Apple Increases Mac Production, Decreases iPod?

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com)

Banc of America sources (http://seekingalpha.com/article/62694-apple-s-asian-production-macs-up-ipods-down-iphone-volatile) (via iLounge (http://www.ilounge.com/index.php/news/comments/ipod-production-being-cut/13242)) in Asia claim that Apples desktop and notebook production numbers have been increased by 20% from Apple's early January estimates, suggesting stronger than expected demand for Apple's computers.Firm believes production numbers should continue to move up throughout the quarter. MacBook Air orders also increased slightly for March, contributing to the upside. They continue to believe that desktops and notebooks are the key driver of the story.
Meanwhile, iPod production numbers are said to be significantly reduced by 10-20% from early January, suggesting slower demand than expected for the popular music player.

Recent outlooks (http://www.macrumors.com/2008/01/31/gartner-apple-to-double-its-market-share-by-2011/) have suggested growth in Apple's Mac marketshare, and the latest Net Applications numbers (http://marketshare.hitslink.com/report.aspx?qprid=8&qptimeframe=M&qpsp=108) (methodology (http://marketshare.hitslink.com/)) from January 2008 reveal that the Mac had a 7.57% browser marketshare. This is up from 7.31% in December 2007.

Article Link (http://www.macrumors.com/2008/02/04/apple-increases-mac-production-decreases-ipod/)

[roland.g]

A lot more people have iPods than Macs, and this may be indicative of the halo effect beginning to really take hold.

[colocolo]

I guess the fact that people are more prone to give iPods than computers as Christmas gifts might have to be taken into account for the decrease in the music Player production.
As for the more Macs part - well, that's just more demand.

[ziwi]

I guess they are starting to become a computer company again ;) Or perhaps the standard iPod has run its course and it is going to be al phones and touches from here on out...

[Mac21ND]

I guess the fact that people are more prone to give iPods than computers as Christmas gifts might have to be taken into account for the decrease in the music Player production.
As for the more Macs part - well, that's just more demand.

Exactly. Why a production increase prior to the holidays and a decrease post-holiday's would surprise an analyst is beyond me.

[sterlingindigo]

Great work Apple, on the increase in market share for Mac's-I'm not surprised. Why are iPods down though? I hardly doubt saturation or competition when we get are getting our frequent updates to satisfy quality demand (little phatty, touch) and do I need to mention... Zune?

[ChrisA]

Makes sense. This mirrors what I plan to buy. I've go two iPods and have no plans to buy a third. I think they've already sold an iPod to just about everyone who wants one. Not everyone wants a "touch". They are unless at the gym. Also many people are looking at non-Apple music players now because of price and features. Apple's "iPod goldmine" is not sustainable.

With luck, Apple will one day will change it's name back to "Apple Computers"

[happydude]

THE MAC IS BACK!!:apple::apple::D:apple::apple:

[andiwm2003]

good, so apple becomes more of a computer company again i hope.
the ipod's certainly reach a saturation and also suffer from the iphone sales.

now if apple would invest heavily in productivity software that would be great. iwork isn't good enough. i need a better word processor, a better spreadsheet, a easy database similar to filemaker, improved iweb, much better ical, a ton of web apps and a much faster/better .MAC

go apple!

[notjustjay]

Yeah, the market for iPods may not be "saturated" but it must be close. Lots of people have one, two, or more already, and most of those that don't have iPods choose not to because they'd rather buy a different brand, so Apple can't count on a sale from them anyway.

[dmelgar]

Exactly. Why a production increase prior to the holidays and a decrease post-holiday's would surprise an analyst is beyond me.
This is an old story, has been out for a week or longer.

It is 5-10% MORE of a decline than Apple anticipated. Apple starts out with a much reduced production schedule for this quarter.

[hockeysc23]

Yeah, the market for iPods may not be "saturated" but it must be close. Lots of people have one, two, or more already, and most of those that don't have iPods choose not to because they'd rather buy a different brand, so Apple can't count on a sale from them anyway.

Exactly. The only new markets are younger kids that may not have a MP3 player already or someone replacing ther broken one.

