Apple pulling away from competition in teenage mindshare
Apple in the last six months has broadened its lead among the teenage demographic in the areas of mobile phones and digital music, a critical indicator of the company's long-term growth prospects in those respective markets.
Apple's dominance unchecked
Piper Jaffray on Tuesday released the results of its 16th bi-annual Teen Survey, for which members of the firm visit several high schools across the country and survey students on their interest and buying patterns in portable media players, online music, and the iPhone.
The bottom line is that "Apple's dominance in the consumer electronics and online music markets is going seemingly unchecked," analyst Gene Munster told clients in a report outlying the study's findings. "We believe that the teen demographic is a critical component of long-term growth in the digital music and mobile markets."
iPhone
In particular, 8 percent of the 769 students surveyed said they already own an iPhone, with another 22 percent implying that they plan to purchase one in the next 6 months. That's up substantially from the firm's April survey in which 6 percent of students had iPhones but only 9 percent said they planned to purchase one in the next 6 months. What's more, of those students adding a mobile phone to their "wish lists," 33 percent penciled in an iPhone.
Munster said the findings suggest ample room for Apple to continue to build share amongst the teen sub-market and further his convictions that the company is well on its way to meeting a self-imposed goal of capturing 1 percent of the worldwide cell phone market during the 2008 calendar year.
iPod
In terms of digital media players, a resounding 87 percent of students said they own one of the devices, up from 80 percent increase during the fall of last year. As such, interest among those looking to buy a new player in the next twelve months has fallen to 37 percent from 47 percent.
Apple continues to dominate the market, with an 84 percent share, up from 80 percent last year. Deadlocked for second place are Microsoft and Sony, whose Zune and Walkman players are each clinging to a 3 percent share of the teenage market. Of those students who say they plan to purchase a new player in the next 12-months, 79 percent indicated they'd choose an iPod while 15 percent are eyeing a Zune -- the highest response ever seen by the Microsoft player in the history of Piper Jaffray's Teen Survey.
iTunes
In general, the percentage of students downloading music over the internet remains relatively high at 80 percent, down 6 percent from April. However, 60 percent of those students are still using illegal peer-to-peer file sharing services instead of purchasing their songs legally. The good news for digital music store operators, artists and record labels is that illegal peer-to-peer usage has actually decreased 4 percent year-over-year.
While Piper Jaffray's April survey saw iTunes use amongst teens start to plateau at around 80 percent after falling from a high of 91 percent in the fall of 2006, the Apple digital download service has since bounced back to reclaim a 93 percent share. Rival services from Yahoo, Rhapsody, and Amazon, which at one time seemed as if they'd give iTunes a run for its money among the teen demographic, have since lost their momentum, Munster told clients.
The analyst said the average age of students in the most recent Teen Survey was 16.2 years old, with 53 percent of the students being male and 47 percent being female.
Apple's dominance unchecked
Piper Jaffray on Tuesday released the results of its 16th bi-annual Teen Survey, for which members of the firm visit several high schools across the country and survey students on their interest and buying patterns in portable media players, online music, and the iPhone.
The bottom line is that "Apple's dominance in the consumer electronics and online music markets is going seemingly unchecked," analyst Gene Munster told clients in a report outlying the study's findings. "We believe that the teen demographic is a critical component of long-term growth in the digital music and mobile markets."
iPhone
In particular, 8 percent of the 769 students surveyed said they already own an iPhone, with another 22 percent implying that they plan to purchase one in the next 6 months. That's up substantially from the firm's April survey in which 6 percent of students had iPhones but only 9 percent said they planned to purchase one in the next 6 months. What's more, of those students adding a mobile phone to their "wish lists," 33 percent penciled in an iPhone.
Munster said the findings suggest ample room for Apple to continue to build share amongst the teen sub-market and further his convictions that the company is well on its way to meeting a self-imposed goal of capturing 1 percent of the worldwide cell phone market during the 2008 calendar year.
iPod
In terms of digital media players, a resounding 87 percent of students said they own one of the devices, up from 80 percent increase during the fall of last year. As such, interest among those looking to buy a new player in the next twelve months has fallen to 37 percent from 47 percent.
