the biggest challenger to Apple with their Vudu service.

“The future of the online movie business may come down to competitive battle between Apple and Wal-Mart,” Amel concluded.

Apple closed at $351.88, up $5.38, or 1.55 percent on Monday. Microsoft closed at $28.20, up $0.43, or 1.54 percent. Wal-Mart closed at $56.07, up $0.04, or 0.07 percent.