If you want an iPod odds are good you got one already, or a couple.

[bluedoggiant]

Banc of America sources (http://seekingalpha.com/article/62694-apple-s-asian-production-macs-up-ipods-down-iphone-volatile) (via iLounge (http://www.ilounge.com/index.php/news/comments/ipod-production-being-cut/13242)) in Asia claim that Apples desktop and notebook production numbers have been increased by 20% from early January estimates, suggesting strong demand for Apple's computers.

Shouldn't it be Bank? I know the source says Banc, but maybe they mean Bank.

[sterlingindigo]

Everyone may already have an iPod but it's inevitable that they will want the next generation. Once quantity demand has been established then quality demand follows. If you've owned a first generation iPod or 128k, you may know what I mean. I don't think the iPod is dead by any stretch.

[Mindflux]

Shouldn't it be Bank? I know the source says Banc, but maybe they mean Bank.


No, they don't.

[Full of Win]

Matches what they said in their stock call. I think they said they had a few weeks of product in channel then they like.

[nomar383]

Shouldn't it be Bank? I know the source says Banc, but maybe they mean Bank.

Interestingly enough, I believe this is the investment portion of BANK of America and to avoid some confusion they call it BANC of America. Apparently it didn't work though and I doubt it ever would have lol

[Tosser]

Shouldn't it be Bank? I know the source says Banc, but maybe they mean Bank.

No. "Bank of America" is a huge "normal" bank and not the same as "Banc of America", which is an investment bank. The latter is the "investment and analyzing department" of the former, if that makes sense?

[Eidorian]

A lot more people have iPods than Macs, and this may be indicative of the halo effect beginning to really take hold.How many years have we used the iPod Halo Effect? Isn't it at least going on 3 years now?

[Irfan]

Anyone feel that there may be a new iMac coming which is why production has been increased?

[psychofreak]

How many years have we used the iPod Halo Effect? Isn't it at least going on 3 years now?

Yes, at least...the iPod really started to take off with the 3G in 2003, with the Mini bringing a huge amount of people to Apple stores...

[Tosser]

Anyone feel that there may be a new iMac coming which is why production has been increased?

No, not really, I'm afraid :o

[CmdrLaForge]

I am not surprised. In fact - thats exactly what I expected. Here is why: Apple has a very huge market share regarding the iPods. There is not a lot room to grow. And I would expect that the overall demand for mp3 players is shrinking just because everyone who wanted one already has one. C'mon - who has today no iPod or no mp3 player from another brand ?

Computers is different - Apple holds a tiny fraction of computer market share - and Vista is a failure - that means a huge oppertunity for Apple to increase its market share and thats exactly whats happening.

[GQB]

How many years have we used the iPod Halo Effect? Isn't it at least going on 3 years now?

Point?
The first 2 years were talking about what the 'halo effect' could be, the last about the reality of OSX spanning computers, ipods and portable internet devices.
I think this train is just pulling out of the station.

As an aside, I stopped by my local Apple Store to lay hands on the Air, and was caught totally off guard. You just don't get how light this thing is until you pick one up. The sucker virtually floats. I'd be buying were it not for the fact that I'm currently awash in computers and don't 'need' one. I think Apple is smart, however, recognizing that, and selling the 'want'.

[jouster]

Exactly. Why a production increase prior to the holidays and a decrease post-holiday's would surprise an analyst is beyond me.

Reading the linked article would tell you that isn't just a simple decrease after the holidays - that is a given. It is a decrease of what they expected even in a traditionally slow quarter:

"Current production expectations for March imply 5-10% Y/Y unit decline, versus firm's expectation for 5% Y/Y unt growth during the March quarter..."

[britabroad]

The problem with the ipods is, unless yours is broken, they're not worth upgrading too - especially if you're looking for a mass storage device. The Classics have a horribly slow interface and no new features - not better sound quality, no radio, no recording facilities... just the same old same old.

[ChrisA]

Everyone may already have an iPod but it's inevitable that they will want the next generation. Once quantity demand has been established then quality demand follows. If you've owned a first generation iPod or 128k, you may know what I mean. I don't think the iPod is dead by any stretch.