Apple continues to dominate the market, with an 84 percent share, up from 80 percent last year. Deadlocked for second place are Microsoft and Sony, whose Zune and Walkman players are each clinging to a 3 percent share of the teenage market. Of those students who say they plan to purchase a new player in the next 12-months, 79 percent indicated they'd choose an iPod while 15 percent are eyeing a Zune -- the highest response ever seen by the Microsoft player in the history of Piper Jaffray's Teen Survey.
iTunes
In general, the percentage of students downloading music over the internet remains relatively high at 80 percent, down 6 percent from April. However, 60 percent of those students are still using illegal peer-to-peer file sharing services instead of purchasing their songs legally. The good news for digital music store operators, artists and record labels is that illegal peer-to-peer usage has actually decreased 4 percent year-over-year.
While Piper Jaffray's April survey saw iTunes use amongst teens start to plateau at around 80 percent after falling from a high of 91 percent in the fall of 2006, the Apple digital download service has since bounced back to reclaim a 93 percent share. Rival services from Yahoo, Rhapsody, and Amazon, which at one time seemed as if they'd give iTunes a run for its money among the teen demographic, have since lost their momentum, Munster told clients.
The analyst said the average age of students in the most recent Teen Survey was 16.2 years old, with 53 percent of the students being male and 47 percent being female.
Comments
This is the kind of data that tells us that Apple is a long-term play. If you're in the stock for next five years, just ignore the current noise.
And, echoing the previous comment: Take that, Woz!
Of those students who say they plan to purchase a new player in the next 12-months, 79 percent indicated they'd choose an iPod while 15 percent are eyeing a Zune..
And Zero% outside the U.S.
Woz is clever, but he's been consistently wrong lately. He said Apple switching to Intel was a mistake, and Apple getting into the phone market was a mistake. He's a good engineer, but I wouldn't look to him for business advice.
I think I know where's my social security check for August and December is going for the next 6 years. (She is the only grandchild, so at least I'm safe for the other 10 months of each year)
In my daughter's 7th grade class -- we're talking 12 to 13 year olds -- an astoundingly high proportion (perhaps upwards of two-thirds) own digital musc players. Every single one that I've seen is an iPod.
This is the kind of data that tells us that Apple is a long-term play. If you're in the stock for next five years, just ignore the current noise.
And, echoing the previous comment: Take that, Woz!
Completely right,
I'm 15 live in New York and about 16% of the students in my high school have an iPhone and 62% have BlackBerry's, and out of the ones that don't have an iPhone 97% have an iPod. You can see the hallway's lined up with little white headphones on everyones ears.
These are true statistics because we had a poll in our school and surveyed 600 students. (about 1/2 of our school)
Completely right,
I'm 15 live in New York and about 16% of the students in my high school have an iPhone and 62% have BlackBerry's, and out of the ones that don't have an iPhone 97% have an iPod. You can see the hallway's lined up with little white headphones on everyones ears.
These are true statistics because we had a poll in our school and surveyed 600 students. (about 1/2 of our school)
[rant]
I only wish more people would understand that low-bitrate music from Limewire (and others) played over inexpensive headphones is simply not doing the artists justice.
[/rant]
It is good to see a growing trend of actually buying music. Although I understand the biggest reason why people download illegally: DRM sucks. End of story.
Although I understand the biggest reason why people download illegally: DRM sucks. End of story.
I think the biggest factor is the low likelihood of being caught and convicted of stealing music, combined with the ease of which you can steal music far outweighs the desire of paying for music. The mentality with much of today's youth (and I bet its creeping into the older generations) is that since you aren't stealing a physical copy: no harm, no foul.
As for the DRM argument, if that were true then the iTS would not have bypassed CD sales and Amazon's entire library being DRM-free and often double the bitrate of iTS at the same or lower price, would be taking a much larger marketshare from iTS, but we have no evidence to support that.
I think the biggest factor is the low likelihood of being caught and convicted of stealing music, combined with the ease of which you can steal music far outweighs the desire of paying for music. The mentality with much of today's youth (and I bet its creeping into the older generations) is that since you aren't stealing a physical copy: no harm, no foul.
