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iPhone, iPod touch "cannibalizing" traditional iPod market

post #1 of 41
Thread Starter 
Sales of traditional MP3 players like the iPod nano, iPod shuffle and iPod classic continue to decline, as the enemies of these Apple products -- the iPhone and iPod touch -- come from within the same company.

Peter Oppenheimer, Apple's chief financial officer, said the company had expected that consumers would lose interest in traditional MP3 players over time, and that was one of the reasons the iPhone platform was created.

"We expect our traditional MP3 players to decline over time," Oppenheimer said during Tuesday's earnings report conference call, "as we cannibalize ourselves with the iPod touch and the iPhone."

Later, Chief Operating Officer Tim Cook also used the word "cannibalization" to define the iPhone chipping away at traditional iPod sales.

Realizing that iPod sales would slow, Apple has lowered channel inventory of its lineup by about 400,000 units. Cook said this was partially due to the shrinking market for traditional MP3 players.

Together, the iPhone and iPod touch have sold 45 million units. Year over year, sales of the iPod touch increased 130 percent in the third quarter of the 2009 fiscal year.

"Customers continue to embrace this outstanding platform experience, which has been increasingly enhanced by the tremendous offering for the App Store," Oppenheimer said.

While Apple has portrayed a future of diminishing returns for traditional iPods, the market is hardly dying. In the third quarter, Apple sold 10.2 million iPods -- more than the total number of sold iPhones and Macs combined.

Apple also controls 70 percent of the MP3 player market, and announced Tuesday that 50 percent of customers who buy an iPod are new to the brand.

"We have a great business that we believe will last for many, many years," Oppenheimer said of traditional iPods, "and which we will continue to manage well and offer the worlds most innovative products."
post #2 of 41
I don't think the iPod classic has that long before it goes to the big Apple Store in the sky. The next iPod touch will probably be 64GB, and the cycle will probably continue in the future with 128GB etc. The current iPod classic is 120GB, iPod games have been completely outclassed by the iPhone App Store, and that hard drive is (comparatively) heavy to carry around. I don't think you can even get a hard drive based Walkman or Creative player now.
post #3 of 41
I'm surprised the classic has lasted this long.
post #4 of 41
So the new Shuffle sales are declining? Why am I not surprised.
I extremely doubt that an iPhone or iPod Touch would contribute to poor Shuffle sales. It's simply the new Shuffle itself- totally different markets and one bad design.
post #5 of 41
Quote:
Originally Posted by Galley View Post

I'm surprised the classic has lasted this long.

Hey, my 160GB classic is almost full - when will the new classic come out???
post #6 of 41
OK, all together now (so the 'analysts' can hear us)...

THE iPHONE AND TOUCH ARE iPODS!!!!

Sorry for shouting.
post #7 of 41
I find it interesting that Apple is generally regarded as a company that sells products to high-end markets (ex Macs are generally regarded as a "premium" product vs. regular PCs) yet it sells to the low (shuffle), medium (classic, nano) and high (touch) ends of the music player business.

The iPhone is a device aimed squarely at the high end of the mobile phone market. It definitely does not cater to the low end, and is arguably just now beginning to cater to the medium end (iPhone 3G 8Gb model).

If Apple expects to do business in all levels of the MP3 player market, then it will most certainly start losing share when low-end phones begin to offer higher storage (4 Gb and up) and reasonably user friendly music player capabilities. The fact that no low-end phone manufacturer offers such a feature doesn't make a whole lot of sense, since adding reasonably user friendly music playback and decent storage shouldn't be that complicated. The only thing I can think of is that none of the service providers have added these features to their checklist of features required from phones.

Still, it's only a matter of time before they do. So what does Apple plan to do if it loses the low end of the music player business. Do they care?
post #8 of 41
Quote:
Originally Posted by johnmcboston View Post

Hey, my 160GB classic is almost full - when will the new classic come out???

Just out of curiosity, what do you have on there? Tons of video and lossless music?
post #9 of 41
iPod Touch is the future. The Classic will go away once the Touch gets the 128GB flash drive. We will end up with the Shuffle, a different Nano, and the iPod Touch. It wouldn't surprise me if Apple dropped the next iPod Touch price to $199.
post #10 of 41
Quote:
Originally Posted by JavaCowboy View Post

Just out of curiosity, what do you have on there? Tons of video and lossless music?