Not "dead" but entering a period of flat growth. It is like the market for refrigerators. Everyone already has a refrigerator. The only reason new ones are sold is either (a) Kids grow up and move into their own place or (2) the old 'fridge breaks or otherwise needs to be replaced. So while there will always be a market for new refrigerators we don't see the CEO of GE going on stage at "Refrigerator World" talking about how sales have doubled every year.

And yes, even if every iPod user upgrades his iPod every few years that is still "flat growth" because the total number of iPods in use does not change except to follow demographics.

[twoodcc]

i guess everyone has an iPod now?

seriously, very good news about Macs. not so good about iPods. but i think Apple will be okay though

[jouster]

Not "dead" but entering a period of flat growth. It is like the market for refrigerators. Everyone already has a refrigerator. The only reason new ones are sold is either (a) Kids grow up and move into their own place or (2) the old 'fridge breaks or otherwise needs to be replaced. So while there will always be a market for new refrigerators we don't see the CEO of GE going on stage at "Refrigerator World" talking about how sales have doubled every year.

And yes, even if every iPod user upgrades his iPod every few years that is still "flat growth" because the total number of iPods in use does not change except to follow demographics.

However, the revenue per iPod has grown substantially. So they have earned more money for Apple despite sales growth leveling off.

[drb6]

The problem with the ipods is, unless yours is broken, they're not worth upgrading too - especially if you're looking for a mass storage device. The Classics have a horribly slow interface and no new features - not better sound quality, no radio, no recording facilities... just the same old same old.

Agreed, partly. I think the currently line of iPods absolutely leaves something to be desired. I need an iPod badly and have for a few months but I won't buy any of the current options. Nano is too small capacity/screen wise and classic is too slow and the Touch is not big enough for my needs. Of course this is only me, but compared to the past few years I feel like Apple doesn't have as perfect a variety of products/pricing in the line.

[Mac21ND]

Reading the linked article would tell you that isn't just a simple decrease after the holidays - that is a given. It is a decrease of what they expected even in a traditionally slow quarter:

"Current production expectations for March imply 5-10% Y/Y unit decline, versus firm's expectation for 5% Y/Y unt growth during the March quarter..."

If you read the iLounge article MacRumors points to, the decline is based simply on analyst checks production - nothing more. They cite a decrease against Apple based on Apple's forecast of having 5 percent growth year over year. In the article, there's no basis for a decline other than these "checks" that analyst do (which may or may not be correct, sometimes it's nothing more than calling a few stores and checking if they have something in stock), which is why typically analyst predictions or forecast are hardly reliable.

[sterlingindigo]

Not "dead" but entering a period of flat growth. It is like the market for refrigerators. Everyone already has a refrigerator. The only reason new ones are sold is either (a) Kids grow up and move into their own place or (2) the old 'fridge breaks or otherwise needs to be replaced. So while there will always be a market for new refrigerators we don't see the CEO of GE going on stage at "Refrigerator World" talking about how sales have doubled every year.

And yes, even if every iPod user upgrades his iPod every few years that is still "flat growth" because the total number of iPods in use does not change except to follow demographics.

Perhaps if an iFridge could connect wirelessly to iTunes, I might be in the market. In happened this way in my family; I bought a 30gig 5.5 gen iPod, then the older kids got shuffles, 6 year old get's an 8 gig little phatty, now the older kids gotta have video too, heaven forbid it's silver. I traded up to iPhone (which I use at the gym) and will be getting the 3G 16gig version this year. Kids will end up with iPhones or iNanoPhone's before too long. It'll never end, Apple's got their hooks into us!

[Works4Me]

I have a 2 gig iPod Nano and 30 gig 5g video. I usually use the Nano at the gym, and I'd likely have already purchased a Touch, but I'm waiting until they get to 32 gb. Once they, I'll get one, and the kids will inherit the 30gb iPod. So, while the percentage of first time buyers may decrease, as long as they keep improving the product, a lot of us will keep coming back. I do, however, think that as other players catch up (in terms of a product ecosystem) Apple may have to pricer their products more aggressively.

