Total BS. You need to take into account all the admin and overhead cost for such a small volume seller. With the phone those costs are spread over 190 million units. With the ipod its only a few million units.
Oh please...your pure guess doesn't buy. I'm using the number, not guess. Show me the proof that admin and overhead cost of iPod is higher than iPhone and we talk.
Apple aint making crap selling ipods. Why do you think analysis dont give a crap about ipod sales?
LOL...small revenue doesn't mean it can be ignored. Why don't we stop arguing and place a bet: iPod will be around for as long as it can sell. If it get killed in 2 years, I lose. Otherwise, you do and ban yourself until iPod's discontinued. Deal?
Well, aside from @sog35's dismissing anyone's opinion but his own, it is a good topic of debate. Clearly some (who don't use the product) argue that Apple should cancel it as it is a diminishing line of business, and it is time to clear out wood. Better to focus on iPhones and watches. It is true that Apple will cut stuff before it is "truly dead", but it isn't by any means clear if that time is at hand for the iPod line. This is one of their flagship historical lines, with a large installed base, and part of their largest ecosystem
Others would argue that it is still a key part of the iTunes and iOS ecosystem, it may be a useful part of an expanded Apple music business, and it is a halo product for the young. That is certainly my case. I still use my Shuffle for working out & would buy another one if/when it fails. Both kids have iPod Touches, as we gifted them when they were young (would never buy a 5-year old an iPhone, but did buy them a Touch). Great for them & they likely will be future Apple consumers of their in short order (in fact, my daughter is saving up for an iPad Mini to buy with her own money). Not every kid will get an iPhone or iPad as a gift, but the iPod line makes for some nice, more affordable gifts.
Apple could easily keep the existing line alive with some minor tweaks (upgraded CPU & cameras unlikely to change BOM costs much). That said, despite what some want, Apple has never given lower-priced devices like the iPod the same advanced features as their flagship 2.5x as expensive phone. LTE? Seriously doubt that will ever happen.
Use a 3-year old iPhone instead? Fine except for battery, and generally as a gift, many people want to give something "new".
Could go either way, but I for one hope they give it a bit of life, for both personal enjoyment reasons, and because I think it is the right financial decision for Apple.
The iPod nano could do with a refresh as well. Only really needs a capacity bump and a software refresh, primarily to update the user interface design to match the minimalist iOS7+ aesthetic, though
Total BS. You need to take into account all the admin and overhead cost for such a small volume seller. With the phone those costs are spread over 190 million units. With the ipod its only a few million units.
You' d also need to factor in huge R&D costs for the phone that have long since been recouped for the iPod Line
Total BS. You need to take into account all the admin and overhead cost for such a small volume seller. With the phone those costs are spread over 190 million units. With the ipod its only a few million units.
For all we know the design for a new iPod could've been developed while coming up with a design for the iPhone 6. The bulk of the work is probably done, and all it needs is a little tweaking at minimal cost.
Look at 3M, they weren't trying to invent the Post It, they were trying to develop a super glue, and inadvertently formulated a really weak glue, and someone was smart enough to see its potential.
Ipods profit margin is 20% and will only have $500 million in revenue next year. That is only $100 million in profit a year and it shrinks each year.
You guys sound like the people begging for new vcr players to come out. Its over. Deal with it.
In 2 years Apple will have a watch with more memory and gps to replace the ipod.
The iPod is such a small device in Apples eyes that they no longer report unit sales. Do you really think they would do that if they thought the ipod had a bright future?
If they stopped selling iPods today they'd make less money in a year than if they didn't. I agree the iPod is on its way out, but it still makes money, so why stop? Eventually people will all migrate to Watch/other wearables, but not right now, so why cut the iPod early?
Ipods profit margin is 20% and will only have $500 million in revenue next year. That is only $100 million in profit a year and it shrinks each year.
You guys sound like the people begging for new vcr players to come out. Its over. Deal with it.
In 2 years Apple will have a watch with more memory and gps to replace the ipod.
The iPod is such a small device in Apples eyes that they no longer report unit sales. Do you really think they would do that if they thought the ipod had a bright future?