A few hundred CDs. music videos. some long podcasts. I'm not at home, so I can't give the breakdown - will post later if interested...
post #11 of 41
Does the shuffle re-design have anything to do with the decline in iPod sales?
post #12 of 41
Quote:
Originally Posted by NasserAE View Post

iPod Touch is the future. The Classic will go away once the Touch gets the 128GB flash drive. We will end up with the Shuffle, a different Nano, and the iPod Touch. It wouldn't surprise me if Apple dropped the next iPod Touch price to $199.

The touch would have to come out with shuffle-like headphones with the remote control on them. The biggest nicety is I can change volume and songs by touch, so I don't have to take the classic out of my pocket. Plus, with the Touch, I have to unlock it every time it goes to sleep; the classic and nano you don't have to worry about that.
post #13 of 41
Quote:
Originally Posted by johnmcboston View Post

The touch would have to come out with shuffle-like headphones with the remote control on them. The biggest nicety is I can change volume and songs by touch, so I don't have to take the classic out of my pocket. Plus, with the Touch, I have to unlock it every time it goes to sleep; the classic and nano you don't have to worry about that.

The new shuffle will probably come with those headphones (similar to the ones with iPhone 3GS). With the new Apple remote headphones you can do everything without having to take your iPhone (and maybe the next Touch?!) out of your pocket. Also, I am certain that Apple will include the voice command feature in the new touch.

Why do you have to unlock the Touch when it goes to sleep?! The volume control on the Touch and the play controls on the headphones work even when the screen is sleep.
post #14 of 41
OFF WITH THEIR HEADS!!! Bring on the next logical path.....iTablet.

Hoping for a small form factor desktop machine...looking at my G5 tower to my right, I cant help but wonder why its SO BIG....especially when its sits next to my 15" Macbook Pro.....
post #15 of 41
Quote:
Originally Posted by GQB View Post

OK, all together now (so the 'analysts' can hear us)...

THE iPHONE AND TOUCH ARE iPODS!!!!

Sorry for shouting.

No they are not. They call the Touch an iPod, but it and the iPhone are pocket computing devices, not dedicated media players. While the iPod success was leveraged to launch the new platform, even Apple treats them as seperate product categories. It makes sense, the market is different, competition is different, customer usage patterns different etc.
post #16 of 41
Quote:
Originally Posted by MacVicta View Post

Does the shuffle re-design have anything to do with the decline in iPod sales?

Well when you get basically mediocre reviews for it that state it's not an improvement over the last model, what do you think?
post #17 of 41
Quote:
Originally Posted by JavaCowboy View Post

I find it interesting that Apple is generally regarded as a company that sells products to high-end markets (ex Macs are generally regarded as a "premium" product vs. regular PCs) yet it sells to the low (shuffle), medium (classic, nano) and high (touch) ends of the music player business.

The iPhone is a device aimed squarely at the high end of the mobile phone market. It definitely does not cater to the low end, and is arguably just now beginning to cater to the medium end (iPhone 3G 8Gb model).

If Apple expects to do business in all levels of the MP3 player market, then it will most certainly start losing share when low-end phones begin to offer higher storage (4 Gb and up) and reasonably user friendly music player capabilities. The fact that no low-end phone manufacturer offers such a feature doesn't make a whole lot of sense, since adding reasonably user friendly music playback and decent storage shouldn't be that complicated. The only thing I can think of is that none of the service providers have added these features to their checklist of features required from phones.

Still, it's only a matter of time before they do. So what does Apple plan to do if it loses the low end of the music player business. Do they care?



Low end phones already offer 4gb of storage. Just put in a microSD card
post #18 of 41
Quote:
Originally Posted by JavaCowboy View Post

I find it interesting that Apple is generally regarded as a company that sells products to high-end markets (ex Macs are generally regarded as a "premium" product vs. regular PCs) yet it sells to the low (shuffle), medium (classic, nano) and high (touch) ends of the music player business.

The iPhone is a device aimed squarely at the high end of the mobile phone market. It definitely does not cater to the low end, and is arguably just now beginning to cater to the medium end (iPhone 3G 8Gb model).