[GQB]

Stand-alone music players are of course a dead end. Why this is causing such hand-wringing is beyond me. iPod features will become just that... features on far more capable devices, touch being just the first.
As soon as I saw that the sales numbers being gabbed about for iPod sales didn't include iPhones, I knew that this was a nonsense story. Every iPhone IS an iPod.

[notjustjay]

Not "dead" but entering a period of flat growth. It is like the market for refrigerators. Everyone already has a refrigerator.

This is also precisely the position that Microsoft is in with both Windows and Office sales. Virtually everyone has a PC already running Windows, so Windows sales are relatively flat. And virtually all of those PCs have Office installed. People aren't going out in droves to upgrade either of those.

[Mindflux]

Not "dead" but entering a period of flat growth. It is like the market for refrigerators. Everyone already has a refrigerator.


Sales like these rely on people coming into their 'own', being old enough to buy appliances (or iPods) for themselves. There are always folks that will need to buy a Fridge or an iPod (not necessarily out of necessity).

It's not a case of "everyone already has one".

[deathshrub]

Maybe now they'll pay more attention to OS X.

[gkarris]

I guess they are starting to become a computer company again ;) Or perhaps the standard iPod has run its course and it is going to be al phones and touches from here on out...

Still waiting for that 160 Gig hard-drive based Touch...

waiting...

[seashellz2]

well APPLE has 8% of the market.
a consulting firm here recently said APPLE could DOUBLE it market share by 2010 (Browser share?)
iPod: market saturation + poor economy-bought by those of limited income (read: mostly kids and teens)
Desk/laptops appeal to the more well off=who havent yet been hit by the coming PRIME meltdown. according
to Real Estate and Financial sources Ive read. Not to mention a million ARM resets this spring going from a teaser 6% to a mindboggling 15%
APPLE shouldnt waste money on YAHOO, but rather hunker down until the storm passes-if it does.
Or at best GOOGLE

[nagromme]

Interesting how math works. "Reduced from estimates" gets shortened to just "reduced"... and suddenly outside guesswork being wrong becomes an iPod nosedive :p

[Mindflux]

Interesting how math works. "Reduced from estimates" gets shortened to just "reduced"... and suddenly outside guesswork being wrong becomes an iPod nosedive :p


That's just it, estimates are nothing but estimates.

All they did was 'reduce' their estimate and translate that into the assembly line.

[rockthecasbah]

Great news for the Apple computer numbers. Not very surprising given the consumer popularity of everything Apple these days. Computer sales, particularly on college campuses, are really help bring health back to those divisions, and the iPod's success has encouraged many more converts.

As for the iPod numbers, it's nothing that should be surprising. The iPod can only boom and boom for so long before sales decline. It still sells well i'm sure, but so many people have iPods these days that it really is much wiser to put manufacturing efforts towards the computer end than it does the iPod.

[bluedoggiant]

Still waiting for that 160 Gig hard-drive based Touch...

waiting...

I hope 80GB, that would be a fat iPod.

[JesterJJZ]

Everyone already has an iPod...demand was bound to slowdown sometime.

[Jim Campbell]

Exactly. Why a production increase prior to the holidays and a decrease post-holiday's would surprise an analyst is beyond me.

Stop the Presses! Hold the Front Page!

++Consumer Electronics Manufacturer Experiences Fall-Off in Demand During Period After Christmas!++

Pictures at Eleven ...

Cheers

Jim

[JGowan]

I am not surprised. In fact - thats exactly what I expected. Here is why: Apple has a very huge market share regarding the iPods. There is not a lot room to grow. And I would expect that the overall demand for mp3 players is shrinking just because everyone who wanted one already has one. C'mon - who has today no iPod or no mp3 player from another brand?While I believe that currently there's not necessarily "a lot of room to grow", I believe that Apple could release a new iPod sometime this year that would make a lot of people decide to upgrade. I drop $200-300 on a new gadget at the drop of a hat. If there's a lot of value, people will upgrade -- people will also be more inclined to buy them as gifts.

