Apple well-positioned to deal with maturing iPod market

“Apple has a little iPod problem. And it is doing an amazing job of rising above it,” Saul Hansell reports for The New York Times.

“O.K., we should all have this sort of problem. Apple sold 10.6 million iPods in the first three months of 2008. It has a 73 percent share of the music player market in the United States and a growing share abroad,” Hansell reports. “Still, the number of iPods sold in the quarter grew only 1 percent from the same quarter a year ago.”

“For some companies, a mature market and downward pressure on prices could lead to a nasty death spiral. But Apple has used its amazing six-year run with the iPod to nurture enough new business lines that it will be able to withstand a collapse in the MP3-player market as well as can be imagined,” Hansell reports.

“First of all, it has a continuing revenue stream from the iPods that have already been sold because of the iTunes Store… Second, Apple has created product upgrades that are so different that they may well appeal to a significant number of iPod users… Apple is also now putting a lot of emphasis as well on the iPod Touch, which is being touted as much as a platform for pocket Internet access and mobile computing as it is for playing music and videos. Already, sales of the Touch helped Apple increase its revenue from iPods by 8 percent to $1.8 billion in the quarter, compared to that 1 percent increase in unit sales,” Hansell reports.

MacDailyNews Take: The transition from the “old” iPod to the new “iPod” (mobile WiFi Multi-Touch platform) cannot be overstated and is already well underway.

“Third, and perhaps most significantly, Apple’s entire adventure with the iPod is helping it sell computers, although the magnitude is impossible to calculate,” Hansell reports.

Full article here.

[Thanks to MacDailyNews Reader “MacVicta” for the heads up.]

17 Comments

  1. Apple needs to introduce an iPod touch with the capacity of the biggest iPod classic. Whether it be with a HD or Flash Memory, it needs to be done. I suspect that the battery life of a HD based iPod touch was not good enough last product cycle. Hopefully that will change this cycle.

  2. Fourth, making iPods has taught Apple how to mass produce consumer electronics

    Fifth, the iPod experience has prepared Apple to enter the mobile phone market with a differentiator … the iPod built into the phone

    Sixth, iPods economies of scale give Apple a natural advantage when sourcing components for the iPhone

    Seventh, Apple has learned now how to leverage its OSX system to work seamlessly on iPods, iPhone, AppleTV and of course their entire line of computers

    Eighth …

    Nineth …

    Tenth …

  3. MikeH, I agree with you, but to some people, that’s not a lot. That’d be more than I need, my little 8GB Nano’s great for me, but for some people, they need (or at least think they need) a lot more space.

  4. The classic example of what Hansell is talking about is Motorola.

    “For some companies, a mature market and downward pressure on prices could lead to a nasty death spiral. But Apple has used its amazing six-year run with the iPod to nurture enough new business lines that it will be able to withstand a collapse in the MP3-player market as well as can be imagined,”

    Motorola didn’t capitalize on its RAZR and now where is it? In a nasty death spiral.

  5. @Crabs
    Expanding on your comment.
    Having used iPods since v1 I think there is a place for the big capacities, but over time I’ve realized that for all but a few the need to carry 10-15000 songs around all the time is unnecessary. With the ease of creating Playlists I’ve found that with the iPod Shuffle, and now my iPhone, the smaller capacities carry plenty of music in almost all cases, and their solid-state construction requires far less care for a portable device. Still, as Apple can accommodate larger capacity NAND into the iPods I will still probably opt for bigger capacity.

  6. ericdano,

    I think iPod touch memory capacities are progressing fine. We’re already at 32gb and that’s what most people I know with HDD iPods were comfortable with. Who knows, Apple may be able to pack in 64gb by the end of the year or early 2009. The prices just need to drop but we’re getting there.

  7. “Third, and perhaps most significantly, Apple’s entire adventure with the iPod is helping it sell computers, although the magnitude is impossible to calculate,” Hansell reports.

    “…impossible to calculate…”

    Impossible to calculate? Well, wasn’t it just reported that they sold nearly 2.3 million this last quarter??

    I’d say that *someone* has been calculating it…

    Damn hyperbole 🙁

  8. I think what the article is trying to say is that, we dont know how big the ipod halo effect on mac sales has been, as in we dont know what sales would of been like without the halo, we can only guess, so the magnitude of the halo is difficult to quantify

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