Will iPod provide Apple with only a temporary boost or will it ignite Mac sales, too?

“With its hip new ads and even hipper marketing deal with mega rock band U2, the iPod has revived Apple Computer Inc.’s image as a cutting-edge company. Shares of Apple have nearly tripled this year, and the iPod has captured nearly 90 percent of the market for portable hard-disk music players. The device, introduced three years ago, and its offspring, the iPod mini – the slimmer, lighter player that had its debut this year – are icons,” Wendy Tanaka writes for The Philadelphia Inquirer.

Tanaka writes, “The word iPod ‘is a generic noun for a portable music player,’ said Michael McGuire, research director for media at GartnerG2, a technology research company in Stamford, Conn. But is Apple playing the same old song, teasing investors yet again with a sizzling product that in the end will provide it with only a temporary boost? Perhaps.”

Tanaka writes, “It’s a familiar story for Apple watchers. Creating innovative technologies and high-quality products that lead the industry has been a hallmark of the Silicon Valley company, but it is equally famous for failing to maintain momentum. Some examples: Apple produced one of the first personal digital assistants, the Newton, which disappeared after the smaller Palm Pilot and Microsoft-based Pocket PC devices appeared. It revived itself with colorful, bubble-shaped iMacs in the late 1990s, but they produced only a small upward blip in market share that has since subsided.”

Tanaka writes, “Now, Dell Inc., Rio Audio and others are nipping at Apple’s heels with their own digital music players, and analysts do not expect Apple to hang onto its enormous lead in that market forever.”

“Still, at least some believe that this time may be different – that the iPod frenzy will drive sales of Apple’s computers because the device works more seamlessly with Apple’s own products. ‘We believe that fiscal year 2005 could mark the year when… the iPod story ‘hands off’ to the Mac story,’ Benjamin Reitzes of UBS Investment Research said in a recent report,” Tanaka writes. “Another difference this time, some note, has been Apple’s willingness to make the iPod play well with Windows products. The company released versions of the player and its associated software, iTunes, for Windows computers, and made its online music-downloading store available to all computer users, not just its own customers.”

Tanaka writes, “It also forged partnerships with a variety of companies, including Hewlett-Packard Co., BMW Group, and Motorola Inc., to get the iPod into different areas of the marketplace quickly. HP, for instance, is reselling an HP-branded version of the iPod. Roger Kay, a vice president at IDC, a technology research company in Framingham, Mass., said the iPod should allow Apple to drill down on the consumer market like never before. Kay expects the company to announce more iPod-related products, including possibly an iPod video player, next year. ‘The one play they’ve got is the consumer,’ Kay said. ‘Consumers represent the wild card for Apple.'”

Full article here.

22 Comments

  1. Blah, Blah, Blah…

    Why do so many people always want to predict the demise of Apple and itsd blunders. If anyone deserves to have their blunders publicly announced it is MicroSchrott (Schrott = grabage/scrap ie scrapyard). No other company has lead its users around by the nose as badly as they have. They are as bad as the pharmaceutucals, getting you hooked on “legal” drugs, and then not caring how you cope with the problem.

  2. I’m getting a little tired of the press questioning whether Apple is going to “fail” with any particular product. Maybe it is the mentality of the buying public that has “failed”. We Mac users know why we keep buying Macs and Mac products. The iPod dominates the market, yet this clown sees Dell and Rio “nipping at the heels” and that the the iPod may ultimately “fail”. Pierre’s Hamburger Palace may make the best hamburger in world, but MacDonald’s is going to sell a lot more. Pierre’s may have all the business they can handle in 10 locations, but does that make them a failure because McDonald’s sells tens of millions more a year at thousands of locations?

    There are a lot of factors that influence how a product fares in the marketplace. Maintaing momentum is not always something that is within the control of a company.

    I guess in the end it boils down to this: is something a failure because someone else can copy it on the cheap and sell a larger quantity of an inferior copy?

  3. ‘The one play they’ve got is the consumer,’ Kay said. ‘Consumers represent the wild card for Apple.'”

    Hello, Kay? I’ve got news for you. It’s always about ‘The Consumer�’. Economics 101: If people don’t spend money on a company’s stuff, the company will go out of business.

    Right now, Apple has something that a LOT of people want and they are spending money on it. This lovely little device is giving those same people a taste of Apple products and many of them will want to experience more Apple products. An excellent parable on this subject can be found in the upper-left corner of this page. The parable is called, ‘The Perfect Chocolate’, and it’s listed under “Opinion Archive: November 2004.”

    Maybe this will help put the longer-term prospects for Apple into perspective for you.

  4. It is a reasonable question to ask if marketshare and dominance is what he thinks is most important. Frankly, it has always just seemed so simple to me– Apple has cared about a quality user experience. Period.

    I find it so funny that people are always talking about marketshare as if it, in itself, somehow explains how good something is. Think past American cars, “quality” McDonalds food, clothes from BangladeshsrilankaPakistan-a-China-ville. Hopefully quality now means more than “thrift,” but if not– so?

    As long as the products are good and there remains a market large enough to maintain Apple’s production of them, who really cares (unless you’re after the money)?

  5. That’s cool ph8te, after all two first posts in one day makes me happy. This guy reminds me of those “Apple doomed to die pundits”. I guess time will tell if they are going extinct (my opinion) or simply hibernating.

  6. Interesting point about apple and failure above. Arguably Apple losing to MS Windows was the most famous business failure of all time. And that association is proving very difficult to shrug off. Perhaps Jobs’ second coming should have been to create a newco and call it Pear, or Mango or Peach or… and then no-one would be saying “anyday now Apple will fail again. Cos we’ve seen it all before…”

  7. R, you may find this interesting

    America has its share of early adopters, but they tend to be the exception rather than the rule; the average U.S. electronics consumer is driven more by cost and value than by features and technological sophistication.

    “We’re much more Wal-Mart,” says Carnegie-Mellon’s David J. Farber ruefully. “We buy our electronics from big-box stores where the salespeople know nothing about what they’re selling — they know how to swipe a credit card, and that’s it.”

    ASIAN POP The Gadget Gap
    Why does all the cool stuff come out in Asia first?

    http://www.sfgate.com/cgi-bin/article.cgi?file=/gate/archive/2004/12/09/gadgetgap.DTL

    Also:

    “The way business works here is simple,” says David J. Farber. “In America, if you have a potential product, you do research, you try to figure out the size of the potential market. And if it’s a totally new, totally innovative thing, where no one has any idea of the size of the market, and there’s no guaranteed return on a large investment, well, forget it. No American company will touch it. In Japan, it’s usually quite the opposite: manufacturers know that the home market loves new stuff; they’ll take risks there, hoping that something will catch fire and take off. The only U.S. company that’s doing that is Apple, and, honestly, I don’t think that even Steve Jobs, in all of his infinite wisdom, thought that the iPod was going to take off the way it has.”

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