“Short of an actual prize, one of the most coveted handouts at this year’s Grammy Awards, Academy Awards and MTV Video Music Awards was the iPod music player stashed in celebrity goody bags… Sales of iPods, which Apple Computer Inc. introduced in October 2001, are expected to hit 10 million by the end of the year. The success of the digital music player has burnished Cupertino, Calif.-based Apple’s image as a maker of sleek, elegant computers,” Terril Yue Jones reports for The Los Angeles Times.

“But as with any pop culture phenomenon, iPod’s popularity could fizzle as public tastes change… Apple founder Steve Jobs said he wasn’t worried that iPod might one day be considered the Rubik’s Cube of the 21st century. Instead, he said, iPod is capitalizing on a fundamental shift in the way people buy and enjoy entertainment in the digital age. ‘I don’t think we’re seeing trendiness here,’ Jobs said of the iPod. ‘I think we’re seeing a product that’s truly revolutionizing the way we listen to music. We didn’t sell 2 million of them last quarter because it’s trendy, we sold 2 million last quarter because it’s a phenomenal product that’s reinventing the way people enjoy music,’” Jones reports.

“Indeed, Apple’s strategy has been to use iPod to promote home entertainment networks powered by its big-ticket computers and laptops such as the iMac and PowerBook. ‘That’s where the real opportunity is,’ Munster said. ‘Apple has done a bunch of things right. They came up with a brilliant hardware design that’s compelling to touch, that you want to hold,’ said Darcy Travlos, who covers mobile multimedia for brokerage Caris & Co. ‘Apple has executed a tremendous strategy right under the noses of everyone, and people didn’t notice until they sold 2 million of them last quarter,’” Jones reports.

“And just look at history, said Rod Bare with Morningstar in Chicago. ‘It looks like iPod is penetrating at a similar rate of digital cameras and DVD players,’ he said, pointing out that ‘both are still going strong,’” Jones reports.

Full article here.