If Apple expects to do business in all levels of the MP3 player market, then it will most certainly start losing share when low-end phones begin to offer higher storage (4 Gb and up) and reasonably user friendly music player capabilities. The fact that no low-end phone manufacturer offers such a feature doesn't make a whole lot of sense, since adding reasonably user friendly music playback and decent storage shouldn't be that complicated. The only thing I can think of is that none of the service providers have added these features to their checklist of features required from phones.

Still, it's only a matter of time before they do. So what does Apple plan to do if it loses the low end of the music player business. Do they care?

Apple likes to move on. If they see that a market is moving to saturation, they want to be on something else. While I think that in the long run, there will still be a growing music player market as India and China increasingly move aboard, that could still be a few year off. When they do, Apple will have products for them.

Meanwhile, cell phone makers sell ten times as many. Even though that's a mature market, relatively, its a big market in total. In addition, the smartphone portion, which is where Apple is competing, was just 10% of that when Apple entered, but is expected to become 75% in a few more more years. The kind of young market Apple likes to enter.

So what about those cheap iPods? Does Apple care. Sure. Or they wouldn't be selling them. Not everyone can afford an iPhone or Touch.
post #19 of 41
I don't care if they drop the Classic as long as the Nano's capacity exceeds 160GB someday.

There will always be a market for large capacity and tactile controls. I literally never use my Touch anymore, because I find the touch controls annoying when I use my iPod on the go. With the Classic, I never have to actually look at the device to adjust the controls, I can keep my eyes on what I'm doing.
post #20 of 41
Quote:
Originally Posted by AIaddict View Post

No they are not. They call the Touch an iPod, but it and the iPhone are pocket computing devices, not dedicated media players. While the iPod success was leveraged to launch the new platform, even Apple treats them as seperate product categories. It makes sense, the market is different, competition is different, customer usage patterns different etc.

Jobs referred to the iPodTouch (remember the name!) and iPhone, as the best iPod Apple ever made.

Apple doesn't break sales of the Touch out from sales of iPods in general.

Yes, it's a computer as well.
post #21 of 41
Quote:
Originally Posted by JavaCowboy View Post

I find it interesting that Apple is generally regarded as a company that sells products to high-end markets (ex Macs are generally regarded as a "premium" product vs. regular PCs) yet it sells to the low (shuffle), medium (classic, nano) and high (touch) ends of the music player business.

The iPhone is a device aimed squarely at the high end of the mobile phone market. It definitely does not cater to the low end, and is arguably just now beginning to cater to the medium end (iPhone 3G 8Gb model).

If Apple expects to do business in all levels of the MP3 player market, then it will most certainly start losing share when low-end phones begin to offer higher storage (4 Gb and up) and reasonably user friendly music player capabilities. The fact that no low-end phone manufacturer offers such a feature doesn't make a whole lot of sense, since adding reasonably user friendly music playback and decent storage shouldn't be that complicated. The only thing I can think of is that none of the service providers have added these features to their checklist of features required from phones.

Still, it's only a matter of time before they do. So what does Apple plan to do if it loses the low end of the music player business. Do they care?

Tomi Ahonen (see the Nokia Q2 results thread) predicted around 2006 (or earlier, I don't remember) that phones in general would eat the IPod eventually, especially from the low end. Apple itself recognised the same thing, hence the iPhone. And Apple being Apple started at the high end where the biggest profits are.
post #22 of 41
Quote:
Originally Posted by jodyfanning View Post

Tomi Ahonen (see the Nokia Q2 results thread) predicted around 2006 (or earlier, I don't remember) that phones in general would eat the IPod eventually, especially from the low end. Apple itself recognised the same thing, hence the iPhone. And Apple being Apple started at the high end where the biggest profits are.

He mentioned that in his post here.

There's no question that people are becoming more demanding and sophisticated about their devices.

The question is who will respond the best to that.
post #23 of 41
Quote:
Originally Posted by DimMok View Post

OFF WITH THEIR HEADS!!! Bring on the next logical path.....iTablet.

Hoping for a small form factor desktop machine...looking at my G5 tower to my right, I cant help but wonder why its SO BIG....especially when its sits next to my 15" Macbook Pro.....