You would have more credibility if you didn't continually make straw man points, attack every person that disagrees with you, parrot opinions as fact, and would in fact listen to what others have to say. You have no real knowledge of the iPod's profit margin, nor how much revenue or profit it will make this year or next, and yet you repeat the numbers in almost every post.
Thinking that the iPod continues to be a useful product is like wanting a new VCR player? Talk about diminishing your views.
Apple is only going to report on their major product lines. Rolling iPods in with others is a reflection of its revenue yes, but not an indication that it has no value in Apple. Neither the Apple TV nor Airports are reported separately - is that an indication that Apple is going to exit those businesses. Technically the Apple Watch will be in the same category - is that "proof" they don't believe in it as some of the trolls indicate (of course not - it is to keep competitive information controlled and manage the messaging).
So if Apple does not cancel the iPod line this year, will you ban yourself (seems to be your favourite bet)?
The iPod revenue has gone down 80% the last 3 years.
Apple should not sink another penny into the ipod.
My points are based on Apples sec filings and analysis estimated on gross margin. Even during iPods heyday the margins were not as high as the iPhone. Now they must be razor thin.
Why do you insist that gross margins go down over time? R&D is amortised over the life of the product, which figures into margins, and we can assume that they long ago paid off that expense. They don't advertise (heavily or at all) the iPods, they don't push these products in big sales efforts or have marketing launches or updated marketing materials to produce, the components they put into these devices are now cheaper than they were in the past, we must assume, not more expensive, because the technology is older and they haven't had to retool any machinery they just keep fabricating and producing in the same plants they paid for long ago. The sales teams are reduced in size, the customer service teams are reduced, the product teams are reduced, which means administration decreases NOT increases as you keep insisting by spouting 90% administrative costs (on $1B).
These products just sell, Apple doesn't have to do anything but keep taking orders and keep manufacturing them in plants that were long ago paid for in startup retooling investments. The margins you quoted earlier were in 2010 and 2011 (four and five years ago!), when the product was being updated regularly and there was actual R&D associated with it (along with marketing and sales), investments which were rolled into the expenses and figured in the early margins (they always want a quick return on their investments, they don't want to have to wait years and they don't plan to recoup their costs in longer time frames).
I'm curious to know what expenses you believe would grow, and not only grow, but replace expenses that were paid long ago?
No one is arguing that the iPod is not decreasing in sales or demand, that's not the point, but your continuing to quote figures that make no sense, then continue sliding along that slippery slope into your conclusion that Apple must kill this product line because it's not making any money is completely non-sensical. It's a $1B/year business with little to no effort - businesses don't kill those kinds of products, they let them die naturally while they milk the profits they return, for as long as they can.
If this article is true, then Apple has realised it's time to invest a little money in the line in order to have a simple launch and realise a very tidy revenue stream from an updated product line, which they are pretty much guaranteed to do. I'm not expecting big changes to the latest technology, but there are lots of people who still like these products and will buy new ones, and if Apple can make some more money without killing potential iPhone sales, they're going to do it, and according to this article that's the plan. I say, good on them, and I'd be quite happy to see some new iPods.
Ipods profit margin is 20% and will only have $500 million in revenue next year. That is only $100 million in profit a year and it shrinks each year.
You guys sound like the people begging for new vcr players to come out. Its over. Deal with it.
In 2 years Apple will have a watch with more memory and gps to replace the ipod.
The iPod is such a small device in Apples eyes that they no longer report unit sales. Do you really think they would do that if they thought the ipod had a bright future?
I bookmark this and will come back for it next year and a year after. Hopefully, you're still around.
BTW, how much revenue Apple have for those Time Capture? Not much. Did they kill those? Heck no. Same as iPod which will eventually be reported with iPad revenue. There's no way that they will kill entire iPod in the next 2 years, not even in 5 years.
You are kidding me right? The iPhone 5S, WITHOUT NFC cost $549 with 16GB. So, you are saying remove the phone bit (which is about $10 or $20 from the BOM), and sell it for $200?
In the UK, you can get the iPad Mini 3 for only £100 more than an iPod and it's a much better device.
It depends on your use case. An iPod touch fits easily in your pocket and can be operated one handed unlike the iPad Mini (and current iPhones for that matter). You can also use wifi for internet access instead of devoting an ever increasing portion of your income to cellular carrier companies.
Some of you need to realize Apple is not a non-profit organization and they are thinking ten years from now. Who the hell would want an ipod 5 years from now? Apple is better served using there resources on a growing market instead of the dying mp3 market.
I think a little clarification would be helpful here. There is a tendency to refer to the iPod touch as an mp3 player. No, just no. It is an app machine. All those apps in Apple's App Store? Basically all of them install and run quite well on an iPod touch. A major difference is that you don't have to pay a monthly charge to run those apps on your device. It is also lighter and slimmer than iPhones of a similar vintage. If Apple does produce a worthy update of the iPod touch, I will buy it in a heartbeat. So will millions of owners of aging fifth generation iPod touches. I bet John Siracusa would be standing in line as well. Simply put the iPod touch is the best 'personal' computer ever designed and produced. (By personal I mean a device you keep on your person, not for instance a MacPro).
Yes, I could have been clearer. That comment was meant to indicate that unlike earlier iPods, the iPod touch has internet connectivity. In fact, the name is arguably confusing since it is more like an IPhone than other iPods. It is essentially an iPhone without the legacy cellular radio. The iPod touch does have wifi and Bluetooth radios and I hope a new version will include a GPS radio.
Apple will only get about $1 billion in revenue this year on iPod. That equates to $100 million in profits.
I'm sorry but for Apple such small profits does not justify putting so much time/expense into iPod development.
Apple should not allocate resources to such a niche market. They need to focus on Watch, iPad, iPhone, and Mac.
Apple can probably make $100 million in profits selling hot dogs at Apple stores but that does not mean they should.
IMO the iPod has no place in Apple's future. With the Cloud and the push for Watch there really is no reason for it.
Are they really getting just 10% margins on the Ipod? Considering the well worn tech inside, the R&D being already paid for, they should be getting higher than Iphone margins. Their price certainly hasn't fallen down really fast to erode margins. The BOM probably is $50 at most.
I suspect that the iPod nano and shuffle won't be getting any major updates. Maybe a storage bump. But that's it. Especially the shuffle. It will likely die off to be replaced by the Apple Watch. Might take a couple of years so they will keep it as is and just keep selling it, like they did the Classic
Is the iPod touch still popular as a gaming device? I can see a new premium iPod Nano move to the Apple Watch iOS. It could be like a keychain device, or necklace worn device.
The iPod revenue has gone down 80% the last 3 years.
Apple should not sink another penny into the ipod.
My points are based on Apples sec filings and analysis estimated on gross margin. Even during iPods heyday the margins were not as high as the iPhone. Now they must be razor thin.
To be fair, the iPod hasn't been updated since a long time. It has got yesteryear's technology. No wonder sales are down. This is 2015, not 2012.
The "iPod" is an iconic brand that is firmly rooted into music. Apple would be foolish to kill off this legacy, especially when they are getting serious with music again.
Perhaps the iPod will evolve into a headset that is being controlled by your ? watch or iPhone? It is all about the music and the quality of sound … a headset would actually make a lot of sense.
The iphone5 cost about $200 to make not counting R&D amortization. I dont think the cost parts went down more than 30% since then so it would cost about $130. This is true since they dont enjoy the bulk pricing because they dont make many of them. Now add admin cost, warranty cost, cost of the website, cost of shelf space in the stores, cost of shipping, cost of headphones, cost of packaging. At that point the final profit is only $30-$40.
Where are you getting this information? The iPhone 5 display cost $18 at the time of introduction. Are you saying that the iPod touch display cost more?
And your other points about bulk pricing don't make sense either, since the iPod touch shares multiple internal components with other iOS devices. These purchases are made in bulk, and booked and paid in full way in advance. Apple's dominance of the supply chain and shared components is where their high margins come from. How would the iPod line not benefit from this?
