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The iPod is Slowly Dying — Does Apple Care?

August 5, 2009

ipodThe beloved and oft-copied iPod MP3 music player has been a huge part of Apple’s bread and butter success since the first edition launched in 2001, but iPod sales revenues are apparently dropping and being eclipsed by revenues for Macs and iPhones.

So does that mean that the iPod is dead? Could it be? Will the iPod go the way of Pontiacs, Edsels, and steam locomotives?

Maybe not, but its importance at Apple could be shifting, according to a blog post by CNNMoney.com about a new market analysis conducted by stock market day trader Andy Zaky.

According to the study, iPod sales revenues have dropped from their longtime Number 1 spot in the company to Numipodber 3, behind Macintosh computers and iPhones. Zaky said that’s a good thing for Apple because it shows that it can still be successful even as its core products change their revenue shares and jostle for sales leadership within. The telling evidence, according to the report, is that iPod revenue share at Apple fell to 18 percent in the last quarter, compared to almost 56 percent back in 2006

“Many Apple critics have argued that Apple would essentially fall off the earth because at some point in time the iPod’s growth would collapse,” Zaky told CNNMoney.com. “The second part is true. The iPod growth rate has in fact fallen off a cliff as Apple posted its first yearly drop in iPod sales ever in Q3. However, Apple is still firing on all cylinders thanks to the explosive growth of the iPhone.

The question is, so what’s this all mean for iPod-loving consumers who every few years line up outside stores to buy the latest generation of iPods with all their new features and innovations?

Well, fipodor years I have thought that the iPod would always be on the top of the MP3 player heap, and I don’t see that changing, even as its revenue rankings within Apple change.

Yes, we’ve seen improvements in MP3 players from competitors like Microsoft’s upcoming Zune HD, which is moving to a new, brighter and thinner OLED display with a 16:9 aspect ratio and is getting a new built-in, high-definition radio receiver — features that are not yet included in iPods. The playing field for portable music players is definitely changing.

But I wouldn’t count the iPod out just yet. Here are my top three reasons why its changing revenue picture inside Apple doesn’t mean that iPods will soon face their demise:

  1. Let’s face it — iPod lovers are iPod lovers for far deeper reasons than just the devices themselves. It goes to the core of the iPod, its grace, its simplicity, its deep features and its stellar performance. People have been buying them despite their relatively steep price tags, despite their short warranties and despite their often short-lived batteries (that are not easily replaceable by consumers). None of the competition has yet fully matched the inherent beauty and performance of iPods.
  2. Consumers have been trained that if you want the best, buy the best. That’s how Mercedes-Benz, Cadillac, Jaguar, and others sell their cars. That’s how Apple has sold its products. Apple doesn’t lower prices to bring in sales — its quality products and reputation does that for them. OK, there’s also the almost insane devotion from buyers, but that’s a good thing for any company. Do you think Volkswagen would have ever been an early success in the U.S. market if millions of Americans hadn’t fallen head over heels in love with those funny-looking, charming original Beetles? Different is good.
  3. Microsoft and other competitors don’t have the same easy-to-use and feature-packed online music stores and won’t anytime soon be able to garner the incredibly important “cool factor” that envelopes the iPod and its user base. And what’s even more important, Apple is usually the leader in introducing the next cool features and innovations found in portable music players. And that’s perhaps the biggest part of its iPod success that I don’t believe will be soon be eclipsed by its competitors.

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2 Comments leave one →
  1. August 5, 2009 4:03 PM

    Good post. Although I’ve thought many times of buying an iPod, this little phenom is not in my collection of electronic must-have purchases. I cannot argue the portability and small size are enticing to carry around my music collection in whole or in part, but for me I do not need to carry around my music collection in whole or part. The Shuffle iPods are an exception, though I don’t have that either. A few tunes are all I need, about a 90 minute workout soundtrack, and I’m happy with my $20 off market Coby mp3 headset—surprisingly good sounding headset. But I still want an iPod. For that matter I want one of those new LED TVs that cost a kidney and a first born offspring. But I don’t watch enough TV to warrant the expenditure, and until the price drops to some too good to pass up price I’ll probably not buy an iPod either. Regardless, I doubt the iPod craze will ever fall out of favor, and if anything, will just be upgraded to something even better than before. Maybe I will go out and get that Shuffle.

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