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MacBytes
Sep 11, 2006, 10:22 AM
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Category: Opinion/Interviews
Link: Why the iPod is losing its cool (http://www.macbytes.com/link.php?sid=20060911112232)
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Posted on MacBytes.com (http://www.macbytes.com)
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mkrishnan
Sep 11, 2006, 10:34 AM
Does anyone have a good source of quarter-by-quarter iPod unit sales or gross? These articles are too confusing. They keep comparing different points in the sales year, different periods of time... and otherwise abusing statistics and generally accepted accounting principles in the process of showing iPod trends that are consistent with their spin....

calculus
Sep 11, 2006, 10:36 AM
This was the most interesting bit for me - "The iPod is far and away the most popular tech gadget with our panellists..."

SillyKary
Sep 11, 2006, 12:21 PM
Does anyone have a good source of quarter-by-quarter iPod unit sales or gross?
http://phx.corporate-ir.net/phoenix.zhtml?c=107357&p=irol-news
(= the "Earnings Releases" tab on http://www.apple.com/investor/ )

Oryan
Sep 11, 2006, 12:24 PM
It's not that the iPod is losing its cool, but that the market is becoming saturated. 60 million is a lot of iPods.

mkrishnan
Sep 11, 2006, 12:29 PM
http://phx.corporate-ir.net/phoenix.zhtml?c=107357&p=irol-news
(= the "Earnings Releases" tab on http://www.apple.com/investor/ )

Thanks. :) I was hoping for something more tabular and oriented towards the lazy. :o Maybe I'll be unlazy enough to pull a Dr. Q and do something with that. :D

Hytower77
Sep 11, 2006, 12:38 PM
It is saturated...and also, the way Apple has kept this high of market share for this long is pretty damn impressive. It's really just a matter of time at some point for things to even out. Apple will still be the leader, but it won't be this out of whack. (You wouldn't think, but you never know...we may never have a true competitor.)

student_trap
Sep 11, 2006, 01:55 PM
i read this article yesterday and found it very interesting. one thing was that they seemed to be putting the ipod down via the quotes you saw while scanning the article and the photo's they used (a 4G with a cracked screen), but the body was actually fairly positive:

"The iPod is far and away the most popular tech gadget with our panellists..."

One thing that is certain is that the market is indeed saturated. And "cool" products are not nearly as cool when everyone has them. I think apples largest problem is MP3 phones, i know that they aren't as easy to use, sound quality is lacking etc, but its true that in the UK, most people get new phones for free every 12-18 months, and for those who aren't so frivolous, buying a seperate MP3 player when you already have a phone that could do the job seems ludacrous, (indeed, sony and samsung are about to release MP3 phones with 4GB hard drives).

To conclude, apple should release an iPhone ASAP, a device as easy to use as an iPod, with phone functionality. Forget the RAZR with iTunes - its UI is dire - but beat the competition with the first really really good MP3 phone!

jettredmont
Sep 11, 2006, 02:24 PM
Ahonen, author of Communities Dominate Brands, predicted that in the long term the iPod will have only a narrow audience. 'It will continue to dominate a niche at the top end: if you're a musician or a DJ you'll use it because it's the best, like a photographer with his Nikon camera. But the average mobile phone user gets a new handset every 18 months, and a quarter of mobile phones sold this year will have an MP3 player. In the same way as camera phones have pushed cameras to one side, this is an automatic replacement.'


Okay, maybe I qualify as a "photographer", but there's no way in hell I'd be taking any picture I want to look at again six months down the road on my phone. I'll take snapshots of the whiteboard, and, yes, sometimes take a picture or two around town if I see something interesting. But, this isn't replacing my Canon; I just wouldn't have been getting those pictures without my cell phone.

The fact is, cell phones, universally, make for truly crap cameras. Why? Because they are too small, primarily: the sensors are way too small, resulting in crap pictures; the lenses are too small, resulting in horrid low-light performance; the screens are too small, resulting in shoot-and-pray framing (and when you only have about a half MP of usable resolution to start with, you can't afford to miss framing!); the buttons are too small, resulting in lots of camera movement just trying to press the "shutter". Add to that the clunky interface for viewing pictures you've taken and the simple, silly fact that you might actually want to answer the phone when it rings while you are setting up for that shot of the parade, and cell phones are just nowhere near being able to replace even the most elementary, $50 digicam.

While some of these arguments don't apply to music players (you want the music to stop when you answer the phone, for instance), many of them do. Sticking a music player on a phone makes you compromise on both. Witness the Chocolate: great commercials, OK looks, crappy experience.

[I'll put actual iPod sales analysis in the next post]

macOSX-tastic
Sep 11, 2006, 02:26 PM
It's not that the iPod is losing its cool, but that the market is becoming saturated. 60 million is a lot of iPods.

i wonder how many "ipod houses" you could build:D

S

jettredmont
Sep 11, 2006, 02:44 PM
In any case, that doesn't explain the iPod "down" quarters.


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.'


To understand the sales figures for iPods, you have to be looking at the history of the iPod releases side-by-side with the numbers given in conference calls.