You might have a point to make, but these nonsensical guesses on the costs just denigrate whatever merits your other arguments might have had.
Comments
Total BS. You need to take into account all the admin and overhead cost for such a small volume seller. With the phone those costs are spread over 190 million units. With the ipod its only a few million units.
Oh please...your pure guess doesn't buy. I'm using the number, not guess. Show me the proof that admin and overhead cost of iPod is higher than iPhone and we talk.
Ipod gross margin was estimated at 25%
http://www.trefis.com/stock/amzn/articles/12087/ipad-gross-profit-margins-higher-than-ipod-and-kindle-margins/2010-03-01
Apple aint making crap selling ipods. Why do you think analysis dont give a crap about ipod sales?
LOL...small revenue doesn't mean it can be ignored. Why don't we stop arguing and place a bet: iPod will be around for as long as it can sell. If it get killed in 2 years, I lose. Otherwise, you do and ban yourself until iPod's discontinued. Deal?
Well, aside from @sog35's dismissing anyone's opinion but his own, it is a good topic of debate. Clearly some (who don't use the product) argue that Apple should cancel it as it is a diminishing line of business, and it is time to clear out wood. Better to focus on iPhones and watches. It is true that Apple will cut stuff before it is "truly dead", but it isn't by any means clear if that time is at hand for the iPod line. This is one of their flagship historical lines, with a large installed base, and part of their largest ecosystem
Others would argue that it is still a key part of the iTunes and iOS ecosystem, it may be a useful part of an expanded Apple music business, and it is a halo product for the young. That is certainly my case. I still use my Shuffle for working out & would buy another one if/when it fails. Both kids have iPod Touches, as we gifted them when they were young (would never buy a 5-year old an iPhone, but did buy them a Touch). Great for them & they likely will be future Apple consumers of their in short order (in fact, my daughter is saving up for an iPad Mini to buy with her own money). Not every kid will get an iPhone or iPad as a gift, but the iPod line makes for some nice, more affordable gifts.
Apple could easily keep the existing line alive with some minor tweaks (upgraded CPU & cameras unlikely to change BOM costs much). That said, despite what some want, Apple has never given lower-priced devices like the iPod the same advanced features as their flagship 2.5x as expensive phone. LTE? Seriously doubt that will ever happen.
Use a 3-year old iPhone instead? Fine except for battery, and generally as a gift, many people want to give something "new".
Could go either way, but I for one hope they give it a bit of life, for both personal enjoyment reasons, and because I think it is the right financial decision for Apple.
Total BS. You need to take into account all the admin and overhead cost for such a small volume seller. With the phone those costs are spread over 190 million units. With the ipod its only a few million units.
You' d also need to factor in huge R&D costs for the phone that have long since been recouped for the iPod Line
For all we know the design for a new iPod could've been developed while coming up with a design for the iPhone 6. The bulk of the work is probably done, and all it needs is a little tweaking at minimal cost.
Look at 3M, they weren't trying to invent the Post It, they were trying to develop a super glue, and inadvertently formulated a really weak glue, and someone was smart enough to see its potential.
Buy an ipad mini instead
Ipods profit margin is 20% and will only have $500 million in revenue next year. That is only $100 million in profit a year and it shrinks each year.
You guys sound like the people begging for new vcr players to come out. Its over. Deal with it.
In 2 years Apple will have a watch with more memory and gps to replace the ipod.
The iPod is such a small device in Apples eyes that they no longer report unit sales. Do you really think they would do that if they thought the ipod had a bright future?
If they stopped selling iPods today they'd make less money in a year than if they didn't. I agree the iPod is on its way out, but it still makes money, so why stop? Eventually people will all migrate to Watch/other wearables, but not right now, so why cut the iPod early?
Buy an ipad mini instead
Ipods profit margin is 20% and will only have $500 million in revenue next year. That is only $100 million in profit a year and it shrinks each year.
You guys sound like the people begging for new vcr players to come out. Its over. Deal with it.
In 2 years Apple will have a watch with more memory and gps to replace the ipod.