As for the DRM argument, if that were true then the iTS would not have bypassed CD sales and Amazon's entire library being DRM-free and often double the bitrate of iTS at the same or lower price, would be taking a much larger marketshare from iTS, but we have no evidence to support that.
I completely agree with your first paragraph. I know of many sites where I *could* get music for free. I just choose not to because I prefer to support the artists I like. However, I've found that trying to impose any guilt on my friends who do steal music simply doesn't work. They don't consider downloading music for free illegal because "it's not like they walked into Best Buy and stole the CD."
I have a few comments about your second paragraph. The majority of people do not feel the effects of DRM. If Joe Consumer can buy music online and put it on his iPod, he is happy. If you make that even easier by using the same program to buy music and sync his iPod, all the better. There is also the well thought-out approach of iTunes. I couldn't imagine buying an album without previewing it first. Plus the fact that I don't have to go to a store to buy music is reason enough to use iTunes. However, it is those of us who choose to do other things with our music (like I put music on my Palm Centro for when I forget my iPod) that are truly annoyed. It boils down to "I paid for this, I should be able to use it how I want."
Maybe I'm just biased because I'm angry that I can't listen to my music in Ubuntu without burning it to a CD then reimporting it. But I'm sure that I'm not the only one angered by DRM.
In my daughter's 7th grade class -- we're talking 12 to 13 year olds -- an astoundingly high proportion (perhaps upwards of two-thirds) own digital musc players. Every single one that I've seen is an iPod.
This is the kind of data that tells us that Apple is a long-term play. If you're in the stock for next five years, just ignore the current noise.
And, echoing the previous comment: Take that, Woz!
I agree. As someone who's been using Macs since 1991, it's pretty amazing to see. When I was picking up my MacPro at the Apple Store near my house, a teenage kid was in there waiting for something. He muttered under his breath "That's a killer machine." as I wheeled it past him. It struck me how completely different the perception of Apple and Macs are now than they were even 6-8 years ago. At that time I had teenage cousins that would make puking noises whenever Macs came up. Those same cousins now rant about how shitty Windows is and how everyone should switch to Macs.
Being in marketing, it's hard to come up with many examples of companies completely changing their perception in such a short amount of time. Target is probably the only other one I can think of that's comparable.
Microsoft's reign is coming to an end. What we will almost certainly see over the next five years is a gradual reduction in the retail pricing of Apple products to the point where the computers are not significantly more expensive than Wintel machines. The analysts who spin facts for Wall Street investment companies will all express concern over the reduction in margins. They will reiterate that sentiment quarter after quarter, but Apple will perpetually prove them wrong with increases in market share far surpassing the threshold where the volume gains exactly compensate for the reduced margins. Margins will be reduced only as fast as it makes sense to do so given the gains in demand and in manufacturing capacity. Many of the Wall Street analysts are too stupid to understand this, but that is not so suprising when you consider that most of them were business majors who spent most of their time in college getting drunk at frat parties.
....
Many of the Wall Street analysts are too stupid to understand this, but that is not so suprising when you consider that most of them were business majors who spent most of their time in college getting drunk at frat parties.
HAHAHAHAHAHA!
Best laugh I've had all day. Oh, and before someone starts spitting nails, I was a business major as well. Right after finishing a computer science degree. So I -fully- understand both sides of that equation.
The analysts who spin facts for Wall Street investment companies will all express concern over the reduction in margins. They will reiterate that sentiment quarter after quarter, but Apple will perpetually prove them wrong with increases in market share far surpassing the threshold where the volume gains exactly compensate for the reduced margins. Margins will be reduced only as fast as it makes sense to do so given the gains in demand and in manufacturing capacity. Many of the Wall Street analysts are too stupid to understand this, but that is not so suprising when you consider that most of them were business majors who spent most of their time in college getting drunk at frat parties.
I will quote this from "Six Rules For The Business Writer's Craft":
(find it here: http://www.businessjournalism.org/pa..._business_wri/)
1) Don't quote analysts. Sure, they seem to imbue your story with authority; sure, they speak in handy sound bites. But they aren't oracles, they're pimps -- hustling stocks and cultivating business for their firms. There are so many other sources who have good dope about the companies you cover -- competitors, consultants, union leaders, you name it. Others may have agendas and axes to grind, too. But calling them, instead of speed-dialing an analyst, is the first step in taking a fresh approach to covering business. So please make this mutual-assistance pact with your colleagues on the business desk: Friends don't let friends quote analysts.
