“Apple’s iPod music player and iTunes music store may have 75 and 80 percent of their worldwide markets. But according to a Piper Jaffray analyst, the end is near. ‘Nobody can sustain an 80 percent market share in a consumer electronics business for more than two or three years,’ he told CNN. ‘It’s pretty much impossible.’ Apple’s new Nano music player has several features that are not found in other iPods, such as the ability to display the lyrics of whatever song is now playing. Well, he’s right about one thing: Apple’s market share won’t stay at 80 percent. It’s about to go up,” David Pogue writes for The New York Times.
“If you doubt it, then you haven’t yet handled the iPod Nano: a tiny, flat, shiny wafer of powerful sound that Apple unveiled last week. Beware, however: to see one is to want one. If you hope to resist, lash your credit card to your wallet like Odysseus to the mast,” Pogue writes. “It weighs so little (1.5 ounces), you don’t have to worry about dropping it onto pavement; even if it flies from your hands, the earbud cord catches it like a leash. Once again, Apple has mastered a lesson that its rivals seem unable to absorb: that the three most important features in a personal music player are style, style and style.”
Pogue writes, “The Nano will not come as good news to the growing membership of the curmudgeon club: people who resent the iPod’s success (22 million sold so far) and its trendiness. They’re fond of declaring that other players offer more features for less money. This time, however, they’ll have a tough time. Want to know what happens when you pit other players against the Nano, mano a mano? You give up, because no other flash player on the market offers anything close to the Nano’s capacity… So are the analysts right that the sun will soon set on the iPod Age? The truth is, the iPod has faced stiff competition from some of the industry’s best-known companies since the day it was introduced. Yet somehow, all the Dell’s horses and all Sony’s men haven’t made a dent in the iPod’s dominance. And with the introduction of gorgeous, functional and elegant iPod Nano, that’s not about to change.”
Full article here.
Advertisement: Apple iPod nano. 1,000 songs. Impossibly small. From $199. Free shipping.
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For the iPod users, would you upgrade your old iPod to another brands? Or would you upgrade to a newer and better iPod?
He is right.
The day will only come when Apple stop innovate. Would they do that. THINK about it.
Bravo Bravo, Mr. Pogue!
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The analyst from Piper Jaffray is quite right to say ‘Nobody can sustain an 80 percent market share in a consumer electronics business for more than two or three years,’!!!!!
But what he seems to not understand is that the iPod is not just a piece of consumer electronics … it is bound to iTunes and this makes it a Platform that has “Complements” (all the 1000+ accessories) and also “Switching Costs”.
There is also an Element of scale which is becoming increasingly important. So lets take a look at what they mean
1) Complements:
Like any platform the iPod has a number of complementary devices that make the user experience better than its competition.
The same can be said for Microsoft OS vs Mac back in the old days, but here the complements were software as well as printers etc, and just like the iPod the player who has the largest share has the most complements. In time the complements will become more universal and connect to any player, but for the moment iPod has a distinct advantage in user experience
2) Switching Costs:
Once you have downloaded all your music onto iTunes, and most importantly, once you have started buying hundreds of songs on ITMS it becomes increasingly difficult to switch. If you rate all your music and spend hours cataloging it this effect is exacerbated. A competitor no longer needs to be a little better to convince me to change … they need to be a LOT better. Given the rather simple nature of the products (they play music) this is very difficult to acheive. Through ITMS and iTunes in general Apple has created incredible customer captivity.
3) Economies of Scale
Scale is starting to become important … not only because apple has buyer power (i.e. can get NAND drives from Samsung at a much lower price than competitors by ordering 40% of their production). Buyer power will eventually go away as electronic components are essentially commodity products and supply will catch up with demand. Scale is really important because it allows Apple to absorb large fixed costs such as R&D and Advertising. If Apple spends the same amount per player as Creative does on advertising it can have 10x the presence, or inversely, if it cost 10m to design a new MP3 Player that is only about $1 per player for Apple and $10 per player for Creative … this impact is huge and Scale is likely to make Apple increasingly competitive on Price (see the Nano) and impossible for others to compete in such a Marketing sensitive segment.
Now if only you were to give me the e-mail address of the Piper Jaffray analyst we could have a word or two
Ciao
This article describes the essence of industrial design. Something so simple so integrated into your lifestyle that you don’t realise it is there. It almost becomes part of you. You just notice it when you don’t have it or when you are part of the competition.
If I may be a wet blanket, I think the 75 to 80% figure he quotes is actually for the US. Market share is similar in the UK, but worldwide is much lower (a third to a half of all players maybe) but growing.
“Now if only you were to give me the e-mail address of the Piper Jaffray analyst we could have a word or two.”
Munster’s my name. Making lame predictions about the iPod is my game.
http://www.piperjaffray.com/info2.aspx?id=361&analystid=131
I’m overcome. ahaha. Hell of a good piece, that article! Yesss!
“If I may be a wet blanket, I think the 75 to 80% figure he quotes is actually for the US. Market share is similar in the UK, but worldwide is much lower (a third to a half of all players maybe) but growing.”
the last number I remember was 50% world wide. I can’t remember where I heard it, though.