History is captured from here: http://en.wikipedia.org/wiki/IPod

http://upload.wikimedia.org/wikipedia/en/timeline/046da96109560e803fb720bfab79013e.png

Now, compare that to the numbers found further down the same page (my numbers below came directly from Apple earnings statements, and mirror those of the Wikipedia): http://en.wikipedia.org/wiki/IPod#Sales

First, obviously, Apple's Q1 results are naturally going to be much higher than Q2-Q4: Q1 s the Christmas/Holiday season. Apple sells a lot of stuff then. Moreover, the new iPod for 2006, the nano, was released in Q1/2006 (ie, in time for holiday buying for Christmas of 2005) instead of Q2/2006. That gave a spike (although not as huge as before; 200% y-o-y) in Q1 which faded down in Q2 instead of a spike in Q2 which compensated for the holiday spike in Q1.

Why did iPod sales rise Q1-Q2 in the past several years?

2005: 4.58-5.3M units. January introduction of the Shuffle. Since we're measuring "units" not "dollars", I see this as kinda cheating. Of course you'll sell a lot more cheapy $99 devices than $300+ devices!

2004: 733k-807k. Mounting popularity of iTMS. iPod mini steals the show.

2003: 218k-81k (figures not directly released, but calculated from year-over-year quarter increases in Q1/2004 [233% increase] and Q2/2004 [900% increase] statements). This, as expected, shows the "natural" decline from Q1 to Q2. Interestingly, this instantly belies the assertion given above, as this is inside the given 17-month window. So, who was telling the truth, Mr Anderson, or Mr Ahonen?

The Q1 2006 results can be seen as, more or less, a trend outlier. Apple essentially took the two trend-blowers - holiday season, plus introduction of new, smaller model - and multiplied them together, to great results. Look at that sales graph I linked to above. See the spike? Mentally remove it. Then the Q2 and Q3 results look pretty good overall.

That all having been said, not all is rosy. The 1GB nano didn't give a huge bump-up as evidenced here (although it was late in Q2, it also didn't cause Q3 numbers to rise). And, unlike previous years, Q3 was (marginally) wrse than Q2, for no apparent reason and despite the full-quarter availability of the low-end 1GB nano (primary suspicion is that this cannibalized the 1GB Shuffle sales instead of adding unit sales).

IMHO, this shows signs of a maturing (not "matured"; the "ing" is vital!) market, compounded by the natural fade-down stage of a fad. While I see some warning signs here, the analyst quoted above is jumping way overboard. "Wilting"? Hardly. Sales are incredibly strong. Yes, they haven't been able to reverse the natural market trend as they had a few years in a row. But, in the meantime, they are selling one hell of a lot of units and making one hell of a lot of new Apple customers.

[edit: had misread Q1/2006 results as much worse than they were; noticed nice sales trend data chart in Wikipedia ...]

Dark
Sep 11, 2006, 03:44 PM
Because everyone and their grandmother has one. End of story, its true.

Fender2112
Sep 11, 2006, 04:53 PM
It's not that the iPod is losing its cool, but that the market is becoming saturated. 60 million is a lot of iPods.

That would be my logic. Once everyone who wants one has one, who else do you sell to? Kind of like selling an snow cone to an eskimo.

Apple will have to reinvent the iPod every few years to keep people wanting to upgrade.

I've always had suspicions about the battery. The iPod is the only electronic device over $5 that I know of that does not have a replaceable battery.

solvs
Sep 12, 2006, 12:32 AM
In the same way as camera phones have pushed cameras to one side, this is an automatic replacement.
Yes, no one sells digital cameras anymore. :rolleyes:

I love how everyone expects the iPod to stay exactly the same. As if Apple isn't working on something to make it even better. Eventually there will be an iPod phone too, but there will still be MP3 players for quite some time just as there are still digital cameras. And I'm sure Apple has other things than the iPod to sell to people. ;)

macnulty
Sep 12, 2006, 08:33 AM
FUD, poor excuse for a business article. The author obviously has never heard of the sales curve or even basic economic analysis, ie nobody does back to back quarter analysis for trends, especially 4th quarter 1st quarter.

mrgreen4242
Sep 12, 2006, 09:26 AM
Yup, iPods are still cool, they're just not "elite" anymore... everyone's got one, as has been pointed out.

They're also pretty close to perfect at this point. I mean, early on you had a reason to get a 2G to replace your 1G - the touch wheel and double the capacity.

The 3G was also a big improvement, another doubling of capacity, much smaller form factor, and the touch buttons (which some people like, some people don't, but it was different).

The 4G introduced the color screen and the click wheel, giving lots of people a reason to get a new one. Capacity was no longer a big issue, the 3G came with 30gb+, which was touch for MOST people to fill.

The 5G with it's video features is nice, and is probably a good incentive to buy, but I don't think video is a "killer" feature that was pushing people to upgrade... the 4G is a really well designed, useful, usable piece of hardware.

The nano is pretty close to perfect. It's tiny, has great battery life, is quite durable (other than the trouble with scratching and faulty screens, which seems to have quieted down now). Capacity is GOOD, but a new 8gb model would drive some sales again.

However, my long drawn out point is that there's not a ton of features that Apple could offer that's going to convince anyone who hasn't bought an iPod yet to do it, or one of the 60m people who have to get another one.

Except maybe a phone or a PDA. Id they do a touch screen video iPod it will be "neat" but unless they have full PDA features (I want my iNewt!) I don't think 5G owners are going to jump to get one.

iJaz
Sep 12, 2006, 09:37 AM
strange that people start to complain about non-replaceable batteries now! :rolleyes: