Report: iPod shipments tracking for first yearly decline

Posted:
in iPod + iTunes + AppleTV edited January 2014
Shipments of Apple's iPod digital music players could see their first yearly decline come the end of the company's March quarter, investment bank Piper Jaffray said Monday.



In a research note to clients, analyst Gene Munster said he's analyzed the first month (January) of NPD market research data for the three-month period ending March and found it to suggest total iPod unit shipments of between 9.5 million and 10.3 million units for the quarter.



Should Apple manage to hit the midpoint of that 9.5 to 10.3 million estimate, shipments would have still declined by approximately 6 percent from the same period last year when the company shipped 10.54 million units -- marking the first time iPod shipments have fallen on a yearly basis since Apple began providing sales figures for the digital media player line back in the fourth quarter of 2003.



Munster's findings also come in shy of Wall Street's current consensus estimates, which have the Cupertino-based electronics maker shipping approximately 10.8 million iPods during the quarter, representing 2 percent yearly growth.



Still, Munster viewed his findings as "a slight positive" given all the recent Street chatter of extremely weak iPod numbers for the quarter and the potential for the recently announced iPod shuffle price cut to fuel higher than expected shipments during the months of February and March.



"The 9.5 million -10.3 million unit approximation is based on various assumptions and is an extrapolation of one month of data," he explained. "When the second month of data is released, our analysis will likely lead to a slightly different iPod unit figure than what our analysis suggests based on the first month of data, so we believe investors should supplement this data point with other information."



Declining growth of the standalone MP3 player market, as well as Apple's overall iPod business, has been a cause of concern for investors following the company's December quarter results, which had sales of the players come in relatively flat in the US for the first time in recent history.



While some have feared the declines are indicative of an iPod business that has reached its saturation point, Apple executives have discounted that notion, noting that iPod revenues grew 17 percent year-over-year during the December quarter, a figure they maintain is "uncharacteristic of a saturated market."



Moving forward, the company said it hopes to evolve the iPod beyond an advanced music player and into the first "mainstream Wi-Fi mobile platform" capable of running "all kinds of mobile applications." This strategy would indicate a focus on selling quality and functionality at a higher price, rather than quantity and less functionality at the absolute lowest price. As such, Apple has suggested that the best way to measure the overall growth and performance of the segment is no longer by unit metrics, but rather by revenues.
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Comments

  • Reply 1 of 41
    Is it silly of me to think that iPhone sales really should be considered when they assess whether the PMP business of Apple has begun experiencing negative growth, even if it should not be included in total and average iPod revenue?



    /Adrian
  • Reply 2 of 41
    Y'know, it's not exactly like Apple has put itself in the position of having just a few hit consumer products. AAPL is feeling the pinch, though for the current perception is that all business is just iPhone and iPod business. Am i rambling?
  • Reply 3 of 41
    Quote:
    Originally Posted by SpamSandwich View Post


    Y'know, it's not exactly like Apple has put itself in the position of having just a few hit consumer products. AAPL is feeling the pinch, though for the current perception is that all business is just iPhone and iPod business. Am i rambling?



    I do not think so. Was Mac revenues not up more than iPod revenues this last year anyway?



    /Adrian
  • Reply 4 of 41
    Quote:
    Originally Posted by Zandros View Post


    I do not think so. Was Mac revenues not up more than iPod revenues this last year anyway?



    /Adrian



    iGene is fawning again.

    Face it fanboy it's the Zune cannibalizing iPod sales.

    appl was planning to hold off 32gb iTouch, Shuffle till Sept but were compelled to do this quarter to boost lagging sales.
  • Reply 5 of 41
    Quote:
    Originally Posted by GrandmasterGar3th View Post


    iGene is fawning again.

    Face it fanboy it's the Zune cannibalizing iPod sales.

    appl was planning to hold off 32gb iTouch, Shuffle till Sept but were compelled to do this quarter to boost lagging sales.