The iPod is such a small device in Apples eyes that they no longer report unit sales. Do you really think they would do that if they thought the ipod had a bright future?
You would have more credibility if you didn't continually make straw man points, attack every person that disagrees with you, parrot opinions as fact, and would in fact listen to what others have to say. You have no real knowledge of the iPod's profit margin, nor how much revenue or profit it will make this year or next, and yet you repeat the numbers in almost every post.
Thinking that the iPod continues to be a useful product is like wanting a new VCR player? Talk about diminishing your views.
Apple is only going to report on their major product lines. Rolling iPods in with others is a reflection of its revenue yes, but not an indication that it has no value in Apple. Neither the Apple TV nor Airports are reported separately - is that an indication that Apple is going to exit those businesses. Technically the Apple Watch will be in the same category - is that "proof" they don't believe in it as some of the trolls indicate (of course not - it is to keep competitive information controlled and manage the messaging).
So if Apple does not cancel the iPod line this year, will you ban yourself (seems to be your favourite bet)?
Ipod is dying. Deal with it. Move on.
The iPod revenue has gone down 80% the last 3 years.
Apple should not sink another penny into the ipod.
My points are based on Apples sec filings and analysis estimated on gross margin. Even during iPods heyday the margins were not as high as the iPhone. Now they must be razor thin.
Why do you insist that gross margins go down over time? R&D is amortised over the life of the product, which figures into margins, and we can assume that they long ago paid off that expense. They don't advertise (heavily or at all) the iPods, they don't push these products in big sales efforts or have marketing launches or updated marketing materials to produce, the components they put into these devices are now cheaper than they were in the past, we must assume, not more expensive, because the technology is older and they haven't had to retool any machinery they just keep fabricating and producing in the same plants they paid for long ago. The sales teams are reduced in size, the customer service teams are reduced, the product teams are reduced, which means administration decreases NOT increases as you keep insisting by spouting 90% administrative costs (on $1B).
These products just sell, Apple doesn't have to do anything but keep taking orders and keep manufacturing them in plants that were long ago paid for in startup retooling investments. The margins you quoted earlier were in 2010 and 2011 (four and five years ago!), when the product was being updated regularly and there was actual R&D associated with it (along with marketing and sales), investments which were rolled into the expenses and figured in the early margins (they always want a quick return on their investments, they don't want to have to wait years and they don't plan to recoup their costs in longer time frames).
I'm curious to know what expenses you believe would grow, and not only grow, but replace expenses that were paid long ago?
No one is arguing that the iPod is not decreasing in sales or demand, that's not the point, but your continuing to quote figures that make no sense, then continue sliding along that slippery slope into your conclusion that Apple must kill this product line because it's not making any money is completely non-sensical. It's a $1B/year business with little to no effort - businesses don't kill those kinds of products, they let them die naturally while they milk the profits they return, for as long as they can.
If this article is true, then Apple has realised it's time to invest a little money in the line in order to have a simple launch and realise a very tidy revenue stream from an updated product line, which they are pretty much guaranteed to do. I'm not expecting big changes to the latest technology, but there are lots of people who still like these products and will buy new ones, and if Apple can make some more money without killing potential iPhone sales, they're going to do it, and according to this article that's the plan. I say, good on them, and I'd be quite happy to see some new iPods.
Buy an ipad mini instead
Ipods profit margin is 20% and will only have $500 million in revenue next year. That is only $100 million in profit a year and it shrinks each year.
You guys sound like the people begging for new vcr players to come out. Its over. Deal with it.
In 2 years Apple will have a watch with more memory and gps to replace the ipod.
The iPod is such a small device in Apples eyes that they no longer report unit sales. Do you really think they would do that if they thought the ipod had a bright future?
I bookmark this and will come back for it next year and a year after. Hopefully, you're still around.
BTW, how much revenue Apple have for those Time Capture? Not much. Did they kill those? Heck no. Same as iPod which will eventually be reported with iPad revenue. There's no way that they will kill entire iPod in the next 2 years, not even in 5 years.
You will actually see below that comment I was make a reference to the iPad mini 3 which is £100 more expensive in the UK than the current iPod.
