Special Report: The end of Apple's iPod era - Page 2

Echoing what others have said above: iPhones are iPods.

It's going to get harder and harder to calculate how much this device or that device impacts Apple's revenue because those devices are merging as technology advances.

I just got my first ever iPod last week. I bought an iPhone 4.

I hope the iPod Nano doesn't get discontinued as a result of this. I don't really want an iPhone, and I'd rather have a dedicated music player. I like being able to listen to all the music I want on a trip without worrying about draining my phone's battery down and being unable to make calls.

iPod Touch is superfluous. iPad I might get, but for completely different reasons. For just listening to music, the iPod Nano (or classic) is where it's at. You can't beat the interface and form factor.

Why thank you.

And to think i once referred to you as a troll. I eat my words and apologies unreservedly. I am unworthy.

I have a Ford Edge with navigation and the Microsoft Sync system and I keep an iPod Nano plugged into the USB port. I can control the iPod with the nav system's touch screen or with voice commands.

iPod ASPs actually haven't gone anywhere. They've been basically flat to down for the past 4 years. See here:




Also, here's a chart of iPod revenue. Or I should say, iPod Touch, iPod Shuffle, iPod Classic and iPod Nano everything that Apple has chosen to call an iPod revenue. Notice the flat growth for 4 years now:



And finally, here are iPod unit sales. Notice, once again, flat growth:



So what do these 3 charts say about the iPod in general, and would Apple be where it is today if the iPod is all that existed? Finally take a look at Apple's revenue growth and compare that to the iPod's growth. What should one conclude?

You really don't like him much do you?

i don't remember that. I do tend to go off topic on stuff, sorry...but sometimes people start with ignorant shit and i just have to chime in. and sometimes these Posts bring up some other great ideas.

kumbaya!

I drive a 2009 Toyota Corolla MATRIX and it has a cigarette-lighter-power source, a standard A/C electric plug (!), and a place to plug in a micro-mini stereo walkman or iPod or iPhone.

Somebody at Toyota realized how much curb-appeal you get from a little human-interface design.

PS: I still like Toyota. Their floor mat bunching under the accelerator problem is solved by lobbing the mat into the back seat.

the iPod is very important for their AppStore sales.

we're getting way off topic now, i fear the troll enforcers will be out in droves now. Except most people confuse trollers with haters.

Can't say i've drive or owned an american car in 10-15 years, but i am curious about the Fords, god, the only American car company that can remain viable and without bailout money. Too bad they limited themselves to a Microsoft interface. Glad to hear it works with the ipod. Now if they could come up with a car that can compete with the Mini Cooper, VW Golf, Fiat 500 (In other words, small, stylish, luxury under $20k with better than 35mpg, save for VW...for shame!) then they would really have my attention

I don't have a modern car or a modern stereo, but I agree that an iPod, with an iTrip in my case, is my preferred music method for the car. I've a few complaints about streaming bluetooth to a car stereo, though I use it with my earpiece a lot.

except that the app store doesn't support the shuffle, nano and classic any more. I have about 4 apps on my Classic (all games)...however i don't believe i've seen an update for any of them since 2008

That was my question as well. Define 'ipod'


Agreed. The idevice line up as a whole no. But if you just take the non iOS stuff, yes. They are on the way out as a 'gateway' which makes sense cause now there's the iOS line. Why would anyone spend $149 for a music player that also does video on a tiny screen when for $199 they can get a music player, bigger screen, check their email etc. More bang for the buck means they are willing to spend more bucks

None of this is a real surprise, but a few points;

1. At the time Apple launched iPod, it was very much still in recovery mode. Revenues will still down on where they should have been, but the iPod sparked a lot of new interest in Apple. Not just the Halo effect of iPod buyers, but with the marketing and hype, the Apple brand was back in the public eye and people bought a wide variety of Apple products, even if they didn't own an iPod. For example, I bought my iBook G4 before I bought my first iPod.