'Nuff said...
I teach for a large, multi-county career center in Ohio. These survey results are not very accurate when compared to a large (thousands) number of students.
At least in Ohio, maybe one in 200 have an iPhone. Maybe one in 20 would get one, but only if it was free. No one "lusts" for one. I'd say a good %80 have a flip phone. Of the remaining %19, close to %10 have some kind of slider or clamshell phone like a Rumor. The other %9 would be Windows Mobile, Palm and Blackberry.
Maybe I should do my own survey were I focus on just people I see using Windows mobile phones, pick 200 of them and say that %100 of those surveyed use WM phones?
I do have to say that Apple got it right with the iPod. Most kids with PMP's have an iPod. They're simple to use and easy to get music on.
That does not mean that most iPod owners want a Mac. Most kids see that Mac's are not that prevelant in the business world. They also see that Macs are too restricted when it comes to software and upgrades.
Until Apple gets smart and opens their hardware platform to other OEMs, they will never have near the market share that Microsoft has. Those stupid Mac vs. PC point out how dumb Apple can be. What, they can't directly slam Microsoft, so they go after the hardware Windows runs on? Funny that Macs run on the same hardware. Only Apple puts their little chip on it that makes it so only Mac OS runs on it. Funny that Apple isn't willing to sell their OS for non-Mac PCs. People should ask why. The answer is simple. Apple can't compete in a truely open OS market. They can't develop an OS which supports the breadth of hardware that Microsoft covers.
That does not mean that most iPod owners want a Mac. Most kids see that Mac's are not that prevelant in the business world. They also see that Macs are too restricted when it comes to software and upgrades.
Until Apple gets smart and opens their hardware platform to other OEMs, they will never have near the market share that Microsoft has. Those stupid Mac vs. PC point out how dumb Apple can be. What, they can't directly slam Microsoft, so they go after the hardware Windows runs on? Funny that Macs run on the same hardware. Only Apple puts their little chip on it that makes it so only Mac OS runs on it. Funny that Apple isn't willing to sell their OS for non-Mac PCs. People should ask why. The answer is simple. Apple can't compete in a truely open OS market. They can't develop an OS which supports the breadth of hardware that Microsoft covers.
You are all over the place.
Talk about picking specific people to get the results you want.
I teach for a large, multi-county career center in Ohio. These survey results are not very accurate when compared to a large (thousands) number of students.
At least in Ohio, maybe one in 200 have an iPhone. Maybe one in 20 would get one, but only if it was free. No one "lusts" for one. I'd say a good %80 have a flip phone. Of the remaining %19, close to %10 have some kind of slider or clamshell phone like a Rumor. The other %9 would be Windows Mobile, Palm and Blackberry.
Maybe I should do my own survey were I focus on just people I see using Windows mobile phones, pick 200 of them and say that %100 of those surveyed use WM phones?
I do have to say that Apple got it right with the iPod. Most kids with PMP's have an iPod. They're simple to use and easy to get music on.
That does not mean that most iPod owners want a Mac. Most kids see that Mac's are not that prevelant in the business world. They also see that Macs are too restricted when it comes to software and upgrades.
Until Apple gets smart and opens their hardware platform to other OEMs, they will never have near the market share that Microsoft has. Those stupid Mac vs. PC point out how dumb Apple can be. What, they can't directly slam Microsoft, so they go after the hardware Windows runs on? Funny that Macs run on the same hardware. Only Apple puts their little chip on it that makes it so only Mac OS runs on it. Funny that Apple isn't willing to sell their OS for non-Mac PCs. People should ask why. The answer is simple. Apple can't compete in a truely open OS market. They can't develop an OS which supports the breadth of hardware that Microsoft covers.
Or just maybe the technical support would be not as good since AppleCare knows the specs of that computer and how it was made. When I had a problem with a Windows machine I would have to play phone tag with HP and Microsoft to see who can fix my problem. At the end niether solved my problem! That's what made me switch to a Mac.
Most kids see that Mac's are not that prevelant in the business world.
