“Following a series of checks with sources in the Far East, researchers for Banc of America have put out a call indicating that Apple has commissioned a significant increase in production of Macs for the current quarter while simultaneously reducing iPod production,” Katie Marsal reports for AppleInsider.
“‘We continue to believe that desktops and notebooks are the key driver of the Apple story,’ analyst Scott Craig wrote in a report to clients Friday. ‘Both desktop and notebook production numbers have moved up by 20%+ from expectations in early January, indicating potentially solid demand thus far in the March quarter, as well as some inventory replenishment,'” Marsal reports. “He added that his checks suggest Mac production numbers will continue to rise throughout the quarter, and that MacBook Air production has also increased slightly since mid-January.”
Marsal reports, “At the same time, however, the analyst noted that iPod production numbers for the March quarter ‘appear to have been significantly reduced, down 10–20% from early January and down 30%+ from early December.'”
Full article here.
If this report is accurate, expect Apple to make moves to stimulate iPod demand sooner than later via aggressive pricing and/or increased features (greater storage on flash-based models).
Interesting if true.
The thing is, will lower prices and more memory really stimulate demand (excluding the Touch) if the problem is that people are switching to cellphone/players combos?
i would tend to think iPod’s “next big thing” would be a built in digital stereo receiver with iTunes tagging. it would certainly render the iPod buying decision a no-brainer.
iPhone and iPod orders have both been reduced. Thie leads me to believe that there is an announcement coming very soon for both products. My guess is an iPod touch with 32 GB of storage and an iPhone with 16 GB. I hope this true because I am waiting for the 16 GB iPhone to make my purchase.
Or are iPod orders being reduced due to some slight cannibalization from iPhone? With the margins on the latter, I’d be fine with that.
It might show a transition from the classic iPod designs to a more Touch-like design. A full-screen iTouch the size of the current Nano would be interesting. A consistent design from Nano to Touch to iPhone.
Most likely true. Still, another explanation is that entirely new line might be introduced that would supplant an existing line, reducing the need for heavy volume.
In the end, most likely reason is Apple’s slow but consistent strategic shift towards the iPhone. In two years, I won’t be surprised if Apple exits the mp3 player business, focusing on the phone. Some dirt-cheap variant of the Touch might continue to exist as a phone-less solution, but it is clear that MP3 player industry is maturing and becoming what CD walkman is now. With portable CD players available for $20 from cheap no-name brands (j-Win, Coby), nobody is making serious profits (certainly not Sony, Panasonic or Aiwa). MP3 player business is just a few years away from that and Apple has no business doing business in razor-thin-margin market.
iPod market is tapped out.
Who doesn´t own one? Or two or 3…
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Maybe iPod orders are going down because there’s new kit coming out!
Oh No, the stock analysts will surely see bad news in this!
iPods are a bit stale. The only exciting one is the Touch. But longer term iPod owners have gotten used to storing a great deal of music and, increasingly, viedo on their pods. The Touch just does not hold much. Now a Touch with 120 gigs; that would be exciting.
I would expect iPods will be a big Holiday gift item (i.e., seasonal product), so 20% reduction in iPod should not be a big news. Come October, I would expect Apple to start ramping up iPod production again.
MR, yes, that’s probably it, although the definition of cannibalization I learned in B School doesn’t include cases where you forego sales of one SKU in favor of another SKU with higher margin. In other words, this isn’t really cannibalization. It’s a Good Thing.
Could the decrease in iPod numbers have anything to do with the fact that the Christmas peak was in the last quarter and will exist in this quarter?
Just asking.
I guess we are finally over the iPod glut times.. I hope Apple doesn’t try to Motorolla-ise them in terms of adding unneccessary features just to sell a few more.
People liked them for their simplicity
The iPod market isn’t declining at all if you include the iPhone as an iPod. And that’s just in terms of numbers.
In terms of profit, of course, the iPod range produced a 17% increase year on year, thanks to the Touch.
Apple are very happy with how things are going.
The struggling US economy is also a major driving force for reducing output. Apple is just making adjustments. I wouldn’t panic, its not as if ZUNES are selling by the tens of millions like the iPod and causing Apple to reduce iPod orders. I’m curious to see how many Zunes are selling. NOT that MS has to worry about losing money, we all know how they are happy to keep doing that for years and years to try and win a market.
How could this be? If you listen to the Apple haters on this site, certainly they are more focused on selling ‘toys and gadgets’ than they are on computers.
I just don’t understand how this Mac increase could be if what those critics say is true…..
The iPod is more a luxury item than a must-have. Lower iPod sales are more an indicator of trouble with the economy than anything else.
Of course, iPod and iPhone productions should be higher in the Christmas quarter than the dead of winter, so much of this is probably hot air.
Now, that’s what I’m talkin’ about!
Check any year through the history of the iPod and you will see this same decline year in year out. It’s a seasonal thing.
Think about the following combination of circumstances:
1) Multiple product lines with overlapping capabilities.
2) Potential market saturation
3) Differences between SSHD and conventional when it comes to A) Capacity, and B) Price
4) Worldwide availability (or the lack thereof) of the iPhone
At this point potential customers can choose between new capabilities (iPhone and iPod Touch), capacity (Classic) or small size (Nano), but they can’t have any two at once. There are also a large number of international customers who want the iPhone but are willing to wait until official release in their countries. Both of these circumstances are likely to be delaying sales, because savvy consumers know that time will fix both problems. There will be higher capacity SSHD-based iPods and iPhones, so maybe it is just better to keep what we have for now and wait just a bit longer.
Hey, MDN…
Cut my post all you want, but you now cannot deny the truth that gadgets and toys have a limited shelf life. And, I’m sure, have for too long sucked the life out of what could have been a far advanced Macintosh line by now.
Maybe, just maybe Steve is already doing what I have been calling for – focusing on the serious business of making serious, superior personal computers, the OS to run them, and the software to make them truly productive things of wonder.
Now, the world will be changed!
And, btw, AAPL will soar.
I think there will be new iPod models. It’s been 4 month since Apple revised the line up with the introduction of iPod touch and fat nano. They are winding down the production to get rid the inventory.
This is good news, however I wish that Apple still made it’s products here in the USA.
Every now and again I run across a Mac made here in the US.
Look Its clear as mud! nobody wants to have a load of gadgets in their pockets. if your phone is every bit as good as your pod for playing music the choice is the one does it all device the limited to music only pod is being supplanted by a more expensive and desirable device bigger touch sales are fine by me the nano in my pocket cost 60 bucks its a party favor the touch is a major purchase. the main thing is that whatever they buy they are apple customers i don’t get this obsession with which pocket they rake the cash into.