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Special Report: The end of Apple's iPod era - Page 3

post #81 of 116
isn't that some measure of success that many companies strive to attain? a device so successful that when you embed it into a variety of other devices that some portion of the general public simply takes it for granted.
post #82 of 116
Quote:
Originally Posted by BlueDjinn View Post

I generally agree with your point, but I have to ask: Do your figures and charts above include the iPod TOUCH as well as the iPod Classic, Nano and Shuffle?

I ask because I'm pretty sure that the iPod Touch makes up a huge portion of the iOS-based device revenue, and that Touch sales are through the roof.

Now, if you're talking about the NON-iOS based iPods, I agree 100%, but I'd be very surprised if iPod Touch sales/revenue are becoming "irrelevant", as this article would seem to imply. Just wondering...

Exactly, so in fact if the iPod touch is an iPod the discussion is only about an OS not a product family. iPod lives on and is doing very well!
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post #83 of 116
iPod touch is still important, but classic and nano are definately dieing off. I don't see those much on the L anymore, as most people either have an iPhone or a Touch on them.
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post #84 of 116
I just purchased an ipod classic for the wife and I still have a ipod video 40 gb that I use solely in my car. We also have a red nano, blue mini, black nano iphone 3g and 3gs.

I would still buy a classic for my next to be able to use for my media player in the car for my music collection and video output. I use the iphone for the gym etc but wouldn't want the constant connecting for the car. I think the classic and others still have a market whether it be some people working out, full collection, younger people's first etc.
post #85 of 116
All IMHO:

The iPod has arrived at the point the article describes, for a number of reasons, including that as Apple steadily introduced newer and newer models with new capabilities, the "iPod digital music player" lost its focus.

It became a highly convergent product with many tertiary capabilities not directly related to straightforward digital music playback -- its original and core functionality.

Logic would say that all the neat new capabilities the iPod acquired with the release of each new model, only gave it more variety, capability and enhanced its usefulness, entertainment and value, increasing its demand and thus its sales.

But reality would say that even the coolest of new capabilities that were added to the iPod with each new release, would only make it a less-focused, highly convergent product that detracted from its distinct position in the mind as a straightforward digital music player -- its specialty.

I saw this day coming years ago, when the iPod, whose first incarnation simply stored and played back digital music, added features like PIMs and games.

Color was quickly added.

Any iPod capability that bore no relationship to its core functionality -- digital music playback -- caused the product to lose its tight focus, or in marketing parlance, its "position."

(Search Amazon: authors Trout and Ries.)

It didn't end there. Soon, iPods gained "digital photo album" capabilities, could store and play entire movies, play complex color videogames, and run simple color software apps. An accelerometer was even added!

The iPod's core functionality that made it a success in the first place was being encumbered by ever-more, non-core-functionality features.

Again, all these neat new capabilities gradually added to the iPod with each new release, would seem to enhance product value, increase demand, give the buyer more "bang for the buck," and make the product far more useful and entertaining than a simple iPod that only did digital audio playback. But it didn't. This is a classic example of "less is more."

Counterintuitively, these awesome new capabilities should make consumers think the product is great. The product's demand should increase and thus its sales. But the opposite happened. All this convergence reached a point when it was no longer easy to answer the question, What is an iPod?

In its earlier years, the answer was on the tip of everyone's tongue: it is a device that stores and plays back digital music.

But today, what is an iPod?

The iPod nano has gained so much non-core functionality that it now even serves as a video camera!

The once distinct iPod is now a highly-convergent product with a blurry definition or "position."

I have no idea how well it sells -- it could be a dog -- but probably the only remaining iPod that has retained its focus and only performs its core functionality is the iPod Classic.

Another undeniable reason for the iPod's shrinking success is cannibalization by the iPhone, though the iPhone is more expensive. But if you had never owned an iPod, but bought an iPhone, where the bottom four icons on the main screen include one named "Music," and another named "iTunes," would you be inclined to buy an iPod after your iPhone purchase? I suspect not.

And I don't consider the iPod touch to be a "cannibal" of the iPod line, as it IS an iPod, but maybe it cannibalizes specific iPod models like the nano.

So should Apple kill the iPod? NO!

It can, but some enterprising competitor will swoop in to fill the vacuum left and find the right formula for digital audio players to succeed, and gobble up revenue foregone by Apple. You can count on it. (They'll probably make them limited and focused in functionality, stylish and very inexpensive. They will be Palm Pilots to Apple's Newton.)

FWIW, my humble suggestion is that Apple take the existing iPod nano, which starts at $149, and strip it down to a simple color screen device that only stores and plays back digital audio.

If the nano, with all kinds of capabilities, including video or movie playback (obviously requiring expensive video processing components) was stripped down from its many capabilities, Apple would be able to forego many expensive components that necessitated a starting price of $149.

If the nano, or an iPod of a different name, by eliminating all non-core functionality, could reduce component costs and sell for $79 or less, my prediction is that such a tightly focused, specialized audio playback device would be in demand and would sell. (This may require a price drop in the $59 shuffle, or its elimination altogether.)

There is a gaping hole between the nano and the shuffle, and such a stripped-down product would fill the void and satisfy a certain unaddressed consumer segment.

Apple has alternatives to giving up on the iPod product. Products need constant "reinvention." The iMac started out as, what was perceived at least, a specialized, EASY, "turnkey" Internet computer.

But the iMac has reinvented itself more times than I can count. After its "position" as a specialized, easy Internet computer, the MP3 music explosion happened, and the iMac was repositioned as a way to acquire and burn onto CD, MP3 music files.

As an aside -- as a brilliant example of dexterous marketing/positioning -- with the iMac, Apple, let's call it what it is, "fooled" consumers! Beyond its innovative, unprecedented form factor and eye-catching industrial design, was the same plain old, aging Mac! Yet the iMac was not regarded by consumers as another model added to the Mac line, but as the first entrant in an innovative, entirely new category of computer. The iMac was perceived (inaccurately) as new and innovative by consumers so distracted by its look, they didn't realize it was just a Mac! (And, "The perception is the reality.")

Apple fooled them.

Underneath, the iMac was the same old Mac that consumers rejected the day before the iMac's unveiling!

Had Apple instead added a new model to the "beige" Mac line, a more powerful, faster model with compelling new features at a sharply reduced price, it would have been regarded as just another model in the Mac line -- a line which, at the time -- faced outright rejection and saw poor sales. No amount of enhanced performance, compelling features and low price would have made Yet Another beige Mac succeed. A Mac was a Mac was a Mac. But not the iMac: it was 100% new!

This rare example of brilliant marketing belongs in every marketing textbook for the next hundred years.

(To make it inexpensive, the iMac's specs were less advanced than some existing Mac models at similar price points. As a geek, I would not be susceptible to the Mac's radical ID and would have concentrated on the best specs, and if I bought a new Mac at the time, would probably have bought a faster and more powerful model -- even in beige.)

Continuing, then the iMac reinvented itself with the release of the iPod and iTunes.

Then it reinvented itself when iMovie was released.

Then it reinvented itself when the iLife suite was released, and when iTools-.Mac-MobileMe were created.

And the most recent time it reinvented itself was when powerful, large screen iMacs began to sell to prosumers and creative pros (by accident; Apple didn't market the iMac to this segment, as Apple has always positioned the iMac as a consumer product. The market came to it).

So my advice to Apple is not to interpret the decline in iPod sales too literally. Like the iMac, the iPod could benefit from "reinvention" and proper product positioning. Adaptation to the marketplace is needed, but you must understand the lay of the land, or where the market's at right now.

Rather than discontinuing the iPod in a reactionary fashion, I recommend Apple's people put on their thinking caps and figure out how to reintroduce and reposition the iPod -- even if repositioning means going backward and restoring its tight focus as a dedicated device for the storage and playback of digital audio -- and nothing more.

Hire an outside consulting firm if necessary.

I hate to use this company as an example because of their meteoric rise and devastating crash, but a company you may have heard of named Palm was formed -- staffed mostly by ex-Apple employees from the Newton product development team.

John Sculley (worst-CEO-ever) claimed (but is averse to doing so anymore) direct involvement in the design of the Newton, the first PDA, and yet another Apple first. (Precursors were not full PDAs.)

Sculley should have stuck to marketing. He couldn't control himself as far as packing as many features and as much functionality into the Newton PDA as possible. ("Feature creep.")

The thing wound up with two PCMCIA slots for heaven's sake! Plus infrared! Plus fax capabilities!

Newton was intended to be a complete reinvention of personal computing. (Talk about limited, focused goals.)

Ironically, its CPU was an ARM, the same (though now highly evolved) processor used in Apple's current iOS devices.

The size of the Newton grew from its original size specifications probably because John Sculley packed too many features and capabilities into the machine, requiring more and more components and an increase in the Newton's size. It certainly couldn't fit in your shirt pocket without hearing "Rrrrrrrrrrrrrrrip!" And it fit into your pants pocket much like a VHS cassette would.

This is partly forgivable. Component sizes at the time were not as tiny as the ones the razor thin iPhone now enjoys.