I don?t think that kids either know or care what is prevalent in the business world. It is the nature of kids to want and demand whatever attracts their eye, and if they are attracted to Apple computers and become accustomed to using them, they will want to work for employers who are willing to give them the tools that they prefer.
They also see that Macs are too restricted when it comes to software and upgrades.
Huh? Since when are Macs too restricted when it comes to software and upgrades? Wintel computers only run Wintel applications, except for the very few that have been configured for dual boot and that can run Linux and Linux apps in addition to Wintel apps. The OS that Apple ships with their computers comes with a feature known as Boot Camp built in, which allows anyone to purchase a copy of Windows at retail and run it on their Apple computer just the same as it runs on a Wintel computer pre-loaded with Windows. Apple computers are the only computers that you can buy that offer you the practical capability to run either applications written for the Apple OS or applications written for Wintel computers. Everyone who knows anything at all about Apple computers knows this, and it follows that you do not know anything at all about Apple computers. In addition to Boot Camp, there are two third party applications that run Windows in emulation mode, layered over the Apple OS. These applications are widely regarded as robust and very well designed, and they allow you to run Wintel applications without allowing Microsoft's unsafe operating system to actually touch the computer hardware. If you want to run Linux apps you can do that as well, although not many owners of Apple computers are likely to find much reason to run Linux apps.
All in all, your claim that Apple computers are too restricted when it comes to software, is quite the opposite of the truth.
Until Apple gets smart and opens their hardware platform to other OEMs, they will never have near the market share that Microsoft has. Those stupid Mac vs. PC point out how dumb Apple can be. What, they can't directly slam Microsoft, so they go after the hardware Windows runs on? Funny that Macs run on the same hardware. Only Apple puts their little chip on it that makes it so only Mac OS runs on it. Funny that Apple isn't willing to sell their OS for non-Mac PCs. People should ask why. The answer is simple. Apple can't compete in a truely open OS market. They can't develop an OS which supports the breadth of hardware that Microsoft covers.
I don't like being rude, but you are seriously confused and mixed up. If you really are a teacher, I feel sorry for your students. Perhaps this explains why people in Ohio don't buy iPhones. What does it even mean to say that Apple should open their hardware platform to other OEMs? That makes no sense at all. Anyone can write applications for Apple computers, and using Boot Camp, you can run any operating system that you like on Apple computers. On the other hand, Apple's OS will only run on Apple hardware, or at least that is what Apple intends, and you attempt to address that as well, but you've also got that wrong.
As for the ads that slam the hardware instead of Microsoft, you have read way too much into that. The reference to "PC" in those ads simply refers to Wintel computers. Wintel computers are universally referred to as "PC", and all that Apple is doing in those ads is calling those computers what they are called. If you think differently and have read more than that into it, you are mentally impaired in some way that prevents you from thinking in a clean and straightforward manner.
Why is it "funny" that Apple uses the same processor that Wintel computers use? I can discern nothing whatsoever "funny" or odd about that, and the fact that you have identified something odd about this only demonstrates again that you have mentally impaired yourself in some way. Your logic is anything but logical. The reason that Apple does not sell their OS for installation on non-Apple hardware is simply that they developed the OS as part of a complete product that includes their hardware. You could argue that if they were to do that, people would just buy the Apple OS and install it on some Dell machine, and there is no question that a whole lot of people would do exactly that. But so what? In what way is it fair to criticize Apple for not being willing to give away a part of their technology that is crucial to the success of their products? People who take the attitude that you have taken with this are terribly naive about the fact that in this country, people are allowed to manufacture and sell just about anything that isn't dangerous. If you really are this naive about free enterprise, you really ought not be teaching school. Rather, you should go back to school to get educated on how the free enterprise system in this country works.
You are also complete wrong about Windows supporting a greater breadth of hardware than does the Apple OS. The reason that you think that is because Windows runs on multiple brands, but those different brands all use the same Intel processors.