Thanks “Solid”
I will see if I can get one of my friends on the street to have a word with Mr Munster
Cheers
Try this one
Pogue@nytimes.com
Mark my words, the iPod nano is the final straw that breaks all of the other’s backs. By this time next year, over 50 million iPods will have been sold since it’s release in 2001. And all of those 50+ million iPods will be eternally bound to both iTunes and the iTMS, regardless of whether it’s running on Windows or a Mac. Apple’s final dominance over the digital music medium will be complete.
‘Nobody can sustain an 80 percent market share in a consumer electronics business for more than two or three years,’ he told CNN. ‘It’s pretty much impossible.’
-Microsoft
-Nokia
Can’t think of others off the top of my head right now…
AS SOON AS… someone comes up with the bright idea of a iStereo/DSL/music store combination for under $200 that doesn’t need a computer and the REST OF THE WORLD can use it instead of some computer geek.
Then we will see the end of dominance of Apple.
Gosh I wish I had a few million dollars to start my own buisness.
The iPod will rock on for another 2 or 3 years at least. And when video becomes part of it well, it will probably keep going another couple of years. But yes the day will come when something better and cheaper will be released and we’ll all flock to that. But at the moment the iPod is the big daddy of them all. Even if it is that small.
This article made me happy. Who doesn’t want a nano now? Someone who already has an iPod you say? I have 2 and love them both and use them constantly. Okay then, someone who doesn’t love music you say? Whose that?! Apple’s stocks World Wide will continue to rise from what I see, and their stocks in the US will stay a high average until the day that music dies out…which should be pretty much never. Each year more kids are born more that need music players and more that love music. It’ll be awhile before they die out…like never.
I think there may be trouble in paradise as more and more complaints are coming in from new Nano owners about the SOFT plastic used on the front piece of the Nano, both on the glossy case and especially on the screen.
People are saying that their Nanos are becoming horribly scratched just by leaving them in an empty shirt pocket for a couple of hours of walking around!
This could come back to bite Apple if they are forced to recall the first batch of units, or are forced to replace the front of all of these scratched up units with an improved HARDER material version.
How funny…My MDN Magic Word was “trouble”
The real strategic issue here is not iPods or even iTunes but Quicktime. iPods will eventually fade or be transformed into something totally different but the omnipresence of Quicktime as a standard (if not THE standard) will allow Apple to play a major role in entertainment software and hardware for another decade…
:rolleyes:
Is the nano really made from softer plastic than the original iPod or is it just easier to see the scratches on a black iPod vs. a white one?
They should be made of MATT plastic not GLOSS plastic. I have an iBook (3 years old) when I first got it, yeah to quote the famous Little Britain line it was GAWJUS. But now it’s a scratched up mess. However, the Apple logo in the middle looks as good as when I first bought it. MATT plastic is the secret it can still be white or black or purple but MATT. It will still get scratched I suppose but it won’t be half as noticable, and you won’t see fingerprints either.
iPod iPeople are a huge cult that are under the influence of SJ’s RDF (Reality Distortion Field). Even I with my tin foil hat can no longer resist this evil. I just ordered two, a black and a white. The difference between me and most of you other people is that I know I’m now in a cult and you don’t. This is maddness I just ordered today and keep going to the door thinking its the FedEx guy. I need help. I don’t even like music that much. Woe is me! Woe is me!
There are plenty of examples of companies dominating electroncs sectors for more than a couple years. How long has Microsoft’s Windows been around. How long did Sony’s Walkman rule, how long has the iPod been around (4+ years), How long has Nokia been around. All of these are examples of companies with a clear lead in their fields. As long as apple keeps innovating as they have, they will continue to lead.
If my beloved Microsoft wasn’t so busy running the world and playing supress free speech with China they would have come out with a device even better than this Nano thing.
After all, once they own the world then they can decide what type of player we will use.
MDN (aka M$) word: “Piece” like Apple has a little piece.
The Piper Jaffray report is the standard stuff you’d expect from a “suit” in yupieland. Instead of actually using their head, they resort to historical data sitting around their office. For them to state that “Nobody can sustain an 80 percent market share in a consumer electronics business for more than two or three years,” ignores a new, VERY import factor for which there is no prior precedent: iTunes. A company might come out with the Walkman or other “electronic device.” Even if they’ve got some decent patents, there are ALWAYS work-arounds and lots of hungry competitors trying to be as creative as the leader.. The fat-cat leader gets complacent and someone comes along and eats their lunch.
The iPod is a different animal. It’s a consumer electronic device that takes us into entirely new territory because it’s highly coupled with Apple’s iTunes. This gives the consumer a software-based virtual record store that sell songs with exclusive digital rights management protection. It’s easy for some snot-nose on Wall Street to quote historical precedent and sound like he’s quite an expert on a subject; we consumers must be simple folk that just buy iPods because they’re fadish and cool. Apple is damn well financed ($8B in the bank) and has a huge selection of music. With 75+ percent of the market, any other competitor faces a combination of hurdles that are near insurmountable.
Sure, this market is fadish. The market will eventually saturate and the “cool factor” will wane. The sales growth will have to flatten and then decline. However, the SIZE of the market is one thing; the market SHARE that Apple will enjoy in the future is another. Apple’s engineering ingenuity (with their hardware) and their exclusive virtual store position (with iTunes) are, combined, something that might keep Apple with the lion’s share of the market far into the future. If I were working at Piper Jaffray, I’d be damn careful about trying to predict the future of the iPod and iTunes based on history; we’re in uncharted waters.