But certainly, the need for ever more components, thanks to John Sculley's ever-increasing feature and functionality demands, negatively impacted its size.

Well, we all know that the feature-laden Newton was a flop, as were PDAs from other companies who licensed Newton OS from Apple.

I have to add that I picked up a Newton for cheap mainly as a collector's item, and found that its handwriting recognition was a learning experience. Through trial and error, I began to know how to write characters in such a way that the Newton was more likely to recognize them. Every time the Newton failed to recognize a character I had written, it was a learning experience.

I actually became proficient at handwriting on the Newton, having learned of its persnickety demands on how you needed to draw characters.

But the Newton's error-plagued handwriting recognition, sometimes turned a word you had handwritten into something that actually made you LOL.

It was even made fun of in a short segment of The Simpsons, when the Bully Kearney wrote on his Newton's To Do list, "Beat up Martin." The Newton blinked and then reproduced Kearney's To Do list item as "Pick up margarine." (He threw it at Martin's head.)

In its latter days, the Newton could even recognize contiguous cursive handwriting.

Anyhoo, back to the Newton's flop and Palm.

Demoralized members of the Newton product development team at Apple, left to form Palm. And their genius was their recognition that "less is more."

So they drastically scaled back the features and vast capabilities of the Newton and produced a physically smaller PDA (originally called the Palm Pilot) that could fit in your shirt pocket (although stick out at the top), and which had a limited set of functions that were optimized.

The smaller Palm Pilot did a few things, but did them well. Though in time, it would prove misleading, Palm experienced a period of meteoric growth and unlike the Newton, Palm PDAs sold like mad.

Huge pressure from all quarters was put on Steve Jobs to introduce an Apple PDA, but his uncanny prescience made him firmly resist. (Once astonishing, his prescience has become so commonplace that it is now met with yawns.)

At one Annual Stockholder Meeting where Steve Jobs held court, he fielded question after question from shareholders either "ordering" Apple to come out with a PDA because of Palm's conspicuous success, or asking for an explanation for why Apple doesn't market its own PDA.

In a rare exception to his downright paranoid secrecy about the internal affairs at Apple, Steve Jobs calmly revealed that Apple had actually designed in-house a complete PDA, but decided not to market it.

He said that when he was in meetings between Pixar and Disney, he noticed almost everyone in attendance was taking notes on one of Palm's PDA models. He said that at subsequent meetings, he noticed fewer people with Palm PDAs in hand, and eventually at these meetings, none.

He predicted the failure of the PDA and predicted that PDAs and wireless phones would eventually converge into one product.

Of course he was precisely correct. PDAs are gone. Just as Steve Jobs predicted, we now have "smartphones" <yawn>.

Palm's misleading raging success was followed by a precipitous failure. Brokerage firms were advising clients to "short" Palm stock, and predicted that its share price would drop to a dollar or less.

When a company has an IPO, and puts up one million shares for sale, and all shares sell, that doesn't mean you can't still buy shares. There are always investors who "short" a stock or bet that it will go down in price. They are legally permitted to "lend" their "short" shares to an investor who wishes to "borrow" them to buy (long).

So a company that has only put up one million shares for sale, might find that total shares held by all investors of their stock are 1.5 million shares!

Well, amazingly, just before White Knight HP pulled Palm out of the fire, there were actually thousands of Palm shares available that weren't even owned! That's how bad it got for Palm.

Palm's failure is almost entirely its own fault. But as a fig leaf I will say the market shifted, and entrenched, experienced wireless phone makers had the resources and completed engineering that could be dropped into a brand new model of phone -- without the need to "reinvent the wheel," but the ability to apply completed engineering to a new phone. So the established players in the wireless phone market could create a new model with a very abbreviated development period. Quick fulfillment of consumer demand was the result.

Having acceded to the smartphone market -- the PDA's Grim Reaper -- Palm tried to compete in the well-established smartphone market with zero experience and zero existing wireless phone engineering.

So unlike the entrenched wireless phone players with prior engineering in hand that allowed for rapid development of new models, Palm had no wireless phone experience and had to start from scratch in developing a smartphone.

Palm had not been aggressive enough on fast-moving adaptations required as any marketplace experiences rapid change. There's the expression, "Adapt or Die." (I think there's even a book by that title.)

But isolating Palm's period of spectacular success, they approached the development of the Palm Pilot with a "less is more" philosophy.

Reduce the variety of things the device could do, but make it do them WELL.

It succeeded where the Newton failed.

I recommend this exact approach to making the iPod successful. Right now, the iPod is a Newton, and (during the time it was successful) a Palm PDA is a limited, specialized digital music storage and playback device.

Apple should not give up on the iPod, it's just long-overdue for a "second act," seeing it was introduced in 2001.

Rather than concluding, "The iPod is failing because it doesn't do enough. We need to develop new models that do even more!" (A 100% wrong approach, and, in fact, responsible for the iPod's decline), Apple should "un-reposition" the iPod and position it the way that made it successful in the first place. Reduce the clutter in its capabilities. "iPod" is starting to stand for a foggy product with no coherent, succinct definition.

As I said, "iPod" once meant "digital music storage and playback device." Now it's hard to say what "iPod" means anymore.

Now, you'd have to add digital photo album, PIM, game machine, TV, video and movie viewer, and now even video camera to the complex definition of "iPod."

So, IMHO, the iPod can rise again if Apple makes a model between the shuffle and the nano that ONLY stores and plays digital music. This will eliminate the need for some of the expensive components that make the nano start out at a price point of $149.

I would like to see $79 or even less. The shuffle would have to be reduced in price or discontinued.

Lastly, I read an article written in the iPod's heyday, reporting anecdotes that the iPod was so successful, that its competitors (say, SanDisk) would run ads for their digital music players and DID succeed in creating demand, but the determined buyers that the ad created, out to buy a digital music player after being motivated by the ad, would buy an iPod!

So the ad worked, except not for the company and the product that was the subject of the ad; it worked for Apple!

So some "virtual iPod ads" from iPod competitors were free ads for Apple and the iPod.

People didn't just want a good digital audio storage and playback device, they wanted an iPod.

defender



P.S. Re: a $79 price point. Yes, that doesn't leave much room for margin, but like razors with replaceable blades or inkjet printers that need new ink cartridges all the time, an iPod with a slim margin wouldn't be the end of the revenue to Apple. Owners, as iPod owners do now, would continuously buy songs off the iTunes Store for the life of the device, providing a steady revenue stream to AAPL -- I mean, Apple, Inc.
post #86 of 116
wow I need to take a moment to breathe
post #87 of 116
Quote:
Originally Posted by 8CoreWhore View Post

A friend asked me if he should get a iPod nano. I told him spend a tiny bit more and get an iPhone 4.


If that is the sort of advice you give to 'friends', I'd hate to see what you suggest to enemies.

A 16 GB Nano costs £134, a 16 GB iPhone 4 costs £599. You call a £465 difference in price tiny?

Nice to know Steve himself posts in these forums.
post #88 of 116
what the real point is that even though iPods have gone down in price over the years they account for more money in Q1 2010 than in Q1 2006. Even if the percentage is less the fact is Apple is making so much more money that even at a lower percentage and a lower average selling price the iPod still accounts for more money in 2010 than in 2006...

This guys is right when he talked about accounting and statistics...they are meaningless unless you know the whole picture. They can be manipulated to show whatever you want. Its the first thing you learn in statistics 101..."its all about the questions you ask, or dont ask for that matter."

Still a good article though
post #89 of 116
Quote:
Originally Posted by cincytee View Post

If by "iPod era" one means Apple's unhealthy reliance on a single device for its well-being, then, yes, the iPod era is over.

When was the last time you heard Apple talk about the iPod outside of annual events? It really is all about the iPhone. Half the time it's all you see here and on MacRumors. It's everyone on Apple sites ever talk about too. Rarely do you see or here about the iPod or any MP3 players these days - not even on Tech sites.

It's all about phones now. While the iPod line continues to sell today, it's no longer Apple's major focus. The iPod + iTunes no longer play. If Apple talks about the iTunes, it's just apps, apps, apps... Aside from the Touch, it really is all about the iPhone.

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post #90 of 116
Quote:
Originally Posted by zorinlynx View Post

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.

I think the point here is that the iPod era is over as a major revenue source for Apple, not that the iPod itself is over. It's not as if the iPod will go away and leave the dedicated music player market to the Zune or Creative. It will remain as the overwhelming top choice of consumers like yourself who want a dedicated music player. It's also correct that the progenitor iPod has spawned evolved descendants like the iPhone and iPad. The game changing innovation continues in these devices.
post #91 of 116
Quote:
Originally Posted by Zc456 View Post

When was the last time you heard Apple talk about the iPod outside of annual events? It really is all about the iPhone. Half the time it's all you see here and on MacRumors. It's everyone on Apple sites ever talk about too. Rarely do you see or here about the iPod or any MP3 players these days - not even on Tech sites.