2. The iPhone is also an iPod. Remember the Keynote, it is a revolutionary touchscreen iPod, Mobile Phone and internet device .... all in one.Not many people would buy an iPhone and another iPod (although I am seriously considering it as I've given my girlfriend my iPod Touch - not need for two iOS devices, but there are times I want an iPod without wanting to carry my £600 phone).

3. If you look at what happened to the Walkman brand, it expanded into other devices, including phones. The iPod is doing exactly the same, as is part of iPhones and iPads. I would not be surprised to see the iPod brand associated with some In Car Entertainment devices, either made by Apple or 3rd parties, the "powered by Apple iPod technology" approach. [Side note: Hope they don't implement "shake to shuffle" on an ICE device - Can you imagine people swerving to change tracks!!!]

4. Market saturation. Just about everyone that wants/needs an iPod / MP3 player now has one, so the market is just one of replacement when upgrades are required. The tablet market is quite new, and the iPad is a new Apple device so there are many people who don't own a device of this nature, that do want one. In a couple of years, this market will also become saturated, and iPad sales will decline.

5. For many people, the iPhone lagged competing products on features but the iPhone 4 is just about complete of these (5 Mpxl camera, flash [camera that is ;-))], front facing camera, ...) so more and more people will be switching to iPhones, which in turn will lead to further decline of standalone iPods (back to point 2).

6. I'm sure in Apple's labs are lots of new, innovative and competition beating products that will keep their revenues going in the right direction. Whether they'll have any MS Kin moments is yet to be seen, but I believe the iPod halo is now the iPhone/iPad halo and these are the products that keep Apple's brand in the spotlight.

7. At the time the iPod launched, it was very rare to see Apple advertisements (TV, posters, etc) in the UK, and even more rare across Europe. Now, it is difficult to go anywhere without seeing Apple Adverts, they are everywhere, thanks to the increased brand awareness and growth that the iPod and now iPhone/iPad are providing.

8. I'd expect the iPod family to continue, but consolidate down to fewer products. Maybe a single shuffle (but in a small range of colours), one nano (again, in it's usual wide range of colours) and one iPod Touch, likely to be the next memory size up from the highest iPhone.

9. Even at the declined sales levels, it is still a product worth Apple producing, even if it was just 4% of revenue, most companies would see that as a viable business.

Phil

I might have to disagree with you. Remember that the iphone 4 isn't just '50 dollars more and you get a phone'. It's got a contract with an ETF, etc. And it can be very pricey if it's lose or breaks. As much as $599 pricey.

So if your friend is looking for something to take to the gym or while jogging, the iphone perhaps not the best idea. Something sleek like the nano or even a shuffle is way better.

Which is why I bought a shuffle the same day I got my iphone 4. Easier to carry, cheaper to replace if it drops, less to fret over and no real risk if I set it down cause all anyone will get is the greatest hits of Abba

If your friend is looking for something for more general use and has a contract ready to upgrade etc then yeah why not consider the iphone.

There are always people who will want more storage than features, so the Classic hits the perfect price point for those that simply want lots of music in a very portable device. If Apple launched a 320Gig Classic for the same price as the current line up, I'd be buying one simply to use in my car. [I've got a Hard drive system in my car which stores approx 30 gigs but the idea of having my entire iTunes library in car would be amazing!

Well, after having an iPhone or likely a 3G iPad, an iPod just seems like a crippled version. We are all spoiled by the "always on" aspect. A phone and mobile computer will become even more the same as time goes on.

And AT&T's network has been pretty much always on for me as far as internet - I just can't make calls!!

Apple has already won the iPod market as far as stand-alone music players go, so in that sense, I think the author has a point. Of everyone I know, I only know of one person who has an MP3 player that wasn't made by Apple. iPods are just so ubiquitous these days that it's easy to take them for granted. In essence, they've reached Xerox or Kleen-ex status in that everyone just says "my iPod" when referring to what they play music on.

With the web as a whole moving towards mobile computing, so does the iPod. No doubt, Apple planned this all along. Things like the iPod touch are just secondary devices to the iPhone.

different strokes...
I use my ipod classic as my music device, i use my iphone 3g as my Everything-Else Device when out of the house. see my previous statements for more detail.