[blairwillis]

I look to sites like MacRumors in hopes of getting an accurate report/summary of an article without going to the original article myself. Unfortunately the journalistic approach is not always on point. The problem here is in the journalist's reporting of the article, or their summary of it being not entirely accurate. To say:

"Meanwhile, iPod production numbers are said to be significantly reduced by 10-20% from early January's estimates, suggesting slower demand than expected for the popular music player."

Is misinterpreting the original article, or at least poorly conveying its meaning. In fact, the original article is making interpretations of "demand" based on numbers, and the MacRumors note is further interpreting that interpretation.

It would be better to simply state that the linked article makes some statements as to iPod/Mac supply and demand, instead of further dilution.

Decreased demand due to a softer market was discussed in Apple's quarterly conference call, and is one of the primary reasons the stock slid off its relatively "stable" position in the 170s down to the low 130s (closing at 131.65 today). (That and an inflated value and ridiculous anticipation of MacWorld and the earnings report the following week.) Reporting on related systemic events such as this might increase the value of a MacRumors article instead of leaving it as a "he said, she said" report of another rumors site's report on an analysts interpretation of some numbers. I heard that 70% of all statistics are made up on the spot.

The last paragraph of the MacRumors article also sways a bit in mentioning market share and then browser share in a way that does not tell me anything of real importance. Are we talking "Safari" browser share on Macs plus iphones plus Safari on Windows or what? Let's break this out into a separate article and put some meat in it.

I appreciate MacRumors, but sometimes I think we all need a good nudge to keep at the top of our game.

[brad.c]

Not really sure if these figures mean something in the real world, but I'm glad to see focus renewed on the Mac platform. Maybe MacWorlds of the future will be about just that.

Although AppleWorld sounds fun. Like Wallyworld, but with better merchandising.

[clima08]

does anyone know if prices one the macbook pro or macbook will drop due to the release of the air?

[ashoka8350]

Bank of America and Banc of America are two different entities. Bank of America is the regular Bank while the Banc of America is an investing company. ;)

[BoyBach]

Stop the Presses! Hold the Front Page!

++Consumer Electronics Manufacturer Experiences Fall-Off in Demand During Period After Christmas!++

Pictures at Eleven ...

Cheers

Jim


Ha-ha! Great post.

:D

[whooleytoo]

No wonder Apple were getting so excited about the iTouch - it has the potential to open up a new avenue for new products/services/mobile applications; just as the "vanilla" iPod itself approaches saturation and flat growth.

[Simicino]

One thing not mentioned here is that Apple's competition has caught up or exceeded the Ipod (at least regarding function). And I don't just mean the Zune or the fact that a 32gb flash player is on the market while the Nano and Touch are stuck at 8 and 16 gbs respectively (and for the foreseeable future). The flash-based Cowon D2 offers over 50 hours of battery life when playing back audio, for instance, or the Archos players support a plethora of file formats and at least one of their players that I know of is a wifi touch-like device. Young people are flocking to these alternatives. I hope Apple can keep up.

[thejadedmonkey]

Wait, this means that my 3g 10gig ipod with light-up-red buttons and a dead battery is now obsolete?? Dangit Apple, stop releasing new products! If you never released new products my ipod would never be obsolete!

That's the thing.. my 3G iPod still works great too! in 2001, when mp3 players were still a fad, getting the "best" was what sold the iPod. They're not a fad item anymore, and a Zen or Zune is just as good as an iPod for listening to music.

Apple is riding a wave of fads right now, and it'll carry them into a larger market share of macs but after a while, like all fads, it'll fade. And then what's Apple left with?

"hip" looking iPods that are no longer hip and have software issues.
"hip" looking Macbooks and iMacs that are no longer hip and have leopard bugs

Apple really needs to stop being hip, and go back to being innovative. Give me a candybar cellphone with buttons or an iPod that makes me go wow like the red buttons did in 2003!

[Morod]

while the Nano and Touch are stuck at 8 and 16 gbs respectively (and for the foreseeable future).

Ask and ye shall receive:

http://www.apple.com/ipodtouch/

Morod