It's all about phones now. While the iPod line continues to sell today, it's no longer Apple's major focus. The iPod + iTunes no longer play. If Apple talks about the iTunes, it's just apps, apps, apps... Aside from the Touch, it really is all about the iPhone.

And you can add Macs to that ignored list. When was the last time AppleInsider posted an article about Macs? There was a teeny blurb about the new Mini and that's about it. As you say, it's all about iPhones. An old time Apple II and Mac user like me no longer matters either. I don't yet have an iPhone or an iPad yet. I do have a second generation iPod that still holds a charge and works as well as it ever did.
post #92 of 116
Quote:
Originally Posted by lkrupp View Post

And you can add Macs to that ignored list. When was the last time AppleInsider posted an article about Macs? There was a teeny blurb about the new Mini and that's about it. As you say, it's all about iPhones. An old time Apple II and Mac user like me no longer matters either. I don't yet have an iPhone or an iPad yet. I do have a second generation iPod that still holds a charge and works as well as it ever did.

Well said, you and Zc456.

Another thing is that if you have not bought into the iPhone/iPad ecosystems, or are in any way critical of any aspect of them, you are labeled a troll or Apple hater, even if you have a house full of other Apple products and have had for the last two decades. The iPhone has become a religion on here. They jokingly referred to it as the Jesus phone when it first launched but in all seriousness, that tongue in cheek phrase was so close to the mark it is no longer amusing. The only question in my mind is, is the church of iOS a cult or a religion?
post #93 of 116
Quote:
Originally Posted by ruoppster View Post

what the real point is that even though iPods have gone down in price over the years they account for more money in Q1 2010 than in Q1 2006. Even if the percentage is less the fact is Apple is making so much more money that even at a lower percentage and a lower average selling price the iPod still accounts for more money in 2010 than in 2006...

This guys is right when he talked about accounting and statistics...they are meaningless unless you know the whole picture. They can be manipulated to show whatever you want. Its the first thing you learn in statistics 101..."its all about the questions you ask, or dont ask for that matter."

Still a good article though

EXCELLENT point about iPod revenue viewed in the context of Apple's HUGE increase in revenues leading up to today. You're right: it's raw dollars vs. percentage of total revenues.

I'm embarrassed I overlooked your point, which now seems obvious.

If Microsoft is still actively selling and developing the piteous Zune, there is no reason for Apple to get out of the iPod market.

If they did, SOMEONE would fill the void left by Apple and it may be Microsoft or a "garage" startup that finds the formula for success and introduces very small, "cool-looking" digital music players (cool like graphics on skateboards), at a nice price point, they'll scoop up the revenues in the dumpster behind a building on One Infinite Loop.

And another poster's point about when was the last time you saw an iPod ad is pertinent as well. I haven't seen a crazy silhouette ad in years!

I read in a recent article that Apple spends far less on advertising than others in its industry. I can't find a justification for this as Apple is sitting on $48 billion in dead presidents.

defender

post #94 of 116
Ok. I'm having somewhat of difficultly trying to understand how the simplest concepts in this article are so misunderstood. I'll try to outline here in a very basic summary:

Point 1: The iPod, as a percentage of Apple's Total Quarterly REVENUE, is declining. This is indicated by the first chart I post. It shows a consistent decline in terms of a percentage of Apple's total revenue. Notice, that a product can grow 500,000,000% percent and yet it can still be in a decline in terms of overall revenue contribution in terms of percentages. THUS, no one should take a decline in the overall contribution to revenue as being an overall decline in the product. This point has clearly be misconstrued by a lot of people reading this article. Please read very closely.

Point 2: Because the iPod contributes less to overall revenue in terms of percentages, it thus has less of an impact on Apple's overall sales. This is stating the obvious. If Product X accounted for 70% of Company Y's revenue 10 years ago, and today Product X only accounts for 10% of Company Y's revenue, OBVIOUSLY product x has less of an overall impact on revenue.

Point 3: iPods have sales have been more or less flat over the past 4 years. This is indicated by iPod unit sales and iPod revenue. if you would like to see iPod unit sales, I have it posted here. iPod revenue is posted in my article:

http://farm2.static.flickr.com/1381/...47da2e14_b.jpg

Point 4: I demonstrate how, even though iPod revenue has been relatively flat to slightly up over the years, Apple's revenue has exploded due in large part of Macintosh sales and iPhone sales.

Point 5: Point 4 leads to the conclusion that Apple has the ability to innovate in the face of slowing growth. If Apple didn't release the iPhone or iPod touch, trust me, we would see a whole different story with Apple right now.

Conclusion: The conclusion of this article is because the iPod's impact to Apple's top line in terms of a percentage of Apple's overall revenue has been on a constant decline since 2006 headed straight for contributing under 10% of Apple's revenue, that the iPod era of being Apple's main revenue driver is over. The end.

I can't explain this in any simpler terms.
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post #95 of 116
Quote:
Originally Posted by ruoppster View Post

what the real point is that even though iPods have gone down in price over the years they account for more money in Q1 2010 than in Q1 2006. Even if the percentage is less the fact is Apple is making so much more money that even at a lower percentage and a lower average selling price the iPod still accounts for more money in 2010 than in 2006...

This guys is right when he talked about accounting and statistics...they are meaningless unless you know the whole picture. They can be manipulated to show whatever you want. Its the first thing you learn in statistics 101..."its all about the questions you ask, or dont ask for that matter."

Still a good article though

That point isn't lost upon me. In fact, I've posted a chart detailing the iPod's revenue over the past 4 years. I also note in my article:

"Though the iPod is contributing less in terms of percentages, it still makes very hefty contributions in terms of revenue. In fact, while iPod revenue as a percentage of Apples overall revenue has been on a constant decline since 2006, the iPod has posted very consistent revenue throughout that period of time."

To the General Message Board:
So I do notice that the iPod is very much a big player. I really hope that people don't take this article to suggest that I think that Apple would stop selling iPods lol. That would be the biggest misconstruction of my article. In fact, I think quite the contrary. The iPod, while not as important as a revenue driver, is still very crucial in converting droves of people to the macintosh environment.

In fact, the iPod touch is maybe one of Apple's most important products as that device is the gateway drug or introduction to Apple's iPhone OS. That OS is now a part of two of Apple's most important product lines - the iPhone and iPad. And evidence suggests that this iPhone OS will power an all encompassing media hub being used in a flat screen TV that Apple is potentially developing.

So while the iPod as a revenue driver by itself isn't so important, the device as a gateway to future revenue streams for Apple is very crucial.

I didn't really chose the title of this article. The title that I have originally posted on my blow reads:

"The End of the iPod Era: How the iPod has become Irrelevant to Apple's Growth"

That title is more appropriate but doesn't leave much to be desired. That's why I think Apple Insider choose the title they did.
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post #96 of 116
You're simply missing the point Andy.
Apple is selling more iPods today than all other products combined. Most of them are buried in the value proposition of the devices they are embedded in. I buy an iPhone because I want an iPod too. Without the iPod built in, how well would sales go? They still contribute to revenue. Embedded value is ADDED value. Intel's chips are all embedded in something. They're still counted in the sales value of the products they're embedded in. It's possible to break out a notional sales value for the embedded iPods as part of the selling price of the host device. It may be a notional value but the embedded iPod is real. It should be counted.
Let's say I sell pigs and I make a pile of cash. But gradually people don't want pigs they want bacon sandwiches. So I re-purpose my pigs and fry em up to make sandwiches. Suddenly my combined sales are through the roof. Then I start making pork pies and whaddyaknow, there are queues outside my shops running for 20 blocks. Wow, the missus says. Let's make pork sausages Honey.
I'm making a fortune every second Andy. The pigs aren't selling so well, but I have to keep them going to supply my other products.
I move more pigs than I ever used to. The pig side is growing exponentially.
Gotta go. Felling hungry.
post #97 of 116
Quote:
Originally Posted by andyzaky View Post

Ok. I'm having somewhat of difficultly trying to understand how the simplest concepts in this article are so misunderstood.

Same here, as I've just read three pages laced with "the iPhone is an iPod" drivel.
post #98 of 116
Quote:
Originally Posted by chano View Post

You're simply missing the point Andy.
Apple is selling more iPods today than all other products combined. Most of them are buried in the value proposition of the devices they are embedded in. I buy an iPhone because I want an iPod too. Without the iPod built in, how well would sales go? They still contribute to revenue. Embedded value is ADDED value. Intel's chips are all embedded in something. They're still counted in the sales value of the products they're embedded in. It's possible to break out a notional sales value for the embedded iPods as part of the selling price of the host device. It may be a notional value but the embedded iPod is real. It should be counted.
Let's say I sell pigs and I make a pile of cash. But gradually people don't want pigs they want bacon sandwiches. So I re-purpose my pigs and fry em up to make sandwiches. Suddenly my combined sales are through the roof. Then I start making pork pies and whaddyaknow, there are queues outside my shops running for 20 blocks. Wow, the missus says. Let's make pork sausages Honey.
I'm making a fortune every second Andy. The pigs aren't selling so well, but I have to keep them going to supply my other products.
I move more pigs than I ever used to. The pig side is growing exponentially.
Gotta go. Felling hungry.