If they don't make it significantly better than what they currently have then why bother, especially seeing as people really don't need iPods anymore
...
In the UK, you can get the iPad Mini 3 for only £100 more than an iPod and it's a much better device.
It depends on your use case. An iPod touch fits easily in your pocket and can be operated one handed unlike the iPad Mini (and current iPhones for that matter). You can also use wifi for internet access instead of devoting an ever increasing portion of your income to cellular carrier companies.
...
Some of you need to realize Apple is not a non-profit organization and they are thinking ten years from now. Who the hell would want an ipod 5 years from now? Apple is better served using there resources on a growing market instead of the dying mp3 market.
I think a little clarification would be helpful here. There is a tendency to refer to the iPod touch as an mp3 player. No, just no. It is an app machine. All those apps in Apple's App Store? Basically all of them install and run quite well on an iPod touch. A major difference is that you don't have to pay a monthly charge to run those apps on your device. It is also lighter and slimmer than iPhones of a similar vintage. If Apple does produce a worthy update of the iPod touch, I will buy it in a heartbeat. So will millions of owners of aging fifth generation iPod touches. I bet John Siracusa would be standing in line as well. Simply put the iPod touch is the best 'personal' computer ever designed and produced. (By personal I mean a device you keep on your person, not for instance a MacPro).
Yes, I could have been clearer. That comment was meant to indicate that unlike earlier iPods, the iPod touch has internet connectivity. In fact, the name is arguably confusing since it is more like an IPhone than other iPods. It is essentially an iPhone without the legacy cellular radio. The iPod touch does have wifi and Bluetooth radios and I hope a new version will include a GPS radio.
There are no iPods with cellular radios. They solely depend on wifi for connectivity.
Apple will only get about $1 billion in revenue this year on iPod. That equates to $100 million in profits.
I'm sorry but for Apple such small profits does not justify putting so much time/expense into iPod development.
Apple should not allocate resources to such a niche market. They need to focus on Watch, iPad, iPhone, and Mac.
Apple can probably make $100 million in profits selling hot dogs at Apple stores but that does not mean they should.
IMO the iPod has no place in Apple's future. With the Cloud and the push for Watch there really is no reason for it.
Are they really getting just 10% margins on the Ipod? Considering the well worn tech inside, the R&D being already paid for, they should be getting higher than Iphone margins. Their price certainly hasn't fallen down really fast to erode margins. The BOM probably is $50 at most.
Ipod is dying. Deal with it. Move on.
The iPod revenue has gone down 80% the last 3 years.
Apple should not sink another penny into the ipod.
My points are based on Apples sec filings and analysis estimated on gross margin. Even during iPods heyday the margins were not as high as the iPhone. Now they must be razor thin.
To be fair, the iPod hasn't been updated since a long time. It has got yesteryear's technology. No wonder sales are down. This is 2015, not 2012.
The "iPod" is an iconic brand that is firmly rooted into music. Apple would be foolish to kill off this legacy, especially when they are getting serious with music again.
Perhaps the iPod will evolve into a headset that is being controlled by your ? watch or iPhone? It is all about the music and the quality of sound … a headset would actually make a lot of sense.
Quote:
The ipod touch display alone cost almost $45
The iphone5 cost about $200 to make not counting R&D amortization. I dont think the cost parts went down more than 30% since then so it would cost about $130. This is true since they dont enjoy the bulk pricing because they dont make many of them. Now add admin cost, warranty cost, cost of the website, cost of shelf space in the stores, cost of shipping, cost of headphones, cost of packaging. At that point the final profit is only $30-$40.
Where are you getting this information? The iPhone 5 display cost $18 at the time of introduction. Are you saying that the iPod touch display cost more?
And your other points about bulk pricing don't make sense either, since the iPod touch shares multiple internal components with other iOS devices. These purchases are made in bulk, and booked and paid in full way in advance. Apple's dominance of the supply chain and shared components is where their high margins come from. How would the iPod line not benefit from this?
You might have a point to make, but these nonsensical guesses on the costs just denigrate whatever merits your other arguments might have had.