    Show us some numbers showing that it is the Zune cannibalizing iPod sales. Perhaps it is other competitors as a whole doing damage to iPod growth, but I haven't heard anything that would indicate the Zune is the cause for the possible iPod slow-down. I don't really research the Zune, so if someone has some numbers or links please post them.



    But Zandros was right, iPods may be a high volume seller for Apple, but Macs are the meat of their business. They have much higher margins on Macs, IIRC. I'm not upset with Apple that they might be having a slow-down in iPod sales because the iPod numbers for the past few years have been phenomenal. It has to end sometime.



    Also, is the 'fanboy' comment really necessary? He was just stating a fact, so I don't believe it is necessary to start name calling. Let's start acting like grownups now, thanks.
  • Reply 6 of 41
    nasseraenasserae Posts: 3,158member
    Quote:
    Originally Posted by GrandmasterGar3th View Post


    iGene is fawning again.

    Face it fanboy it's the Zune cannibalizing iPod sales.

    appl was planning to hold off 32gb iTouch, Shuffle till Sept but were compelled to do this quarter to boost lagging sales.



    Please, you must be kidding!! I have never seen any Zune player in our campus so far. The only one I have seen students using are iPod Nano, iPod Classic, Touch, iPhone, and some other cheap player. Dream on.



    And By the way, I have been to the mall this weekend for the first time this year and I was wondering "What recession are those people talking about?!". Never seen the mall crowded on non holiday season before. I couldn't even have my hands on MBA because of the number of people inside Apple Store. I am 100% sure that many retailers (specially Apple) will post better than expected revenues this quarter.
  • Reply 7 of 41
    Ugg this is killing me. Negative news in this market will kill the already craptastic stock price for the next 3 months. I can honestly see another 6-10 dollar drop on this news. None of it justified, but Apple never says anything and so the speculation will drop the stock in the toilet.
  • Reply 8 of 41
    cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by mbene12 View Post


    Ugg this is killing me. Negative news in this market will kill the already craptastic stock price for the next 3 months. I can honestly see another 6-10 dollar drop on this news. None of it justified, but Apple never says anything and so the speculation will drop the stock in the toilet.



    If you think the stock will drop like that as a result of this non-news, you're nuts.



    The stock has already priced in the worst case scenario for Apple right now. If you think things will turn out better than worst case, it's a good time to buy. Maybe some longer term (late summer/fall) out of the money calls if you're really confident that things are not as bad as they seem. That's what I've bought recently, by the way.



    Either way there's not a lot of room left for the stock to drop - the assumptions you have to make about sales and profit growth to justify lower prices than today are pretty extreme.
  • Reply 9 of 41
    dmzdmz Posts: 5,775member
    I'll go with some inevitable market saturation on the iPod -- but with Leopard adoption, more streams for the iPhone, AppleTV, the Mac 30ish% percent yearly creep in market share, and things like movie rentals, I think it will all come out in the wash.



    This downturn in the stock may have more to do with this:



    http://www.nytimes.com/2008/01/27/bu...p=2&sq=&st=nyt



    ...than anything else.
  • Reply 10 of 41
    Zune?

    A check of Amazon top MP3 list shows that the price chop on the Shuffle has spurred sales. That alone will have an effect on Munsters numbers, probably get them closer to that 10.5 rate. I pod sales ARE slowing. The fact is there is not a compelling reason to buy in the 150 to 250 sweet spot that has spurred sales in the past. We will see a 199 variation of the touch and price drops on the higher mb models. Apple can drop prices on the Nano if they want -- but I see them keeping those price points to be filled by more desirable models --same is true for the Iphone.
  • Reply 11 of 41
    Quote:

    If you think the stock will drop like that as a result of this non-news, you're nuts.



    Dont get me wrong, I dont think it should and i certainly dont want it to. I know the PEG is fantastic and the P/E is pretty good considering the premium the company in question usually commands. That said, there is some major negative sentiment that seems to be buzzing around the stock. It keeps lagging the market significantly even after the huge recent downturn.