Find you can view it that way all you like. But the financial world doesn't view it that way. Its understood that an iPod is built into almost every product they sell. This is just stating the obvious. No one is debating that.

But from a financial perspective, its a completely different device. Apple doesn't report a portion of each of its product lines as iPod revenue. They report iPod revenue as sales of just their iPods i.e. iPod Touch, iPod Classic, iPod Shuffle, iPod Nano. So even Apple views it differently than you do...

They do this because they understand the advantage of showing the financial community that Apple is more than just an iPod maker - something that you're sooooo intent on making it.

You do realize that this view, that all of Apple's products are just iPods, is a major disservice to a multi-demonsional Apple right? You do see this?

Its better to view the company as a company that makes iPods, iPhones, iPads and Macs. In fact, it would have been even better if Apple broke out iPod Touches into some PDA category. That way it shows they make 5 different products. PDAs, Tables, MP3 Players, iPhones and Computers. Yet, the way you would have it is that Apple makes just two products. iPods and Macs.

Again, this article presents evidence. It doesn't make any subjective arguments. It presents clear indisputable evidence that the iPod as a percentage of Apple's revenue is declining. Draw whatever conclusions you want from that.

But I'm willing to bet you that if you asked a 6th grader what they thought if one of a company's product lines posted more or less consistent revenue but made up an increasingly smaller portion of that company's revenue they would arrive at the only obvious conclusion that the company isn't so dependent on that device. And before you say what you're going to say, I know I get it. iPods are all built into all of Apple's devices.

But guess what, MP3 players are built into almost all other smart phones as well. Are they iPods? No they're phones! just because a car plays music, doesn't mean it should be characterized as a music player. It serves a further more important function - transportation. Just as a phone serves the function of communication.

This article makes a very crucial point that nearly everyone here seems to want to ignore. That is, that Apple can innovate and innovate well. That when faced with an impending slowdown in one of its product lines, it has been able to innovate and create new streams of revenue.

This point is very important because from a stock perspective, issues of whether Apple can continue to innovate and drive further growth at its current market capitalization is already cropping up all over the place. This article is intended to be an answer to those bear cases by saying, "hey look, Apple is able to innovate." They were able to make more than just iPods. Apparently Apple supporters don't want to make this argument and instead would rather say, "Hey look, all we can really make is fancier iPods."
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post #99 of 116
I have yet to read any article that suggests the theorized iPod halo effect is no longer in effect.

1.) Revenue traced to the iPod doesnt end at the cash register. Post-purchase, the iPod serves as a veritable money minting machine for Apple, as the owner regularly buys content from the iTunes Store (for who knows how long a period?).

That's unless the buyer obtains all digital content illegally and spends not one dime on the iTunes Store. Then iPod revenues would end at the store check-out counter.

Apple could do something that would require them to endure heaps of scorn, riots in the streets, the overturning and burning of Steve Jobs Mercedes, until the backlash peters out (hopefully quickly!).

Apple could embed in digital content bought and paid for on the iTunes Store not DRM per se, but some sort of metadata digital receipt, that prevents illegally obtained content from working on an Apple iPod.

(Although iTunes sells a variety of digital content, Ill limit it to music files to simplify matters.)

Besides the riots and looting, Apple would also have to accept that they're surrendering sales to any digital music player competitors (are there any left?) whose players would take all comers: MP3, WAV, AIFF, WMA, Ogg Vorbis, FLAC, and any format under the sun. They can use the Amazon, Napster, Rhapsody stores, etc., and iPod owners could not. Stolen digital content used on competitor devices would be the users secret.

But Apple has already gone DRM-free. If a person buys a song off iTunes, they can give it to all their friends and family for free.

So, does Apples switch to DRM-free songs mean that music files purchased and downloaded from the iTunes Store consist 100% of zeros and ones only used to create the song?

Nope.

In a song purchased on the iTunes Store, besides the data that makes up the song, your email address -- the one you used when you signed up on iTunes -- is embedded in the file.

So share iTunes DRM-free songs with your friends and family all you like, but if you, or any one of them, uploads any to an illegal file-sharing network, those files, with your email address embedded in them, can be traced right back to you, and you could end up in hot water.

Apple would need an actuary (or use two or three and compare their results) to calculate, theoretically, of course, whether Apple would lose money if the iPod/iTunes ecosystem restricted file types accepted by an iPod to those that, although DRM-free, contained a digitally-embedded receipt in them, versus the present situation where the iPod can play (restricting things to songs-only in this discussion) AAC, MP3, AIFF and WAV.

Personally, I would use three or more actuaries to perform their calculated predictions, allowing none of them to communicate with each other, so that each ones calculated risk/reward outcome would be independent and objective.

If the probability was found to be very high that Apple would make MORE money if iPods would only accept files with embedded digital "receipts" (proving that, even if shared, someone paid for it originally), and Apple understood that they would be surrendering or creating a whole market for digital players without such restrictions which could play most any file type without complaining, Apple should try it. I say try because if the actuaries are all wrong, and the new practice backfires, they should be kicked to the curb, and Apple can always reverse its policy like THAT!

2. If Apples iPod margins are slim, and iPod buyers obtain their content in other ways (e.g. illegally), so sales at the iTunes Store to iPod owners drop, the product is still important as a touchpoint.

In recent years, Marketing has been babbling about a newly identified marketing factor termed touchpoints. A touchpoint is any instance when a consumer comes in contact with or is exposed to your brand. Every touchpoint is a reflection on your brand, either negative or positive. It is utterly impossible for a company to identify all touchpoints, and they may be infinite.

But the better practitioners of Marketing go to great lengths to identify as many touchpoints as possible and control all that submit to control. I think its safe to say, the vast majority of touchpoints go unidentified or are identified but deemed beyond a companys control.

Touchpoints can be major or they can seem so insignificant that they are prone to being overlooked.

Apple seems to have identified as many touchpoints as possible and insists on uncompromising quality in everything from ads, to industrial design, to Mac OS X and iOSs clean and consistent look, to product packaging and the unboxing experience, to the look of apple.com and store.apple.com.

A physical Apple Store is a good example of a MAJOR touchpoint. It is also one Apple has strict control over. IMHO, Apple Store sales are less important than Apple Store traffic. Because even people who browse around and play with the products in an Apple Store and leave without buying something have experienced a touchpoint that reflects well on the brand, and is factored into the innumerable components that comprise the perception of a brand in peoples minds.

It would be impossible to track or measure, but Ill bet visitors to Apple Stores (especially the breathtaking flagship stores like the New York Fifth Avenue Store or the Paris store in the Carrousel du Louvre -- where it was recently reported that on iPad launch day, the line was far longer in front of the Apple Store than the line waiting to view the Mona Lisa -- maybe a sad commentary unless youre an Apple cultist like I) who leave the Apple Store without making a purchase, later end up buying an Apple product from Best Buy, Radio Shack, an AT&T store or even Apples online web storefront. The Apple Store's quality and the satisfaction of experiencing its pleasant atmospherics factored in.

A touchpoint can even be as small as a two-sided card Apple stacks in holders at their physical stores containing product literature and specs and such. As insignificant as this particular touchpoint would seem, Apple should, and does, produce these cards or two-fold brochures with the highest quality and cleanest, greatest-possible, nonpareil graphic design. Like any touchpoint, its quality is a reflection on the brand.

If an Apple Store visitor brings home one of these cards or brochures, they may refer to it from time to time, and -- completely beyond Apples control -- may show it to countless others. So, while it may seem trivial, the highest quality should go into creating something as simple as a card or brochure.

If a person who is not particularly bright, finds a card about an Apple product on the floor of a mall, and it has footprints on it and is dirty, wrinkled and mangled, they may pick it up while simultaneously not feel like touching it, and may see this touchpoint, in its present condition, as a poor reflection on the brand.

(A reasonably intelligent person would know that its decrepit condition is incidental and not a negative reflection on the brand. It once looked nice!)

As an example of a possible touchpoint beyond Apples control, if someone has a friend who is a slob as well as a geek, who has almost memorized every episode of the original Star Trek TV series, as well as almost every Monty Python skit, and, when not playing Dungeons & Dragons, or Magic: The Gathering, is chained to his Mac and the Internet, and that someone, who has never owned a Mac, joins his slovenly friend in looking something up on the Internet on his Mac, and his Mac is wearing a coat of dust, the screen is filthy and the once white keyboard is virtually black because the slob never rinses off his hands after reading a newspaper, this COULD be a touchpoint that reflects negatively on the brand, and one which Apple has no control over.

But a reasonably intelligent person would correctly conclude that despite the fact that his friend the slobs Mac is in a disgraceful state, it is not a negative reflection on the brand, but a direct reflection on your friends squalid lifestyle -- HA! His touchpoint!)