Totally agree.

Another time I'd want a separate device is for holidays. Taking the iPhone onto a sandy beach or by the pool can be very daunting. A shuffle / nano would be ok, and easily within the cover of most travel insurance policies. I also do a lot of city breaks, often to eastern european destinations where the iPhone is almost 3 months average income, making it a prime target for thieves, so I'd prefer to take my very old samsung phone and a low end iPod.

Phil

I saw a guy just this week using one of those. The funny part about it was that he was listening through iPhone ear buds.

Heh...a woman at my gym uses a discman and it cracks me up.

The paragraph you quoted said "For the 2010 holiday shopping season, though the iPod posted 250% more revenue than it did in 2006", but that is an error in the article. In the 2006 holiday quarter, iPod revenue was $2906 million. In the 2010 holiday quarter it was $3391 million (see graph at the bottom). That is a 16% increase, not 250%. It also said nothing about number of iPods, just revenue.

Looking at full financial years in Apple's reports (note that Apple's financial year ends in September):

2005: $4540M revenue, 22.5M iPods, average price $201
2006: $7676M revenue, 39.4M iPods, average price $194
2007: $8305M revenue, 51.6M iPods, average price $160
2008: $9153M revenue, 54.8M iPods, average price $167
2009: $8091M revenue, 54.1M iPods, average price $149

From independent comments by Apple at special events, I estimate that 12 million iPod Touches had been sold by the end of calendar 2008, and 32 million by the end of calendar 2009, so it seems that 2009 iPod sales were almost 40% iPod Touch. There must have been a similar proportion of Shuffles being sold for the average price to be as low as $149, with most of the rest being Nanos.

Total iPod sales declined in 2009, but there was a financial crisis.

Since then, we have these figures for 6 months from Oct 2009 to Mar 2010:

Q1+Q2 2010: $5252M revenue, 31.8M iPods, average price $165

(Q1 is the holiday quarter ending Dec 2009, so this will be more than half the iPods sold in FY2010.)

iPod unit sales are down 6% but revenue is up 4% (compared to the same period a year earlier), so a greater proportion of iPod sales so far this financial year are the expensive models (Touch).

Generally looking good for steady or increasing sales of iPod Touch, but the iPad may shift the goalposts. We'll know more in a couple of weeks when Apple releases the results for the June quarter (first one in which iPads were sold).

My girlfriend got me the iPhone 4 yesterday! OMFG!
Reception issue?
Get a bumper!
Lol!

I've seen this in action and liked it a lot. Just wish Apple had something similar for cars.

My Infiniti's connection is awful. It also keeps the iPod from suspending (hibernating?) when the car is off and within a day drains the iPod's battery.

You guys should have quite a few years to look forward to enjoying your perfect-for-purpose Classics.

My iPod Photo (60GB, 2004) is still my traveling auto jukebox and DJ-on-the-go music device - looks and works like new - and gets more attention for its now retro "bulk" than yet another person brandishing the latest iteration.

And my Sony belt clip am-fm digital radio from 1997 has survived several drops into sinks and bathtubs. All saving me moolah towards my next MBP and iPad 2.....

The iPod is still relevant as a product, probably not considered the most valuable Apple asset, as in if it fails Apple are history. Apple has always pushed on and the most successful products rarely die, they often morph into the next great thing.

The iPod is still the most popular stand alone music player, and still the envy of companies like Sony!!! Also the iPod touch is very popular and as others have question is this including in the report?

For me, and probably many others, the iPod Shuffle and Nano are still the music player to use at the gym or out jogging, just press play and go!

Apple's revenue numbers have historically been strongest during the winter holiday season (their fiscal Q1), even when all they sold was Macs. And fiscal Q2 (Jan-Mar) has always shown the weakest revenue.

But to me, it looks like Apple is trying to spread out their product releases as widely as possible throughout the year in order to give each new iPad, iPhone, and iPod line several months in the spotlight. This year iPad was on Apple's home page for six full months: Jan - Jun, but that might change if Apple gets really serious about Apple TV.

