“The Mermaid, Puddle Dock, is not the first place you might go in search of the cool and cutting edge. That will not stop an expectant crowd gathering at the conference centre in London’s Blackfriars this week for a live satellite broadcast from San Francisco that could make or break one of the consumer icons of the Western world,” David Smith writes for The Observer.
MacDailyNews Take: Tuesday’s media event “could make or break” Apple? Damn, you know for sure they’ve got some strong stuff in London now. We’re getting a contact high from all the way over here across the pond.
Smith continues, “The iPod, the digital music player beloved of everyone from Coldplay’s Chris Martin to President George Bush, is in danger of losing its sheen. Sales are declining at an unprecedented rate. Industry experts talk of a ‘backlash’ and of the iPod ‘wilting away before our eyes.'”
MacDailyNews Note: iPod unit sales:
• Q4 03: 336,000
• Q1 04: 733,000 (holiday quarter)
• Q2 04: 807,000
• Q3 04: 860,000
• Q4 04: 2,016,000
• Q1 05: 4,580,000 (holiday quarter)
• Q2 05: 5,311,000
• Q3 05: 6,155,000
• Q4 05: 6,451,000
• Q1 06: 14,043,000 (holiday quarter)
• Q2 06: 8,526,000
• Q3 06: 8,111,000
During no quarter have year-over-year iPod sales declined.
Smith continues, “On Tuesday the eyes of iPod-lovers the world over will be on Steve Jobs, the co-founder and chief executive of Apple, when he seeks to allay fears that it could follow Sony’s tape-playing Walkman into the recycling bin of history.”
MacDailyNews Take: Whose fears?
Smith continues, “Analysts warn that the iPod has passed its peak. From its launch five years ago its sales graph showed a consistent upward curve, culminating in a period around last Christmas that saw a record 14 million sold. But sales fell to 8.5 million in the following quarter, and down to 8.1 million in the most recent three-month period. Wall Street is reportedly starting to worry that the bubble will burst. Tomi Ahonen, a technology brand expert and author, said: ‘For the first time the iPod has had two consecutive falls after 17 quarters of growth. If I were the manager, I would be wanting my people to explain what is going on. The iPod is wilting away before our eyes.'”
MacDailyNews Take: Again, during no quarter have year-over-year iPod sales declined. And Christmas comes but once a year.
Smith continues, “The company is facing growing competition on every front. Last week Amazon launched a digital TV and film download service in the US, and the supermarket giant Wal-Mart is in talks with Hollywood studios about a similar website. Later this year a new online music store, SpiralFrog, will undercut iTunes by offering a huge catalogue of music for free while relying on advertising for its income. MySpace, the immensely popular social networking site, also poses a threat. Three out of every four MP3 players sold are iPods, but the device could be challenged later this year by Zune, the contender from Microsoft, whose billionaire founder Bill Gates is not used to losing. Samsung is also betting heavily on its new K5, which has the option of built-in loudspeakers.”
MacDailyNews Take: Is this a comedy piece?
Smith continues, “James Beechinor-Collins, editor-in-chief of T3 consumer gadgets magazine, added: ‘It’s cool across the board: everyone from my seven-year-old niece to my 60-year-old uncle has one. But as the leader Apple needs to keep innovating, not resting on its laurels. We haven’t seen a new product for a year, so Tuesday’s announcement had better be bloody good.'”
Full article here.
MacDailyNews Take: This is a semi-annual article that’s dusted from time to time for republication. The formula: Ignore cyclical holiday buying patterns to show “declines” in iPod sales, dig up some out-of-context focus group lines that iPod is “losing its cool,” and insert this year’s “threats” to iPod+iTunes (oh, David, basic iPod FUD 101: you forgot “iPod scratches,” dummy). Then we’ll have Apple’s announcements, new iPod quarterly sales figures that show continued year-over-year increases and the article will be forgotten until Smith and/or his insipid ilk dust it off to rerun next year. In short, it’s boring, old, recycled FUD.
On May 23, 2006, Credit Suisse analyst Robert Semple wrote in a report to clients, “We believe Apple is still in the early stages of its product expansion and that the company can grow its iPod units at least 20% for the foreseeable future.” Peter Kang reported for Forbes, “The analyst’s prediction comes from what he sees as the low penetration rate of the iPod, estimated at about 10% of PC users, or an ‘active installed base’ of about 40 million units worldwide. One region looking ripe for growth is Europe, which has an estimated penetration rate of 7.1% compared with 15.5% for the United States, according to Credit Suisse. In addition, customers appear to be replacing their iPods with new models quicker; Semple estimates the current ‘lifecycle’ of the iPod at approximately 1.5 years, down from two years. The Credit Suisse analyst compared the current pace of iPod shipments to that of the Sony Walkman and Discman portable music players. ‘We believe that over time Apple’s iPod can easily exceed Sony’s 309 million cumulative Walkman and Discman shipments,’ he said. ‘For comparison, it took Sony over 10 years to sell 50 million Walkmans, while Apple reached the same milestone in half the time despite lower market share and stiffer competition.'” Full article here.