Industrial Design is a touchpoint, and a particularly powerful one at that. Definitely a touchpoint, if someone browsing in an Apple Store picks up an iPhone 4 or an iPod nano, it is an experience! Your jaw drops as you see how compact, svelte, aesthetically compelling and thin it is. Then they see the screen and UI. Then they scroll! Then they pinch and unpinch!

I dont own one, but even as a loooooooong-time Mac user, when I played around on a 27 iMac in an independent retail shop that carries Apples line, I was in awe! What a hell of a touchpoint! If a Mac and Mac OS X veteran like I was bowled over by the experience, imagine its impact on an average person!

To complete the loop in this voluminous dissertation, the iPod still has compelling industrial design if nothing else, and it stands as an archetype (touchpoint) of the quality of Apple products in general. (When Im in an Apple Store, I cant take my eyes off the iPod nanos with their vivid metallic colored sheen. I look away, but then my sweet tooth for eye candy has me staring at them again.)

If Apple derives less revenue and profit from the iPod, and iPod owners are all stealing their content, and iTunes Store sales of content to iPod owners declines, a persons iPod is still a touchpoint. Its compactness, thinness and compelling industrial design, and usability reflects well on Apple, and, by extension, all Apple's products.

And an iPod owner isnt the only one who will every see this touchpoint. Countless other people will see it and cant help but be taken by its compelling form factor and aesthetics.

So the iPod will serve as a touchpoint to the owner and countless other people who see it.

(Ive noticed that when someone is wearing headphones and listening to music on a digital music player that is not an iPod, other people dont ask to see it. But as soon as they hear its an iPod, they say, Oh snap! Lemee see that sh*t!)

And that iPod owner, because of his highly positive experience with the iPod product may, someday, who knows when?, buy a Mac, an iPhone or an iPad.

If the iPods representation has shifted a bit as a component of Apple, Inc.s total revenues and profits, it should be taken in context: a lot of products have been released by Apple since October, 2001.

Abstract: Dont discontinue the iPod.

defender



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post #100 of 116
To Defenderjarvis:

I don't think the iPod should discontinued nor do I make any such argument. The halo effect is still very much alive and well. The iPod does benefit Apple in a variety of ways, but its not longer Apple #1 source of revenue which happens to be the topic of this article.
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post #101 of 116
Quote:
Originally Posted by antkm1 View Post

yeah, and he'd have to charge the thing every 4 hours if she used it heavily. I honestly tried to use my iPHone as the All-in-One device it's supposed to be. But the user-interface in the car sucks a big one. The battery life is abysmal at best (especially if you're traveling by plane or someplace you can't charge it easily). Just not a practical music device. Heck, i even download TV shows and transfer movies to my ipod classic if i'm on a plane just because the battery on that is so much better. There is an occasion i'll listen to NPR on their App or download a podcast when i've left my ipod in the car, but the iPhone/Touch just doesn't work for music.

4 hours... try turning down the brightness... the only time you would need it more then 30-40% is if it was VERY dark and u needed a light or if there was bad glare... this is what i do not get... people complain about how it gets no battery life, i check brightness settings and its maxed out...

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i have processing issues, mostly trying to get my ideas into speech and text.

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post #102 of 116
Quote:
Originally Posted by andyzaky View Post

To Defenderjarvis:

I don't think the iPod should discontinued nor do I make any such argument. The halo effect is still very much alive and well. The iPod does benefit Apple in a variety of ways, but its not longer Apple #1 source of revenue which happens to be the topic of this article.

Andy,

You took it personally. My post was in no way directed at you. And I drew nothing from your article suggesting an opinion that Apple has cause to discontinue the iPod.

If anything, my post was directed at Apple, should I be lucky enough that a key Apple employee should happen to read it.

If I wrote, Dont discontinue the iPod, theres no Andy in there anywhere.

In a too-long post (post #85) I offered an IMHO view of why iPod sales are flat. iPods sell like mad, but because of intense pressure from Wall Street, flat doesnt cut it.

The Street unrealistically expects a company to report uninterrupted quarterly growth over the corresponding quarter of the previous year to infinity and beyond.

If your company is in perfect health, but you post a 1% decline in quarterly revenues/profits compared to the same quarter last year, The Street grossly overreacts and jumps to extreme conclusions like, the company is in decline, or, the company is feeling the heat from the competition and this suggests the start of a trend that will continue.

Then your companys stock price quickly plummets by 25% or more. You get crucified!

So the iPods numbers are absolutely great, but The Street makes unrealistic demands that all of your product segments continuously grow, grow, grow.

By appearances, it would seem that Apple looks for new iPod buyers only in existing iPod owners. So they revamp the models to a high degree -- enough that existing iPod owners really want the new model. A slight features upgrade would not be motivating enough for existing iPod owners.

That continuum has led us to the current state of the nano -- a highly convergent product that now defies categorization. As I wrote in post #85, iPod used to have a distinct meaning. Now, I dont know what an iPod is. Is it a PIM? Is it a digital photo album? Is it a video camera? Is it a movie and video playback device? Is it a handheld game machine?

A product that stands for everything stands for nothing.

The assumption Apple seems to have made in only seeking new iPod buyers from existing iPod owners is that they have saturated the market. Everyone who would ever buy an iPod has one, and our only option is to constantly offer new models with features compelling enough that iPod owners in our saturated market want the new model.

I dont think the market for iPod buyers is saturated. Theres a whole globe out there. And I havent seen a silhouette ad in years. Apple stopped advertising the iPod or even iTunes.

Probably two-and-a-half decades ago, Xerox believed they had saturated the market, and that every potential person or organization that would buy a Xerox copier had one. They found themselves with piles of cash on hand and didnt know what to do. Xerox was SO successful that it resulted in failure.

Before the term photocopier had been invented, copiers were called Xerox machines, and Xerox became a verb. Could you Xerox four copies of this for me?

This is a rare marketing phenomenon when no one has a more convenient word to describe a product so they use the brand name generically: Kleenex (I dont think Ive ever uttered the words facial tissue, and if I did, the other person probably said, Huh?, and I said, A Kleenex!), Q-tips, Jell-O, Band-Aids, Frisbees, ChapStick, Popsicle, Saran Wrap, Post-Its, Rollerblades, Vaseline, Scotch Tape, White-Out, etc.

I remember reading that when someone bought from a Xerox competitor (call the company Repro) one of their offerings that would much later be known as photocopiers, people would actually say, I just bought a new Xerox machine by Repro.

The meaning of Xerox was so confining that attempts to grow revenues/profits (like I said, that The Street demands) by expanding into such areas as electronic typewriters, computer mainframes, desktops, printers, laser printers, fax machines, etc. there were no takers. No one seemed to want a computer from a photocopier maker.

Thankfully, Xerox poured some of that pile of cash on hand into the Xerox Palo Alto Research Center or Xerox PARC. Legendary!

Where would we be in computers today without Xerox PARC?

Xerox could have succeeded in any market they chose if only they were willing to take the Procter & Gamble approach. Just create a new brand name for whatever product in whatever field and never mention that Xerox is behind it. Simple.

IBM failed in computer printers until they stopped using the IBM brand name and sold them under the Lexmark brand name, after which sales took off. (Then IBM foolishly sold the Lexmark division.)

But I dont think every potential iPod buyer already has one. The market is not saturated. Apples target market should not be just existing iPod owners. They arent where Xerox found themselves. Theres a whole globe out there.

IMHO, in an example of Less is more, Apple should try an iPod model between the shuffle and the nano, that is strictly a digital music playback and storage device.

THAT product would stand for something. THAT would be a product people would understand and could easily categorize in their minds.

I suggest Apple at least try, and see how it works.

defender



.
post #103 of 116
Quote:
Originally Posted by cnocbui View Post

Well said, you and Zc456.

Another thing is that if you have not bought into the iPhone/iPad ecosystems, or are in any way critical of any aspect of them, you are labeled a troll or Apple hater, even if you have a house full of other Apple products and have had for the last two decades. The iPhone has become a religion on here. They jokingly referred to it as the Jesus phone when it first launched but in all seriousness, that tongue in cheek phrase was so close to the mark it is no longer amusing. The only question in my mind is, is the church of iOS a cult or a religion?

someone's sig said something like : iOS is the way of the future, it is the new platform, OSX is just a platform for upgrading iOS.

unless Apple has somthing coming out thats big in its iMacs or Mac Pros, i think they will fall behind in this (more in workstations (i.e. Mac Pros))

i have to admit that sig is one of the funnier ones i have seen

whoever's it is please keep it (also i would like a copy XD)

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post #104 of 116
I have successfully been patient enough to skip over buying an iPod. Once the iPhone came out it was clear that the iPod was soon to be superfluous, and the iPad confirmed it. The thing that strikes me is that Apple always comes out with too many versions of the same thing - it's confusing to consumers.

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post #105 of 116
Quote:
Originally Posted by 8CoreWhore View Post

A friend asked me if he should get a iPod nano. I told him spend a tiny bit more and get an iPhone 4.