This article shows that Apple is not necessarily against cannibalizing its own products, yet
they do not seem willing to do it with desktops. There always seem to be many people who
say they want a mid-tower Mac. I wonder how many people who buy Mac Pros really need
all those drive bays and card slots, or if they could get by with a mid-tower. Is it possible
that the Mac Pro is the equivalent desktop to the iPod classic????
post #24 of 41
The iPod Touch is cool but they need to keep a player that you can use with one hand and without looking at it. The iPod Touch isn't really a music player... it's a small handheld computer that requires a lot more of the user. I'd be happy with a 128GB Nano.
post #25 of 41
Quote:
Originally Posted by melgross View Post

Apple likes to move on. If they see that a market is moving to saturation, they want to be on something else. While I think that in the long run, there will still be a growing music player market as India and China increasingly move aboard, that could still be a few year off. When they do, Apple will have products for them.

Meanwhile, cell phone makers sell ten times as many. Even though that's a mature market, relatively, its a big market in total. In addition, the smartphone portion, which is where Apple is competing, was just 10% of that when Apple entered, but is expected to become 75% in a few more more years. The kind of young market Apple likes to enter.

So what about those cheap iPods? Does Apple care. Sure. Or they wouldn't be selling them. Not everyone can afford an iPhone or Touch.

FINE post big guy ...

A baby touch and a baby phone pods will come about . IN fact all pods will have touch to them .
dick tracey ipod watche/phones will show up.

A

Its all bullsnot . All ipod s are one . and an iphone os an ipod so is a ipod-touch an ipod .
Jibberish talk about stolen sales .

They all play music . They all link to itunes .They all are wonder ful machines and i hope to one day own one of each model .

Apple keeps on trucking on and on
whats in a name ? 
beatles
Reply
whats in a name ? 
beatles
Reply
post #26 of 41
First everyone is assuming the Shuffle is the reason for declining iPod sales. I see nothing to support this in the public info. In fact I can make a good arguement that Nano sales are the cause of the decline.

Second the Classic has become a limited interest device. Limited in that people who want it currently need it for the storage. The app capability of Touch attracts a broader interest.

Limited storage is a huge issue on all of Apples devices, frankly I'd like to see half a terabyte real soon now. In fact if Apple skipped a generation of Flash sizes and put 128GB in the coming Touch updates I would consider that a very smart move on their part. More so if part of that storage could be accessible as a USB disk.

One thing that bothers me about my current iPhone is that I can't seem to sync music to it while at the same time syncing movies. At least it wouldn't let me do that. Hopefully this has something to do with flash storage, but I still have plenty of space. Strange but I'm thinking it can be resolved as it seems artificial. In case you are wondering I synced some video files related to iPhone development.

In any event I looks like both Apple and the analyst are blowing this one. IPhones and Touches are iPods. Taken that way sales are booming. Seems like the wrong spin.


Dave
post #27 of 41
Quote:
Originally Posted by wizard69 View Post

First everyone is assuming the Shuffle is the reason for declining iPod sales. I see nothing to support this in the public info. In fact I can make a good arguement that Nano sales are the cause of the decline.

What can you say that you can support with public info?
post #28 of 41
If the Touch and the iPhone are cannibalizing lower end iPod sales I don't think anybody is very worried. In the Pod world those are high end, high price items.
post #29 of 41
Quote:
Originally Posted by paxman View Post

If the Touch and the iPhone are cannibalizing lower end iPod sales I don't think anybody is very worried. In the Pod world those are high end, high price items.

Some analyst/pundits have been studying the trend in iPod sales in an attempt to predict
the date of Apple's demise. This is an alternate thesis to the one that says Apple cannot
be successful selling high-end items during a time of economic recession and high
unemployment. These stock prophets are the only ones worried, because their model
of how companies succeed or fail has been unable to predict results for Apple.
post #30 of 41
Quote:
Originally Posted by NasserAE View Post

iPod Touch is the future. The Classic will go away once the Touch gets the 128GB flash drive. We will end up with the Shuffle, a different Nano, and the iPod Touch. It wouldn't surprise me if Apple dropped the next iPod Touch price to $199.

They will have to drop it a lot more than that, the Classic serves a market that the iPod touch can't 'touch' at the moment, and they will lose sales to competitors if drop it.
post #31 of 41
Quote:
Originally Posted by NasserAE View Post

iPod Touch is the future. The Classic will go away once the Touch gets the 128GB flash drive. We will end up with the Shuffle, a different Nano, and the iPod Touch. It wouldn't surprise me if Apple dropped the next iPod Touch price to $199.

