Forbes writer wonders how long the Apple iPod miracle can last; ‘nothing this good can last forever’

“To hear the media tell it, everyone has an iPod, and if they don’t already have one, they’re soon going to get one. But the fact is not everyone does. Not even by a long shot,” Arik Hesseldahl writes for Forbes. “According to the Consumer Electronics Association, the outfit that put on the International Consumer Electronics Show earlier this month, household penetration of MP3 players–not just iPods but all brands–in the U.S. runs about 15%.”

Hesseldahl writes, “And while Apple still has the edge on quality–I’ve tried out about a dozen different MP3 players, and the iPod is far superior to everything else out there–that case won’t always be so clear. Other manufacturers are learning from Apple’s technology tricks and trying to improve upon them while undercutting on price. This means in time Apple’s iPod profits will be vulnerable.”

“Sure Apple can innovate by adding features like video and maybe wireless connectivity. But even for a company as innovative as Apple, that well can run dry, leaving it to compete on price alone. That’s a scary thought when you consider that 34% of Apple’s revenue last quarter was derived from iPod sales. A sudden, unexpected shift in consumer tastes–they are a fickle bunch after all–could feel like a nasty punch in the nose,” Hesseldahl writes. “I don’t mean to sound bearish about Apple or about the iPod. But as good as Apple’s latest results were, I’ve started to wonder how long the iPod miracle can last. Nothing this good can last forever.”

Full article here.

34 Comments

  1. Thoughtful article. It asks some cogent questions that should be taken to heart. As the writer points out, the iPod is technically superior to its competitors, but the thing that should be of most concern is the fact that it’s become fashionable. No matter the technical merits of a product, if it becomes unfashionable (due to oversaturation, whatever) its popularity could plummet. Same with Macs. We Mac users pride ourselves on our maverick mystique, not running with the lemmings. What happens if Macs muscle wintel machines out of the market and they become mainstream? Suddenly, we’ll be the herd we sneered at for so long.

    The MDN Magic Word is “thought”, as in we all should give it some.

  2. OK. I’m officially pissed. This is about the third time I’ve got the much sought-after 1st post, and I have yet to feel the wave of transcendent euphoria that seems to overwhelm all other first posters. I didn’t gain mystical superhuman powers, and Halle Berry hasn’t called to declare that her undying love for me should be immediately sealed with a strenuous round of rumpy-pumpy. What gives? I feel so cheated.

  3. I’ll say it again and again, others may watch and learn from what Apple did with the iPod, but beating out iTunes will be a hell of a task.

    The fact that all, I mean 100% of my colleagues, mac and PC, are using iTunes had proven that it is the top of the top.

    Copy the hardware, copy the software, many have tried, many have failed and many more will fail. Even if it is guaranteed to play ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

  4. What people forget is that this is about SOFTWARE and HARDWARE..

    Jobs himself told us ages ago: “We have the number one player, the number one store and the number one jukebox software…”

    We’re still waiting for someone to best ONE of those.. Even when THAT happens it will be embarrassingly short of Apple’s solution.

    The thing is.. Bill Gates can rip off software.. but Apple has a PATENT on the scrollwheel.. so how do you beat the iPod without copying it…when everyone loves the design?

    I find it so funny that when faced with competition, the supposedly ‘cutthroat’ PC industry has

    a)copied blatantly (creative)
    b)lied to its customers (sony..kbs fiasco)
    c)whined to the courts (virgin)
    d)given up (hp)
    e)denial denial denial (this forbes article)

    oh.. and what do I have to say about MS

    f)go to the same old well (MS Windows-monopoly leverage with WMP)

    So the only thing cutthroat about the Computer Industry.. was the fact that Macs costed $3000 in 1984…. as opposed to the target of $999.

    Nothing is sacred. With a 99 dollar iPod, everyone, EVERYONE, is going to have one.. i already know about 4 ppl .. plus myself that are getting one.. This is huge.

  5. but the thing that should be of most concern is the fact that it’s become fashionable
    —-
    uhhh.. has it perhaps slipped your mind ‘first-post’ that about 240 million AAC/F songs won’t play on any other device than the iPod line of music players?

    I mean.. the music store is a big deal you know…

    This is where people will argue, what came first, the chicken or the egg.. but i think all three feed each other.. which is amazing.. iTMS/iPod/iTunes Jukebox

  6. This isn’t a fight with reality, its a fight with history, perception, and predudice.

    Apple was head and shoulders better and sooner than every company out there, two computer platforms in a row. Within 10 years, it hardly meant bupkis. They can’t explain why so there’s “no reason it won’t happen again,” so Apple never gets the benefit of the doubt.

    As with minorities, you have to be twice as good for twice as long just to make parity.

  7. No Mike, it hasn’t slipped my mind. The point I was trying to make was that fashion is a very subjective thing, and caters to a feeling of exclusivity. With the herd mentality that prevails in most societies, if a meme starts to circulate that the iPod is somehow “unfashionable” precisely because everyone else has one, a backlash of unpopularity, no matter how illogical, could gain traction. I’ve already heard early iPod adopters on other forums bemoaning the fact that it no longer has that cachet of cutting-edge exclusivity because the masses have them now. I’ve even seen T-shirts proclaiming the owner a 1st Gen iPod owner. As to the iTMS, I think that Apple has MUCH bigger things planned for it, not just as a loss-leader to stimulate iPod sales, so don’t count on it being exclusive forever. Besides the potential revenues from licensing fees if they eventually decide to license AAC/Fairplay could dwarf iPod sales. The iTunes/Motorola deal should have clued you in. Remember Microsoft achieved dominance with their control of their file formats, not because Windows or Office were that good.