A tiny bit more? How is +$60 a month for the next two years, "a tiny bit more"?
post #106 of 116
Quote:
Originally Posted by EricIndiana View Post

I have successfully been patient enough to skip over buying an iPod. Once the iPhone came out it was clear that the iPod was soon to be superfluous, and the iPad confirmed it. The thing that strikes me is that Apple always comes out with too many versions of the same thing - it's confusing to consumers.

http://www.daisybrain.wordpress.com

Word! You said it!

Confusing customers with your product offerings is one of the worst things a company can do.

WARNING! WARNING! Deplorable digression imminent! Lock phasers:

Ironically, when Apple CEO Gilbert Amelio bought NeXT for $430 million, and brought Steve Jobs on as Advisor to the CEO, Amelio (who, in addition to paying $430 million for NeXT, gave Jobs a generous 1.5 million shares of Apple stock as compensation for his part-time advisory role at Apple), Jobs systematically plotted to undermine Amelio by bad-mouthing him behind his back, lobbying the Board of Directors to fire Amelio, and secretly selling his 1.5 million shares of Apple stock, which made news, to damage the company and further undermine Amelio (Amelio asked Jobs directly if it was him, and Jobs lied until pressed by Amelio into sheepishly admitting it was he who sold 1.5 million shares in one transaction) until the Board fired him, and then Jobs "reluctantly" (LOL) agreed to serve as "interim CEO," then feigned that he wanted no part of being Apple's permanent CEO, then perpetrated a ruse by setting up a straw-man committee to ostensibly search for a suitable CEO (and rejected every candidate the committee came up with -- wonder why?), then after much time, pretended to relent and reluctantly say, "OK. OK. <sigh> I will agree to be CEO. Consarnit!", one of Amelios approaches as CEO was to pare down the number of different Mac models, some of which had only slightly different specs. This lack of clear definition between Mac models and their overlap, had hurt Apple by confusing potential buyers so much that they didnt buy at all.

After his successful Shakespearean coup, Jobs continued Amelios approach and pared down the line even more.

The industrial design for the iMac had been done by Jonathan Ive prior to Jobs return to Apple, and the guts of the iMac were almost complete in Apples MacNC project for a Mac model customized for Internet use -- again -- before Jobs return.

I love Steve, but it is hard to argue against the apparent evidence that he is as evil as he is good.

I mean how do you reconcile his pronouncements that his aim with the technology products he grants from on high (e.g. "The computer for the rest of us.") is an altruistic desire to serve and empower mankind, with the fact that one-on-one he treats people like sh*t?

A quote from an article I read (but unfortunately cannot cite following a browser crash) reads:

"But like many revolutionaries, Mr. Jobs appears to be one who loves the world and loathes people. He has been known to bring misery to people's lives, and not just book authors. His capacity for cruelty runs the gamut from verbal lashings of his own customers to rumored summary dismissals for the sin of having brought him the wrong brand of bottled water."

Individuals he accosts, berates, curses at, dresses-down, humiliates, insults, fires, but mankind he benevolently serves.

The two don't add up!

Par example, before his ouster, Steve Jobs berated one employee so viscously that the man physically attacked Jobs until a couple of employees pulled him off Steve.

Then the man left Apple, went nuts, and was arrested after several window panes of Jobs mansion were shattered by rocks, and when police arrived, the mad man was found sitting on the curb across from Jobs mansion with a brown paper bag full of rocks.

Gilbert Amelio is a "brain," but even "brains" are stupid in some areas. Before he was appointed CEO, Amelio served on Apple's Board of Directors. Only a couple of years before Amelio was appointed Apple CEO, Steve Jobs contacted then Board member Amelio, and invited him to dinner at Steve's home.

When Steve Jobs wants to have a serious, consequential conversation with someone, he always says, "Let's go for a walk."

Well on their walk, Jobs urged Apple Board member Amelio to convince the rest of the Board to hire him (Steve) as CEO -- clearly indicating his interest in being CEO of Apple.

Then after becoming CEO, Amelio hires Jobs as a consultant and believes Steve when he insists he has no designs on being Apple CEO? I mean, Duh! Forgot all about "The Walk," did you Gil?

Also, Jobs has always resented Stephen Wozniak, probably for Wozs prominent role in computer history that prevents the spotlight from being solely on Jobs.

After his coup détat, Jobs contacted Wozniak, who, though he officially left the company some 30 years ago, had the status of an Apple employee and received a paycheck even though he did nothing at the company (until he advised CEO Gilbert Amelio), and Jobs said to Woz, Your services are no longer needed here.

Now I dont know if Woz remains an Apple employee who collects a paycheck, or if Jobs actually severed his ties to the company, including Wozs status as an employee of Apple.

When Woz wrote an autobiography, he asked Steve Jobs if he would write the forward. Jobs refused.

Jobs has been screwing over Woz ever since before Apple when Steve Jobs was an employee at Atari and tasked with creating the Breakout game.

Lacking engineering and programming skills, Jobs knew he couldnt do it (but didnt want Atari to know of his ineptitude).

So he asked Woz to design the Atari Breakout game Jobs was assigned to create, on the promise that he would split what he was paid 50/50 with Woz.

Woz secretly spent five days creating Breakout. As far as Atari knew, Jobs had done it, and was sure to take full credit, of course.

Jobs lied and told Woz he was paid $700, so he gave Woz $350. It was later learned that Atari paid Jobs $7,000, not $700. Word eventually reached Woz, and he was hurt.

When asked about it, the soft-hearted Woz says it was a long time ago and he has forgiven Jobs. Wozs mistake was treating it like an isolated incident instead of a harbinger.

Jobs and Woz were friends right up until the second that he didnt need Woz anymore, and then their friendship ended. Woz has said that at Apple, the two never met or spoke to each other. To Jobs, Woz was like a candy bar wrapper to be discarded when the contents are consumed.

The soft-hearted Woz is ever-forgiving of Jobs, even as Jobs continues to screw him over to this day.

Right after Apple's IPO, Woz was giving away thousands of shares to friends, family and some Apple employees.

Woz has continuously been donating money to philanthropic organizations ever since he became wealthy. Years ago, an article estimated Woz's net worth at $49 million. In a 2010 article, it said because of investments in anything from stock to the startup Oxygen TV network (which NBC bought for $925 million), his net worth is now above $100 million.

Coming full circle, Amelio and Jobs took the same approach in discontinuing Mac models and providing more delineation between models.

So it is puzzling that Jobs has allowed the distinctive iPod to become the current nano.

Consumers used to know what an iPod was, but with the present nano, it's now a foggy mismash of a product.

If a consumer can't answer a question as to what a product is, without expressing just one thought, the product is obviously unfocused.

The nano is a "this and a that and that and another thing."

If Apple can reclaim the iPod's singular definition, they can increase sales.

Given the size of our planet, I don't think the iPod market is saturated.

Apple just needs to remind itself what made the iPod a success in the first place, and restore the product's original tight focus. Return to basics.

defender



P.S. Despite all the criticism, Steve Jobs is actually one of my personal heroes, and his role in the success of Apple cannot be diminished. I mean, it's now the 2nd largest company in the world by market cap! I am just forever trying to figure out a very complex person and an obvious genius.

BTW, Dell is #126 in market cap. I think Dell should close down and give the money back to the shareholders.

.

.
post #107 of 116
Quote:
Originally Posted by defenderjarvis View Post

Andy,

In a too-long post (post #85) I offered an IMHO view of why iPod sales are flat. iPods sell like mad, but because of intense pressure from Wall Street, flat doesnt cut it.

The Street unrealistically expects a company to report uninterrupted quarterly growth over the corresponding quarter of the previous year to infinity and beyond.

If your company is in perfect health, but you post a 1% decline in quarterly revenues/profits compared to the same quarter last year, The Street grossly overreacts and jumps to extreme conclusions like, the company is in decline, or, the company is feeling the heat from the competition and this suggests the start of a trend that will continue.

Then your companys stock price quickly plummets by 25% or more. You get crucified!

So the iPods numbers are absolutely great, but The Street makes unrealistic demands that all of your product segments continuously grow, grow, grow.

I would be very careful here. I know quite a lot about the market's viewpoint on growth and particularly on Apple's growth. I've been trading and analyzing Apple for ages, and have consistently outperformed the street in my earnings estimates published at Fortune by Philip Elmer-Dewitt. I also called the top of this market (also published on Fortune on April 26th), and called the bottom of Apple strongly urging that Apple was a strong buy at in November of 2009 at $80. Only the second time I've ever publicly announced that Apple was the buy of the century. The other time was in July 2006 when Apple was trading at $54 before they reported Q3 earnings.

Here's what I would say about the street's view of growth. Wall Street doesn't expect that Apple should be able to show any growth at all in the iPod. In fact, analysts and money managers are perfectly content with slightly positive to slightly negative revenue growth for the iPod. Look at the last few quarters for example. iPod sales were basically slightly up to slightly down for the past few quarter. Yet, did you see anyone on Wall Street make a stink about it? Not really.