Contact info: Stephen Pritchard, Readers’ Editor, The Observer, 3-7 Herbal Hill, London EC1R 5EJ, tel 020 7713 4656, reader@observer.co.uk
[UPDATE 11:28am EDT: Added Credit Suisse analyst Semple’s notes on iPod market saturation and estimates for iPod cumulative shipments.]
Related articles:
CNET Alpha Blog: absolutely do not try Amazon Unbox – September 09, 2006
Attacks likely to prove futile against Apple’s iPod+iTunes de facto standard – September 01, 2006
Analyst: Microsoft’s Zune an ‘underwhelming’ repackaged Toshiba Gigabeat; no threat to Apple iPod – August 30, 2006
Analysts: Amazon’s ‘Unbox’ to be ‘Unsuccessful’ vs. Apple – September 08, 2006
Universal and SpiralFrog’s ‘free’ music will come with many strings attached – August 29, 2006
NPD: Apple retains huge lead with 75.6% share of U.S. music player market – August 17, 2006
Apple CEO Steve Jobs talks up much-rumored ‘iPhone’ iPod mobile phone – August 11, 2006
Zune: Apple cannot lose. Microsoft cannot win. – July 26, 2006
Apple still In ‘early stages’ of iPod expansion – May 24, 2006
Another iPod+iTunes FUD article keeps the disinformation flowing – May 14, 2006
SmartMoney publishes compendium of iPod FUD – May 11, 2006
In Cleveland, ‘tis the season for Apple iPod FUD – December 10, 2005
The New Zealand Herald serves up a steaming pile of iPod FUD – August 11, 2005
FUD campaign against Apple’s iPod+iTunes fails to stick – April 08, 2005
More blood on Apple iPod’s Click Wheel: Dell’s ‘DJ Ditty’ flash-based MP3 player is dead – August 22, 2006
More blood on Apple iTunes Music Store’s play button: MyCokeMusic is dead – June 20, 2006
More blood on Apple iPod’s Click Wheel: iRiver gives up on digital media player market – May 23, 2006
More blood on Apple iPod’s Click Wheel: Sony’s Walkman Bean is cooked – February 13, 2006
More blood on Apple iPod’s Click Wheel: Dell dumps ‘DJ’ hard-drive MP3 player line – February 04, 2006
More blood on Apple iPod’s Click Wheel: iRiver pulling out of Europe? – February 01, 2006
More blood on Apple iPod’s Click Wheel: Thomson gives up on MP3 player, CE markets – December 12, 2005
More blood on Apple iPod’s Click Wheel: BenQ withdraws from MP3 player markets – November 28, 2005
More blood on Apple iPod’s Click Wheel: Olympus halts production of portable digital music players – November 09, 2005
More blood on Apple iPod’s Click Wheel: Rio is dead – August 26, 2005
Apple’s iPod has blood on its Click Wheel: Virgin Electronics is dead – March 08, 2005
Apple’s iTunes Music Store has blood on its play button: BuyMusic.com is dead – March 28, 2004
flappo: Murdoch doesn’t own the Observer – it belongs to the fiercely independent Scott Trust, along with the Guardian, the Guardian Online and the Manchester Evening News – see http://en.wikipedia.org/wiki/The_Guardian
Having said that, the Observer and the Guardian (the most liberal of our national newspapers) have never been other than lukewarm about Apple, which is surprising, given their readership.
Flappo said
“the uk media is controlled by murdoch
who is in bill gates’ pocket
figure it out
the daily mail is even more anti-apple / ipod”
Neither the Observer (owned by Scott Trust) nor the Daily Mail (owned by Associated Newspapers) are Murdoch titles. By all means criticise the Observer’s article, or even the anti-Apple slant it and it’s sister paper The Guardian frequently take, but don’t talk rubbish in the process.
As for the article itself, considering the 8 million units a quarter translates to 75% of the MP3 player market, I don’t think Apple are too worried just yet. In the meantime, the rise in Mac sales means profits are still rising, which I would think keeps Wall St. more than happy.