    And I was being sarcastic about the first post thing, or did that slip your mind? I still don’t get the first post thing by the way. Why does everyone make a such big deal over it?

  8. And yes, there is a flip side to this, Microsoft sucks in every market it enters where it can’t leverage its monopoly. When it has to play by the rules and its products have to speak for themselves, its lucky to be in the top three.

    A few years of quarterly reports like this one and there will be no more doubts.

  9. yes, I suppose fear of unfashionability is what caused so many people to stick to their bug ridden, unusable PCs?

    wrong rant here. the primary reason the iPod has become so successful now is that it is a standard. it’s not mp3 player, vid player, portable hard disk, etc., but it’s a “walkman.” how many parents bought them because every classmate of their kids had one – not because they thought it was fashionable.

    thus, this whole essay is patently ridiculous. models change, times change, circumstances change. sure, the iPod started out being fashionable – but overpriced and hard to use (before iTunes. then, it became easy, cheaper, smaller, easier, and now – cheapest, easiest, and most cohesive. Apple has done exactly what it needed to do to maintain this momentum. Heck – my wife gave up her more comfortable black headphones last week because she had to wear the white headphones so others could she that she was not just listening to some crappy radio, CD player, what have you, but an iPod.

    now – just look at Apple’s commercials. now – you see what people who sit around all day thinking about this problem can come up with, not the 2 cents we like to throw around here.

    let’s not confuse early adopters with the current adopters – 50,000 vs. 5 million.

  10. Viridian’s point is perfectly valid.

    By the end of the eighties and the early nineties, it didn’t matter whether the ‘Walkman’ or ‘Diskman’ was made by Sony.
    The Sony fashion element had gone.
    People made their choice after consulting tests in a consumer magazin or from a friend’s recommendation.
    There were Panasonics all over the place.
    Sony sold about 20 million Walkmen (or Walkmans?).

    Apple’s already half way there with the iPod …. !

  11. If you read carefully what this guy says (at least concerning Apple sales) contradicts itself. First he says penetration is yet low -only 15%- so LOTS of people out there have yet to buy an iPod. Then he says 34% of Apples revenue is from iPod sales. Then somehow he reaches the conclusion that this should is scary. Correct me if I am wrong but if penetration say doubles, Apple could be losing TONS of market share and still be maintaining that 34% of revenue. So how does his gloom and doom pan out as least as far as the bottom line goes? I am a little dissappointed in him as a business writer, he is not thinking things through before he writes.

    I like your point too odd rock cafe. ITMS rules and I think will continue to do so. At some point this will become a self forfilling prophecy for the majority of users. ITMS will be the standard. Do you think some other company is gonna unseat Amazon anytime soon? Sure there are lots of little guys out there making a buck but Amazon is the recognized “big daddy” and that is where I think ITMS is going.

    Unfortunately, MY above statements would logically lead to the conclusion that Apple does not have a very good chance of replacing Windows. BUT as Viridian points out, is that necessarily something that as Mac users we would want? And in the current situation Microsoft has nowhere to go but down and Apple nowhere to go but up. We could easily DOUBLE or TRIPLE our Market share without seriously damaging Windows headlock on the market.

    I would like to see Apple triple their market share and get up to around 10-20% of the market and then stay there. Small enough to be cool and quick and innovative and to keep the bean counters from taking over, large enough so that every major developer will have to come out with a Mac version or risk losing significant profits. And with the current situation the scenario I have outlined above is very very possible. Buy AAPL now. I did.

  12. Charko: “Or as Shakespeare put it:- �Gather ye rosebuds whilst ye may!�.”

    Charko, I agree. History has shown time and again that NOTHING lasts forever. Well, except maybe for Cher and Madonna, but those ladies keep ‘reinventing’ themselves and ‘changing with the times.’ Wierd.

    Anyway, (just about) everything has a beginning and an end, and so will it be with the popularity of the iPod. If people tend to focus on its ‘cach�’ or ‘hipness’, it’s ‘cool factor’ may diminish more quickly than it would if people would simply focus on its ability to organize, maintain, and play songs better than anything else.

    I believe that what Mr. Hesseldah is wondering out loud whether the iPod is just a ‘fad’, or whether it has fundamentally changed the way people listen to their music and will, therefore, be around for a while.

    Look at the digital camera. It has fundamentally changed the way people take, keep, organize, and show pictures. I will probably be using a digital camera for the rest of my life; I won’t be using film ever again. Similar thing for the mp3 player. The iPod, along with all the others, has changed the way people listen to their music.

    The combination and integration of iTunes, the ITMS, and the iPod is what has made the iPod such a success. The fact that the iPod has a way cool design doesn’t hurt a bit, though.

    I think that if people are only looking for a status symbol, then the iPod’s fortunes could turn overnight, but if people are looking for a device that is an extension of, and/or a supplement to, their ‘digital lifestyle’, the iPod could enjoy many more years of actual use and not just used as an accessory for folks to show how ‘hip’ they are.

  13. Boring, jealous, crap …. Why do some people seem to spend their entire lives bad mouthing and puttind down other peoples success.

    Speculating about failure is a nasty game.

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