And this is precisely because Apple is able to demonstrate other avenues for growth. The whole point of my article. As long as a company can show that product X no longer has that great of an impact and that they have other products that are driving tremendous growth, they don't give a shit about product X. Take from this what you will, but I know exactly what I'm talking about here.
Andy M. Zaky
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post #108 of 116
In general, I agree with Andy. If iPod revenues were subtracted from Apple's bottom line, the impact would be fairly significant, but that's not going to happen. However growth in revenue from this product line has become essentially irrelevant to Apple's earnings growth picture due largely to the iPhone and secondarily to the iPad. The caveat I'd add is that Apple is faced with the feat of pulling successively larger rabbits out of their hat on a regular basis (every year or so) or risk earnings growth flattening out. That could be disastrous for AAPL shareholders. So for investors, I think it is well worth considering what might be coming next to drive earnings. All we know is that it has to be about as big as the iPhone or the iPad if AAPL is going to continue to perform as in the recent past.
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post #109 of 116
Quote:
The iPod era of being Apple's main revenue driver is over. The end. I can't explain this in any simpler terms.

One problem is that you didn't show that the iPod was EVER a main driver of Apple's revenue.

And this overall discussion is pointless. Yes of course the iPod share has diminished since it has morphed into the iPhone and iPad. Ok, but so what? iPod was iPhone version 0.5 now we're on iPhone version 4. So, what's you're point? The platform has evolved, and its influence has increased.

BTW MacOS 9's influence has been waning recently too. Maybe covering that would get you some similar headlines. :-)
post #110 of 116
Quote:
Originally Posted by andyzaky View Post

I would be very careful here. I know quite a lot about the market's viewpoint on growth and particularly on Apple's growth. I've been trading and analyzing Apple for ages, and have consistently outperformed the street in my earnings estimates published at Fortune by Philip Elmer-Dewitt. I also called the top of this market (also published on Fortune on April 26th), and called the bottom of Apple strongly urging that Apple was a strong buy at in November of 2009 at $80. Only the second time I've ever publicly announced that Apple was the buy of the century. The other time was in July 2006 when Apple was trading at $54 before they reported Q3 earnings.

Here's what I would say about the street's view of growth. Wall Street doesn't expect that Apple should be able to show any growth at all in the iPod. In fact, analysts and money managers are perfectly content with slightly positive to slightly negative revenue growth for the iPod. Look at the last few quarters for example. iPod sales were basically slightly up to slightly down for the past few quarter. Yet, did you see anyone on Wall Street make a stink about it? Not really.

And this is precisely because Apple is able to demonstrate other avenues for growth. The whole point of my article. As long as a company can show that product X no longer has that great of an impact and that they have other products that are driving tremendous growth, they don't give a shit about product X. Take from this what you will, but I know exactly what I'm talking about here.

Quote:
Originally Posted by andyzaky View Post

I would be very careful here. I know quite a lot about the market's viewpoint on growth and particularly on Apple's growth. I've been trading and analyzing Apple for ages, and have consistently outperformed the street in my earnings estimates published at Fortune by Philip Elmer-Dewitt. I also called the top of this market (also published on Fortune on April 26th), and called the bottom of Apple strongly urging that Apple was a strong buy at in November of 2009 at $80. Only the second time I've ever publicly announced that Apple was the buy of the century. The other time was in July 2006 when Apple was trading at $54 before they reported Q3 earnings.

Here's what I would say about the street's view of growth. Wall Street doesn't expect that Apple should be able to show any growth at all in the iPod. In fact, analysts and money managers are perfectly content with slightly positive to slightly negative revenue growth for the iPod. Look at the last few quarters for example. iPod sales were basically slightly up to slightly down for the past few quarter. Yet, did you see anyone on Wall Street make a stink about it? Not really.

And this is precisely because Apple is able to demonstrate other avenues for growth. The whole point of my article. As long as a company can show that product X no longer has that great of an impact and that they have other products that are driving tremendous growth, they don't give a shit about product X. Take from this what you will, but I know exactly what I'm talking about here.

Andy,

I had begun a reply to your post back on July 5th or 6th. My Safari was in the throes of a very bad flu and would crash many times an hour when you I something as simple as scroll too fast or type too fast.

In the middle of a lengthy post in the AppleInsider forums, Safari would crash, and all was lost.

Id relaunch Safari, call back the page from history, and the typing field I had spent so much time writing in was as blank as a piece of copier paper straight from the ream.

(Curiously, Mozilla-based browsers that crashed, would allow me to call back the page from history, and the writing field was still filled up to the last keystroke I had made before the crash! Huh!)

So, I decided to start using TextEdit to write my posts, and then cut-and-paste them into the reply field in the AppleInsider forums, apply any typographical embellishments, smilies, etc. and then hit Submit.

I got distracted by a shiny object and never completed my post to you, but decided to rekindle some of the points I made way back them that I probably did not to a very good job of conveying.

So youll know this about me, I am not 100% Wall Street illiterate, though my knowledge, expertise, experience, and above all, perspective, cannot hold a candle to yours, (investing is one area where perspective ranks uncommonly high in importance).

I was a day-trader in the mid-nineties when the dot-com bubble was still liquid soap, and I really raked it in for a while. (Remember? During that period when it was hard to make a mistake? It required effort?) Truthfully, though, I cannot honestly lay claim to any conscious timing skills (though Id like to). It was all basically fortuitous; I got in at the right moment out of sheer luck, and I got out at a pretty good time through sheer luck, as well.

I was advised by all the books Id read to stay clear of IPOs, but wanted to get in on YHOOs. YHOO offered its IPO shares at a price of $13. But the first share traded upon the opening bell that day cost $23.50. I watched it chart upward all morning and early afternoon, and then decided to throw caution to the wind, and I bought a chunk at somewhere near $41 (in one of my very few market orders).

Then I watched for the rest of the day as the stock plummeted from an intraday high of $43 to a close of $33. I felt like a dunce, but held onto the shares anyway. It had four or so 2-for-1 splits, and, I think, one 3-for-2, but (on a non split-adjusted basis, which makes my numbers look bigger! ) I entered a sell order price of $400. It reached $400, the sell order executed, and I was rolling in dough (relatively -- most likely smalltime by your standards. Also, it was largely on paper.). Then I watched as, after I had sold it, it hit a high of $500.13 (on a non split-adjusted basis). Given my nature, I was all consumed by the additional profits I missed, instead of the huge gains I had made. It was all indefensible emotion and greed. (Now if Id only shorted YHOO at $400....)

I held other issues, e.g. Ciscso, Akamai, and made some coin -- plus some under-$10 issues. I did get on the amusement ride at the right time with AMZN, but completely missed out on EBAY, as I held the incorrect belief that the business model was unsustainable long-term, and that barriers-to-entry were too low for potential competitors to ravage the company.

I also missed out entirely on GOOG. Oh, well.

Dont worry, I had some impressive losses to my credit, and they were usually victims of my emotions. I had read so many books, that I could recite all the trading rules by heart, but observing them is a whole other story. Were not all Mr. Spocks.

One book gave a piece of valuable advice that I think played an important role in my general success. The book essentially said, unlike the age-old caution given to companies to concentrate on their winners and not their losers, or not allow their priorities to succumb to the squeaky wheel gets the grease losing practice, in trading, I was told, the opposite is true.

At all costs, guard your capital with the fierceness of a junkyard dog.

In trading, the squeaky wheel should get the grease, or rather, the majority of your attention and concern should be on minimizing (yet accepting) losses, and preserving precious capital. This requires a closer watch on losing picks than on winning ones.

Keep all eyes on your losers, and cut and run early. Minimize the loss and choke it down. Let your winners run and they'll take care of themselves; you tend to the losers. Preservation of investing capital is paramount.

Ive gone on too long, but, to finish up, I am no longer a trader but a buy-and-hold investor. I scooped up some shares of AAPL in the Fall of 2006 at around $76 (not the best entry point, but Ill take it) and still have them. I also picked up a little bit of Citigroup at $3.50, because I intend to hang onto it and basically forget about it for a long time. (I also hold a little YUM and COST.)

This loooooooooooong description is to let you know that I am not a complete Wall Street dummy -- maybe 99% a dummy, but not 100%.

(I also hold the unwavering, extreme position -- that I have yet to find one person who agrees with -- that NO public company should EVER offer a dividend. Sure, shareholders love their cash dividend checks that come regularly in the mail or their DRIPs, but I believe 100% that if a company instead took any net profits it made in a financial reporting period and reinvested them in the company, in R&D, marketing, human talent, plant & equipment, manufacturing capacity, more modern and efficient equipment, used them to acquire a small, innovative and compatible company, with talent and IP that fortifies their core competency -- or in a poor economic climate, temporarily parked earnings in conservative investments in real estate, debt or equity instruments, that shareholders would ultimately make more money on profits from appreciation in the price of the stock issue itself than they would in dividends. Unfortunately, this is unprovable.)

I decided to resurrect the post I started on July 5th or 6th, because of whats now most commonly known as Antennagate.

The point that you missed in your reply to my post (which is my fault for not making clear), is that the iPod is more than just a part of Apples current product lineup. The iPod is not a number or a percentage. Long ago, it took on qualities -- though intangible -- are no less important than a revenue/profit share percentage, or a unit or profit growth figure.