The only concern Apple should have is about not becoming complacent. So far everyone who has tried has failed to beat them or even match them, however that doesn’t mean no-one will and as has been shown by the dominance of windows, their is no guarantee that the best products become the most popular/used.
I love the logic that just because Amazon have launched a service it means they’re automatically a danger to Apple, they’re only a danger if the service works, offers good prices, offers a good selection or any combination which in turn, and most importantly makes them popular. You’re only a danger to a successful product/service if you in turn are successful.
Sadly journalism nowadays is only about hyping new things and destroying the established, there is no middle ground, there is no simple reporting of the facts and letting them speak for themselves. It is all about opinion and in order for opinion to be interesting it largely has to be seen as in opposition to something nowadays. When iPod is new it’s great, when it becomes established it turns to shit.
The Observer is a leftist rag that reeks with envy — they hate competence, quality and success and thus hate Apple. And the writers are journalists, most of whom are clueless and write outrageous garbage because they have deadlines, not because they have knowledge. Just save the link MDN, so that when this twit writes another fairy tale in the future, you can point out his past drug induced outburst.
And exactly what is out there to replace the iPod as it falls from grace?
Nothing my friends, nothing.
Another example of so called experts wearing underwear a few sizes too small.
Leo
Start quote
“
Please would the Guardian Newspaper, a once respected organ of the British press, please make some original observations on the subjects it reports on, in this case weeks after the event.
Your article titled “Why the iPod is losing its cool” dated September 10th, 2006, written (?) by David Smith
The original article, dated July 20 is available here: http://communities-dominate.blogs.com/brands/2006/07/demise_of_a_dar.html
I would suggest to you that if you are to find expert sources you run a few checks to ensure that their statements have not already been dismissed and their factual basis is not fundamentally impaired as it is in this case. I would refer you to a handful of sources to find this information, though there are many more of them available:
http://communities-dominate.blogs.com/brands/2006/07/demise_of_a_dar.html
http://www.forumoxford.com/
http://www.macformat.co.uk/page/macformat?entry=the_demise_of_apple
http://money.cnn.com/blogs/browser/2006/07/is-ipod-dominant-or-dead-meat.html
An identifiable characteristic appears to be the one stated most clearly by one contributor who commented as follows on the assertions of Mr Ahonen on his iPod sales assertions:
“This article was one of the most laughable I’d ever read. To lump in music playing cell phones into the calculation is grasping for straws.”
My own contribution to the debate is summarised as follows:
“The REALLY funny thing about all this is going to be the look on Tomi Ahonen’s face when Apple shortly announce the next generation iPods, probably full screen, touch screen navigation etc etc. and subsequently, SALES OF IPODS WILL SPIRAL AGAIN.
Of course people are going to use music phones. Apple have even recognised this and we all know their phone, which is predicted for launch in 2007, is likely to turn that market upside down too.
But to spout the absurd notion that the iPod is already dead is sheer moronic stupidity. And I will be emailing Mr Ahonen future figures and I will expect to hear the sound of his grovelling apologies.
Thankfully the customer is king, and a few rabid ranters like Ahonen are not going to make a jot of difference to anything.”
Why can’t your journalists spend a few minutes presenting some rational views? Or is this the standard your readership upholds?
In the modern, iPod vernacular I say to you: a special thank you to the Guardian for its upholding of journalistic standards -not- and it’s inciteful -not- regurgitation of fifth hand, dated and impaired material.
” End quote.
He certainly beat his deadline with a finely crafted steaming cowpie.
“. . . wilting away before our eyes” – Smith should stop looking down for inspiration.
Hey Observer, DIE IN A FIRE!
London is cool, will always be cool.
Just questioning whether iPod is cool makes iPod not cool.
Every gadget and gimmick has its day in the sun, its burst of fame. Sooner or later everything goes out of fashion. Even the iPod.
Music in a small digital player was a cool gimmick, gadget. iPod caught the wave. But a digitize music player is a commodity to be stuffed in a cell phone.
And Apple computers have been cool for a lonnnnnnnnnnnng time and still only a tiny group of repeat buyers purchase them.
The CACAA (currently approved cliche against Apple) is “Taking a bite out of Apple”.
davinci: “And exactly what is out there to replace the iPod as it falls from grace?”
That´s probably what the film camera guys were saying to themselves about their cameras before digital cameras came out.
What will replace the iPod is the cellphone that also is an MP3 player. People want to simplify their lives; fewer gadgets to lose, keep track of. Putting the MP3 player in the cellphone is the beginning of the end for the iPod. Apple will have to bring out an phone with an MP3 player in it…and a blackberry version phone, too. Expect at least two different phones from Apple.