    Great buying opportunity of course. Wish I had anymore to throw in and sit on, house purchase coming up though and I hate the thought of selling part of it anytime soon.
  • Reply 12 of 41
    Quote:

    Moving forward, the company said it hopes to evolve the iPod beyond an advanced music player and into the first "mainstream Wi-Fi mobile platform" capable of running "all kinds of mobile applications." This strategy would indicate a focus on selling quality and functionality at a higher price, rather than quantity and less functionality at the absolute lowest price.





    Maybe, now, it's time to offer what customers want, not what stock option grabbing executives decided. How about an iPod Radio, adding functionality to a lower price? This would be bound to spur sales.



  • Reply 13 of 41
    first yearly decline...



    as in the growth has declined, not the numbers. Year over year the numbers are still growing, how insane is that? Despite reaching near full market penetration and market saturation as they like to say, sales are still UP, however the rate at which they normally grow is down...I love FUD.



    if the rest of the market weren't doing so shitty I would say NOW is the time to buy Apple Stock, look at me buying into FUD myself by not buying, damn....I wish I was more brave.
  • Reply 14 of 41
    Quote:

    This strategy would indicate a focus on selling quality and functionality at a higher price, rather than quantity and less functionality at the absolute lowest price. As such, Apple has suggested that the best way to measure the overall growth and performance of the segment is no longer by unit metrics, but rather by revenues.





    When is Apple going to face reality and offer competitive prices?



    Maybe the CEO should get a university education and realize that there are better ways to make money than just raising prices.



  • Reply 15 of 41
    Quote:
    Originally Posted by GrandmasterGar3th View Post


    appl was planning to hold off 32gb iTouch, Shuffle till Sept but were compelled to do this quarter to boost lagging sales.



    Really? How do you know this?
  • Reply 16 of 41
    Quote:
    Originally Posted by Zandros View Post


    Is it silly of me to think that iPhone sales really should be considered when they assess whether the PMP business of Apple has begun experiencing negative growth, even if it should not be included in total and average iPod revenue?



    /Adrian



    IMHO, yes.



    The iPhone seems to have morphed into a category of its own, and its contribution to Apple's bottom line is being quite appropriately (and adequately) valued in its stock price, in my view.
  • Reply 17 of 41
    Quote:
    Originally Posted by mbene12 View Post


    Ugg this is killing me. Negative news in this market will kill the already craptastic stock price for the next 3 months. I can honestly see another 6-10 dollar drop on this news. None of it justified, but Apple never says anything and so the speculation will drop the stock in the toilet.



    If you feel so strongly about this, it is surely a fantastic wait-and-buy opportunity?
  • Reply 18 of 41
    adjeiadjei Posts: 738member
    Quote:
    Originally Posted by ouragan View Post


    When is Apple going to face reality and offer competitive prices?



    Maybe the CEO should get a university education and realize that there are better ways to make money than just raising prices.







    Why don't you go and run Apple since you're the one with the university education.
  • Reply 19 of 41
    Quote:
    Originally Posted by ouragan View Post


    When is Apple going to face reality and offer competitive prices?



    Maybe the CEO should get a university education and realize that there are better ways to make money than just raising prices.







    I think Apple is doing pretty well under Steve Jobs leadership.



    /Understatement of the century



    Apple's stock price went from the 10's of dollars to $200 in a few short years because of him. Your statement would have been acceptable in 80's and 90's during the John Sculley and Michael Spindler days, but not anymore. High margins mean they make more money, which means they can use more for R&D, which means better products. I think their strategy is pretty great how it is, although I wish they would do a bit more bug testing for software nowadays.



    Other than that, long live Steve Jobs at Apple, Inc.
  • Reply 20 of 41
    gqbgqb Posts: 1,934member
    Quote:
    Originally Posted by ouragan View Post


    How about an iPod Radio, :



    Maybe because radio is dead?

    Same reason AppleTV won't incorporate DVR.

    Each are aimed at killing off (or rising from the ashes of) moribund technologies.



    Ala carte is the future.
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