Analysts -- especially those who participate in Apples earnings conference calls -- are paragons of emotions role in the workings of Wall Street.

Analysts at major brokerage firms, who are supposed to be more fundamentally-oriented and data-focused, are actually sometimes even more emotional than traders in the pit at the Chicago Merc!

Though they may be delivered in a sober and dispassionate manner, the questions themselves are too often reflective of the overblown, sensationalized stories swarming the media.

Obviously, a number of milestone, outrageously successful product form the base of the pedestal on which Apple now stands. If analysts can remember that far back, Apple owed most of its early recovery to the iMac, and soon the iMac became an icon for Apples storybook comeback.

Then Apple took the planet by storm with the iPod.

A subsequent steady increase in sales of the Mac were theorized to be the result of a halo effect the iPod had, which conferred certain positive attributes on the Mac and Apple -- an innovator, a company uniquely focused on the future, a technology pioneer, a leader whos followed by its competitors in the industry, and lets not forget, the company that made such a compact, gorgeous, simple little pocket device that some say, along with iTunes and the iTunes Store, drastically overhauled the entire music industry as we had always known it.

My point is about the total picture: the vast context in which the iPod is viewed. Writers have declared the iPod now an official part of Americana. They have declared it a cultural icon, even a cultural phenomenon. The iPod has been called trendy. Like clothing, this gadget, the iPod, has "fashion." Its been said that the iPod has chic and status, and if you owned a competitors digital music player, you werent on the cutting edge of style. There was the iPod, and then a marketplace filled with non-iPods, and people wanted iPods.

So back on the 5th or 6th, when I started this, I wanted to suggest that people listen to the questions asked by analysts during the upcoming Q3 earnings conference call, and make note of the reactions after an Apple official gives a very direct and comprehensive explanation in answer to the question about the iPod. Then in a manner concealing all emotion, another analyst will basically ask the same question, rephrased. In what one would think would be a complete and satisfactory answer, the Apple representative will respond in a measured, systematic way. Then yet another iPod question will come with but a slight difference. I would not be surprised if an analysts -- the self-promoter, Joe Battipaglia-type, hoping to see his name in ink the next day -- will ask a deliberately dramatic questions like, Isnt the iPod the linchpin holding the whole company together? Isnt it central to the digital content ecosystem that Apple derives so much revenue from? If you pull out this linchpin, will the company fall like a house of cards?

People will groan at the totally out-of-place melodrama, but watch that analyst be the one quoted the next day in a media hungry for sensationalism. (Which sells traditional media, and helps their financial picture, so they can cheat death for another day.)

NOW, HOWEVER, we can ALL forget about the iPod in the Q3 call. Itll be antenna, antenna, antenna. A detailed, specific, comprehensive answer will be provided in response to an antenna question, and the next question will be another antenna question. Theyll come in almost interminable waves, and wordings will differ, but the same redundant antenna questions will be asked.

If, in response the questions about criticisms or controversies, one's answer is an attempt to de-escalate the fervor surrounding these criticisms and controversies, analysts will smell blood in that water, consider the question unanswered, or answered evasively and then the feeding frenzy will ensue.

During the 1992 Democratic Primary, in which Governor Bill Clinton and a lot of other Democratic hopefuls ran, all were asked if theyd ever smoked marijuana. The candidates that gave an open, honest admissions to having smoked it, totally eliminated it as an issue. Reporters were left (for once) speechless, with no followup questions. They wandered away from the candidate like zombies, not knowing where to go, what to do.

Only one Democratic Primary candidate gave an evasive, dodgy, crafty, almost comical and some say intellectually insulting response to the same question that amounted to an admixture of admission and denial. Simultaneously, I did and I didnt.

The first example is how to disarm throngs of badgering reporters with some directness, pure honesty, genuineness and openness. Youve revealed all! Theyve got nothin, and they leave you alone after that. (Plus, the story quickly goes away.)

The second example is how to respond to a question in a way that sets reporters hair on fire and triggers a media feeding frenzy, and the issue and the evasive, non-answer greatly elongate what might have been an almost unnoticeably brief news cycle.

Because the question hasnt been answered, it does not stop being asked.

(BTW, David Lettermans handling of his recent scandal took the best possible approach; Tiger Woods treatment of his matter did not.)

Ill be paying close attention to the degree of openness and complete revelation on the part of Apples participants in the call, and how their answers affect the issue and subsequent questions. Does it ease the issue to any degree, or only elevate the issue more than before.

Itll be interesting.

Apple execs in on the conference call can do one of two things:

In answer to a question about the iPhone 4 "Antennagate" affair, an Apple representative can give and indirect, abstruse, oblique, evasive, disingenuous, artful, crafty response, in which it is obvious to anyone listening that key information is being omitted and central facts are being withheld, and that Apple representative will touch off a media firestorm. An issue about a product defect is then transformed into a Nixonian coverup and a scandal with intrigue and many angles.

Or, in answer to a question about the iPhone 4 "Antennagate" affair, an Apple representative can be as straight, direct, open, honest, revelatory, complete and transparent as possible, disarm the pointed questioners, help diffuse the issue, and make enormous strides toward steadily reducing the story's prominence in the media, once there is little to write about since the many questions have been answered with directness, and the uncertainly and suspicions of a coverup no longer have any basis.

But, importantly, no amount lower than 100% openness, forthrightness and a willingness to entertain any question will suffice.

We'll see tomorrow how Apple makes its own bed.

Let's hope they take the approach that works, an not an approach that produces an apparition of the ghost of Richrd Nixon.

defender


.
post #111 of 116
Tell me what are you gonna buy your kids? Sony Player? iTouch is dead, not the whole iPod line...

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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post #112 of 116
Umm...
We'll see in September how it all is gonna shape... Yet, the design of the recent iPhone, tethered so tightly to radio, suggests iTouch may now be living its last year. Just until the 3G casing is discontinued...

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

Reply

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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post #113 of 116
Quote:
Originally Posted by ivan.rnn01 View Post

Umm...
We'll see in September how it all is gonna shape... Yet, the design of the recent iPhone, tethered so tightly to radio, suggests iTouch may now be living its last year. Just until the 3G casing is discontinued...

That's a very interesting point - would an iPod Touch keep the SS perimeter? It wouldn't need it per sé but would it be an issue if it was retained as a cosmetic family tie? Probably not. The only question would perhaps be "Will it be advantageous to have a visual difference between the two?"

I don't know the answer but would guess that they could happily co-exist looking for the most part to be indistinguishable from each other, much like the 3G/3Gs and current Touch.

My honest expectation is that the Touch will continue to be sold alongside the iP4, filling the niche it currently does. I think Apple will be leery of adding too much iPhonesque functionality to it though, given the possibility of its cannibalising iP4 sales.

But as you say, we'll see.
post #114 of 116
Quote:
Originally Posted by Chopper View Post

That's a very interesting point - would an iPod Touch keep the SS perimeter? It wouldn't need it per sé but would it be an issue if it was retained as a cosmetic family tie? Probably not. The only question would perhaps be "Will it be advantageous to have a visual difference between the two?"

I don't know the answer but would guess that they could happily co-exist looking for the most part to be indistinguishable from each other, much like the 3G/3Gs and current Touch.

My honest expectation is that the Touch will continue to be sold alongside the iP4, filling the niche it currently does. I think Apple will be leery of adding too much iPhonesque functionality to it though, given the possibility of its cannibalising iP4 sales.

But as you say, we'll see.

And I can not in all honesty believe in too much glorious future of iTouch.

iPad 2 with truly terrifying set of sophisticated features will hopefully be here in some months to finally compel both normal people and technology enthusiasts. Customers say they want this toy.

If they follow their usual product update cycle, the 3GS, and thus 3G casing, will be discontinued in 2011. And for reason: the casing --- while being quite slick one --- becomes simply and plainly outdated.

Theoretically, they can replace UMTS antenna of the 4 with some sort of plastic bezel for iTouch. The problem is the board design, relaying on compact size of radio chipset, does not look much allowing for easy replacement of that with NAND memory modules...

iPod is not sales determinant for Apple anymore. For the better or for the worse, we're not in 2006. Whence incertitude on whether they would invest in supporting the unpopular product, which requires unique manufacturing process.

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

Reply

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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post #115 of 116
Quote:
Originally Posted by Jerseymac View Post

Hope they keep the classic. Love the storage capacity.

I wish they would merge the two and make a thick Touch with a hard drive...

We both may be disappointed, if the rumors are true and Apple starts pushing the cloud/streaming model (which honestly doesn't make sense to me with all the bandwidth data caps being proposed)...
post #116 of 116
Quote:
Originally Posted by shawnb View Post

I wish they would merge the two and make a thick Touch with a hard drive...

The design flaw like that will blow everyone out of the water much more than their iP4 antenna solution does. Palm's proven a decade ago it's absolutely impractical to have a HD in a handset.

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

Reply

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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