Interesting that Apple chooses to release products at the end of a quarter. I suppose this allows time for the launch and manufacturing to ramp up and for sales to begin in earnest in the following quarter.

So, if we continue the current trend of promoting newly released products, without adding a beefed up Apple TV into the product mix, we get this:

Q1: Oct-Dec: Holiday promotion of all Apple products
Q2: Jan-Mar: iPad promotion
Q3: Apr-Jun: iPad promotion
Q4: Jul-Sep: iPhone promotion

If we add a new, industrial-strength Apple TV after iPad has been sufficiently established, we could see the focus change each quarter:

Q1: Oct-Dec: Holiday promotion of all Apple products
Q2: Jan-Mar: Apple TV promotion
Q3: Apr-Jun: iPad promotion
Q4: Jul-Sep: iPhone promotion

Oh, and I think Apple should stay away from CES. Staging a special Apple media event in January after CES does two things to Apple's benefit: 1) It steals attention from CES and makes it less important, and 2) it reinforces consumers' perception that Apple is the innovator that everyone else copies in a blind panic.

The latter was glaringly obvious this January, as many slate PCs were announced half-heartedly, as though the manufacturers were afraid of making huge mistakes, in public, just before iPad was to be announced. It's as if they were lost in the woods and frozen in their tracks. Remember Ballmer's timid demo of the HP Slate? No? I don't blame you.

I forgot to add that if iTunes gains cloud-based streaming functionality, it could add some sizzle to the iPod announcement in Q4. Apple's product quarterly focus could look like this:

Q1: Oct-Dec: iTunes/iPod promotion + Holiday sales hype
Q2: Jan-Mar: Apple TV promotion
Q3: Apr-Jun: iPad promotion
Q4: Jul-Sep: iPhone promotion

that is funny. Well, if anyone watched "Lost", the character of Hurley had a portable disc player for the first season or two of the show, until the batteries died, and that was 2004.

Just like in real life, profit is what really matters. It would be more interesting to derive the exacting profit margins for iPods and then tally them as a percentage of Apple's profits.

Gross revenues don't mean much if your making a product that has razor thin margins. Just ask Dell and HP.

Exactly. I've had three or four different iPods over the years, but I finally ditched my touch for an iPhone 4 and I love it. This is my iPod now, and it has a phone, camera and GPS, too.

If people were leaving their iPods for Zunes (do they still make those?) or for some new technology that made MP3 players obsolete, that would be one thing. But if people are upgrading to a more expensive Apple device that happens to have a different name ... what's the problem?

First, there are no more than 10 devices in the entire HISTORY of consumer electronics that have sold 100 million - the ipod being one but more importantly, for most companies, it's like being a movie star but once that period is passed, most of them live on that glory for 10+ years ... look at Moto - while the RAZR phone didn't actually sell 100 million what was the follow up? The RAZR 2? Two very important things - a) Apple has launched essentially TWO additional multi-billion businesses (iphone should clear 100 million sold this year) on adding to it - the iphone at the start was clearly an ipod with touch features + a phone ... and the ipad is built on the ipod business of media ... but what is also more amazing - unlike most other companies that add features to a product but are forced to lower prices as the product life goes on - only Apple has maintained pricing and margins in moving people to the ipod touch ... AND has maintained its market share even though competitors can clearly come in and undercut them severly and yet, the ipod maintains about a 70% market share. NO ONE ELSE CAN CLAIM THAT ... people are pretty quick to call it the end of the ipod era but are the ipad and iphone, merely an extension of the ipod ...

P.S. The iPod touch was definitely the "gateway drug" to the iPhone for me. I resisted increasing my monthly cell phone bill for a long time, but after getting to like this "pocket computer" and then seeing AT&T cut their data prices in half, the time was right.

Andy,

I am curious as to why you think Q4 of 2010 is going to be so outstanding for Apple? I mean you are estimating a ~21% increase over the holiday quarter of that same fiscal year. The largest similar growth was in 2008 and Q4 was only ~10% higher than Q1. Is there anything in-particular that you believe would fuel such an amazing quarter?