What you wrote is truly asinine. You also tried to say that in order for Apple to have near the same market share as Microsoft, they have to open up their hardware to other OEMs. What you were attempting to say is that Apple will have to license their OS to other manufacturers, adopting the Microsoft model, before they have a chance to compete with Microsoft in terms of market share. That isn't what you actually said, but that is what you would have said if you were able to think more clearly. The thought that you had, which you were unable to express, is wrong. If Apple were to license their OS to Dell and Toshiba and HP, the only reason that anyone would choose to buy one of those brands would be if they were cheaper. It follows, manifestly, that if Apple were to lower their prices to the same level at which those other brands would be sold, that as long as Apple has the manufacturing capacity to meet the demand, people will buy genuine Apple brand rather than other brands that run the Apple OS.
Thus, the only way that what you attempted to say makes any sense is if it happens that Apple's manufacturing capacity is not able to keep up with the demand for computers that run the Apple OS. There is no way that you could possibly know whether that is the case. The reason that Microsoft chose the model whereby they license an OS to other companies to install on computers that they manufacture, is that there was an obvious niche for a company to do make a fortune by doing that as opposed to trying to start up another company to manufacture circuit boards and power supplies. That niche is now taken, but another way in which a computer manufacturer can distinguish itself is by selling computers that run a different operating system. Your argument is tautological. It boils down to an unsubstantiated assertion that the Microsoft model is intrinsically superior to the Apple model throughout all time and space. If Apple lowers the prices for their computers to the point where there is no price advantage for buyers to buy Wintel machines, then given that Apple computers are capable of running Wintel applications, as long as Apple is able to keep up with the demand, there is no discernible reason why Apple might not virtually take over the personal computer market. I'm not saying that this will happen, but I am saying that whereas you and others like you manufacture illogical arguments that conclude that this could never happen, there is not in fact anything that is genuine that would preclude it from happening.
All in all, what you wrote is nothing more than a nonsensical, asinine rant. If you really are a schoolteacher, I shudder to think of what sort of ridiculous ideas that you are no doubt instilling in the minds of your students. You should strive to teach them to think clearly and rationally, but I doubt that you have the slightest capacity to do that.
Typical of most Mac diehards I know.
Just for the record, I wrote EXACTLY what I meant to write. If you can't look around your rose colored glasses and see the reality behind my words, well, again, typical Mac fanatics.
I've been in IT since the mid-80's. I have used most desktop platforms professionally and personally. Yes, even Apple's from the Apple II up to Leopard.
Replies are lambasting me stating things "I really meant to say but am to stupid to do so". At least I can state that I never said those things vs. totally inaccurate things others wrote trying to make me look stupid. Take a look at what's written, it's pretty obvious what I'm talking about (hint- emulators aren't %100 compatible).
I guess it was pointless coming here looking for impartial viewpoints based on facts. Good thing to know and I'll make sure to use this site as an example to my IT students about how one needs to be careful of what they read since some people can't accept that what they paid for might not be the best.
Oh and if I didn't say what I really mean to say, well, I'm in another state at a hosptial with my daughter waiting for a specialist to run a bunch of test, so I'm a bit distracted.
Just for the record, I wrote EXACTLY what I meant to write. If you can't look around your rose colored glasses and see the reality behind my words, well, again, typical Mac fanatics.
[...]
Oh and if I didn't say what I really mean to say, well, I'm in another state at a hosptial with my daughter waiting for a specialist to run a bunch of test, so I'm a bit distracted.
It's unfortunate that your daughter is at the hospital, but thinking that you wrote your statement incorrectly is giving you the benefit of the doubt. If this statement below has a meaning that I'm missing I would like you to explain it as I don't see what Apple's HW platform being used by other OEMs has to do with securing some of MS' Windows marketshare. If you meant OS X, then it would make sense to me, even though there are many reasons why that would not benefit Apple's bottom line.
Until Apple gets smart and opens their hardware platform to other OEMs, they will never have near the market share that Microsoft has.
I guess it was pointless coming here looking for impartial viewpoints based on facts. Good thing to know and I'll make sure to use this site as an example to my IT students about how one needs to be careful of what they read since some people can't accept that what they paid for might not be the best.
Its true this site is biased towards Apple but the same time Apple isn't perfect. We all do critisize some of Apple's choices and often don't agree on what Apple should do.
The reason you received the responce you did is because you argued the same old tired inacuracies that people have been arguing for years. Still arguing them in the face of Apple's growth.