I think the Classic with go away when the touch reaches 256 GB. Not because of capacity, but because of cost. The 128 GB capacity will need to trickle down to the mid-level Touch to be price/capacity competitive with the Classic.

And it's more than capacity concerns. 64 GB would probably suffice for me, but if the Touch doesn't get a disk mode, I'm still going to be dependent on my hard drive iPod.
post #32 of 41
It's not cannibalizing.. It's smart. The 'tradiional ipod' market isn't something that is going to last forever. You have to innovate, and if that eats away at your old market, so be it.

You want Apple to be like GM and never innovate in 20 years?
post #33 of 41
Quote:
Originally Posted by dcdttu View Post

It's not cannibalizing.. It's smart. The 'tradiional ipod' market isn't something that is going to last forever. You have to innovate, and if that eats away at your old market, so be it.

It's cannibalizing, I think even Steve Jobs said it in an interview once, or maybe even several interviews. One way he said it was to obsolete your product before someone else does. As you say, it's necessary in order to stay ahead of the competition. I'm pretty sure that Apple knew that phones were going to replace separate music devices eventually, that transition was already well under way in Japan and Korea years before Apple introduced their iPhone.
post #34 of 41
I use my click wheel iPod a lot more than my iPod touch. It's easier to use. If the touch had a bigger screen I might use it more (for web and email) but probably not.
post #35 of 41
I also prefer the no-need-to-look iPod over the iPhone/touch.

However, with the iPhone headphones, I don't even have to do reach down to adjust the volume or the track. I can even activate voice-over and ask what playlist I am playing without looking.

The touch is the natural upgrade path plus it is a gaming system. If Apple puts a camera in it, it will become a great tool. I'd like to see a GPS, too, but that's just me.
post #36 of 41
It's always better to cannibalize your own sales than let a competitor do it.

Traditional iPod sales are declining, but there are still millions of kids being born each year for whom an iPod touch is too expensive.

The Shuffle went from an inexpensive way to get into the iTunes universe to a fashion accessory and then got made too small and generic looking to be noticed as a fashion accessory. That was a huge mistake on Apple's part. It still has a role as a workout accessory, but its glory days are behind it.

The Nano is still selling very well to people looking for an easy way to carry around a decent sized music and podcast collection. The UI is simple to learn and use and the screen is just large enough to make selecting from playlists efficient. That UI is what originally separated the iPod from everything else and I expect it to be around for years to come.

The Classic occupies a niche and will soon be squeezed out by a high capacity Touch. A small number of users will be inconvenienced, but Apple has never cared about that sort of thing. Even my collection, which is almost entirely lossless on my Mac, gets compressed before loading onto my iPod because environmental noise covers up the subtle differences between lossless and AAC.
post #37 of 41
It's always better to cannibalize your own sales than let a competitor do it.

Traditional iPod sales are declining, but there are still millions of kids being born each year for whom an iPod touch is too expensive.

Yup

The Shuffle went from an inexpensive way to get into the iTunes universe to a fashion accessory and then got made too small and generic looking to be noticed as a fashion accessory. That was a huge mistake on Apple's part. It still has a role as a workout accessory, but its glory days are behind it.

Previous one is still available and I've got one of the new ones and I love it..

But the touch is definitely the future.. can't wait for the new one in september !
post #38 of 41
Quote:
Originally Posted by JavaCowboy View Post

Just out of curiosity, what do you have on there? Tons of video and lossless music?

Main music library is 25K+ songs, 140GB. Most are mp3's, so not much loslsess at all. This does include around 25GB of podcasts and about 50 music videos.. So yah, the 160GB classic is gettin full
post #39 of 41
Quote:
Originally Posted by Wiggin View Post

I think the Classic with go away when the touch reaches 256 GB. Not because of capacity, but because of cost. The 128 GB capacity will need to trickle down to the mid-level Touch to be price/capacity competitive with the Classic.

And it's more than capacity concerns. 64 GB would probably suffice for me, but if the Touch doesn't get a disk mode, I'm still going to be dependent on my hard drive iPod.

They'll drop it when sales fall below the point in which they can manufacture it and support it while making a profit.
post #40 of 41
Quote:
Originally Posted by Dzign View Post

It's always better to cannibalize your own sales than let a competitor do it.

yup, if you don't cannibalize your own products with newer technology, someone else will eat YOU alive. just ask poor pathetic Sony ... the General Motors of electronics.
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