Mr. Zaky sees the trees but not the woods.
Every other Apple mobile device is an iPod++ Zaky! Duh!
The iPod is software. Even if the device dies, the iPod lives on, subsumed into its descendants and siblings, adding its discrete value to the selling price of its new host device. And why shouldn't the iPod device die when there are more capable options that encapsulate it? How much less would the iPhone and iPad be worth to consumers if they lacked the iPod's functionality, now massively enhanced? $50? $100? I hope you're getting the picture because it's certainly writ very large and clear to those who care to look at these things. Blindingly obvious some might say.
Viewed in this light, iPod sales have never been higher!
As the French say 'The more things change, the more they stay the same.
Sometimes, self-appointed wannabe analysts fall over themselves trying to make a point. You seem to have fallen over Mr. Zaky. Big time. What happened?
Apple has never sold so many iPods as it does now and will keep on selling more going forward. Count the sales per model. Errr... count the competition's pmp sales.
Apple sells what (?), 5, 6, 10, 20 times as many computers as they used to sell pre June 2007. Can you see that? Count the OSX platform variants in play. Hell, they sold 3 million computers aka iPads aka iPods in just 80 days. They sold another 1.7 million iPod/computer/phones in just a couple of days.
Andy. Andy baby. Asleep at the wheel?
Let's go just a little further, Mr. Zaky. Let's call it 'walking the extra mile', shall we?
When is an iPod Touch or iPad a phone? When you use them to talk to people, silly! It doesn't have to be a cellphone to qualify as a phone. FaceTime on Wi-Fi anyone?
An iPhone can be an iPod any time you want. So can an iPad.
An iPod Touch and iPad can be a phone much of the time, or most of the time if you make it so, as Jean-Luc might say.
Apple sells many more phones than all but Nokia. Count the devices it sells on all its the call-capable platforms.
That's what massively disrupting markets is all about. Take the market's preconceptions, and yours too it seems, chew on them and spit them out. Ring the changes. Hand out Kleenex to your competitors if you feel charitable.
Your financial stats may be numerically accurate (as in Zaky says 'X iPods sold, contributing Y to revenues which is Z% of total revenues yada yada ...') but all that is just so much simplistic doodoo. That may be upmarket bs, but it's still bs.
You might as well measure the number of Christians in the world by counting how many go to Church every week. They're out there, everywhere. You just have to make the effort to count them properly.
As sales of trucks declined with the rise of the car, the limo, the Mini, the roadster, etc., did we lose sight of the fact that the new variants retained the four wheels, the seats... etc .... all that the truck possessed in fact? Did fewer people drive around as a result?
This post is just empty nonsense. I don't mean to be rude but it is the kind of elementary mistake no serious analyst would make. That's why there aren't more than a handful of such people in the whole world. Are you building up some steam to short AAPL by any chance? That wouldn't be .... nice.
The iPod is dying. Long live the iPod+++.
Apple sells more iPods today than ever before. It's all uphill for the iPod from now on. No, no not downhill, I said UPHILL!
Buy Apple!
And buy AAPL while you're at it.
It's gonna make you prrrrrrroud!!



This is edited down from a response first posted elsewhere.

From this article all I learned is 55.55% is MORE than half!

"After years of serving as Apple's main source of revenue, the iPod's influence on the company's financial health has diminished"

The article starts off with this bold claim, and then doesn't substantiate it. Your data only shows a single quarter where the iPod contributed over 50% of the revenue. It seems to me that your data shows that the Mac was Apple's main revenue source in every year and every quarter except one.

Where did you come up with this misleading headline?

In Apple's fiscal year, Q4 2010 is July-Sept., so I think this is the period to which he refers. From what I've read of Zacky's analysis, the anticipated big drivers of earnings growth in this and the next quarters are the iPhone and iPad.

Not quite sure i ma ready and an eyePhone http://tv.ign.com/articles/110/1103550p1.html

then again its not the year 3010 (or so) just saying - I'm not getting in line for it (yet).