You people that live in the US do not realize how behind the times you are with cellphone service. You would be amazed what one can do in Korea and Europe with their cellphones that can´t be done in the USA.
Read an article the other day that said the US is at least 1 1/2 years behind Korean cellphone service.
“How does somebody that bad get a job on a newspaper with international renown?”
Peter principle and/or blow the publisher.
Sent to the Observer.
Dear Sir,
Could you please forward this to David Smith, regarding his faulty article on the demise of the iPod? Thanks.
This is a semi-annual article that’s dusted from time to time for republication.
The formula: Ignore cyclical holiday buying patterns to show “declines” in iPod sales, dig up some out-of-context focus group lines that iPod is “losing its cool,” and insert this year’s “threats” to iPod+iTunes (David, you forgot to use ‘iPod scratches,).
New iPod quarterly sales figures that show continued year-over-year increases.
The article will be forgotten until Smith and/or his insipid ilk dust it off to rerun next year.
In short, it’s boring old recycled FUD.
David, these are the numbers for sales of the iPod.
iPod unit sales:
• Q4 03: 336,000
• Q1 04: 733,000 (holiday quarter)
• Q2 04: 807,000
• Q3 04: 860,000
• Q4 04: 2,016,000
• Q1 05: 4,580,000 (holiday quarter)
• Q2 05: 5,311,000
• Q3 05: 6,155,000
• Q4 05: 6,451,000
• Q1 06: 14,043,000 (holiday quarter)
• Q2 06: 8,526,000
• Q3 06: 8,111,000
During no quarter have year-over-year iPod sales declined
We all know there is a saturation point where a product has finally sold as many units as it can no matter how good (or bad) it is, so we might as well admit it and get used to it: The Observer has reached its saturation point.
Damn Yankee.
“The Brits are still sore for the losing their cojones.”
Ex Brit. New Yank.
of course, the u.s news media has jumped all over this one, check out drudgereport.com, they have a link to the observer article there also. it seems people are happy to hear the FUD about the iPod sales.
Zune trounces iPod, film@11 (FUD)
The Walkman went away because something better came along, the CD player. What’s better than an MP3 player right now? Nothing.
The MP3 player will be around for a long time. Checkmate, Apple.
Sensationalism. And the media wonders why they are losing clout and the respect of the citizenry.
Voyager (Veeger?),
Are you as bad at math as that bozo in London? Did you see MDN’s breakdowns of the quarterly sales items?
You make youself look STUPID by saying what you said. Okay?
Bozo
S.
Even I know Drudge is a right-wing idiot who is the online equivalent of the National Enquierer!
Bizzaro Ballmer “What’s better than an MP3 player right now?”
Answer: An MP3 player on a cellphone.
GWM,
Are you by any chance female? I can think of other reasons why everyone you passed on the street was looking at your t-shirt.
I read this last night and found it flawed.
I think there’s a few things.
First, the market is not saturated. Many many people do not have iPods or any MP3 player.
If iPod his mass market, it may not be “trendy” for teens, but Apple still makes money from the rest of us.
iPod sales are declining, but remember that there has been no serious update in quite a while.
I don’t think phones/mp3 players are yet a threat. But maybe that’s just me. I don’t have a cell and don’t want one. Nor do I want a phone that plays music. I just want an iPod to carry around thousands and thousands of songs, not just a few hundred.
The responses from the survey are odd. iPod batteries are replaceable. Sure, not easy, but you can do it. That shows a lack of knowledge.
The overestimation of the competition is really bizarre. Amazon is getting hammered about its Unboxed service. Microsoft is no threat. And whoopty doo, that other player has external speakers. Yay. I’m not saying the next big thing isn’t out there. I’m saying, these aren’t it.
And also, this whole article is based on Apple’s current offerings. YOu just never know what’s coming. Even if iPod becomes your parent’s player, Apple may have the next “teen, cool” thing in the wings.
Overall, the story seems like propaganda to me.
The announcement is coming this week so this fud maker can go to Microsoft’s zune kitchen because Apple isn’t even headed in that direction by a long shot. Apple doesn’t put out Alpha products like Amazon’s unboxed which should be boxed back up again and thrown right back. Apple doesn’t put out beta copies of hardware either. I’m sure the latest and greatest iPod will be well worth the wait when it comes out and make the zune look like an old prune.
And even if there is a slight decline in iPod sales doesn’t mean anyone has gained anything. People may want to wait for the newest iPod so they might slow down on buying until it is announced but it hardly means that Apple’s iPod will just stop selling. It’s to good of a product and to easy to use compared to anything out there.