Apple’s iPod: is the end nigh?
By Dave Lee Technology reporter, BBC News
Analysts do not expect there to be significant improvements made to the iPod range
Few pieces of technology can genuinely claim to be iconic. But Apple’s iPod, first launched in 2001, arguably fits the bill.
With its distinctive click-wheel design, and those ubiquitous white bud headphones, the iPod brought good looks to portable audio technology – with a “cool” factor not seen since Sony’s Walkman over a decade earlier.
And for the record industry, a sigh of relief – the iPod’s accompanying music store iTunes paved the way for legal digital music downloading to hit the mainstream, tempting at least some music fans away from the free-for-all of piracy.
But 12 years, and 26 devices later, the generation-defining iPod range looks like it’s about to fade into history without so much as a whimper.
“I think all of us have known for some time that iPod is a declining business,” said Apple boss Tim Cook earlier this week, speaking during a conference call discussing the company’s latest earnings report.
He announced massive profits – as ever – but noted that iPod sales had dipped: 52% down on this time last year, with further drops expected.
That’s not bad, or even surprising, news for the company. The people who would have previously bought iPods are now more likely to buy iPhones or iPads.
But it’s bad news for the humble iPod – a tiny-but-mighty device that many say was the catalyst that propelled Apple into its boom era of iPhones and iPads.
Cannibalising sales
The iPod has been nervously looking over its shoulder for some time.
When the iPhone was launched in 2007, Steve Jobs joked that it was “the best iPod we’ve ever made”.
And he was right – with its apps and other smartness, the iPhone meant there was no longer any need to own an iPod as a separate device, so long as you could afford it.
“One of the things that’s very striking is that Apple was doing very, very well with the iPod back in 2006, yet it still chose to create a smartphone which on day one had iPod capability,” says Ian Fogg, a mobile analyst from IHS.
“It wasn’t afraid to create a product that would disrupt a successful existing business. It thought: ‘If we don’t do something, someone else will’.”
Younger users
As it happened, the iPod held its position as the biggest selling dedicated MP3 player on the market. It still is.
Despite the iPhone – and other smartphones – offering far more in terms of features and computing power, the iPod was holding its own.
In fact, according to IHS, sales of the iPod reached peak levels after the iPhone launch, with more than 22 million of the devices shifted in the fourth quarter of 2008.
And even today, despite that dramatic 52% fall, the iPod range still generates big revenues – $973m (£587m) in the last quarter.
Analysts say it has remained popular for a multitude of reasons that go beyond simply price. The iPod Touch, for instance, is seen as the iPhone-that’s-not-a-phone, so to speak – offering everything an iPhone does but without cellular capability.
“The iPod touch today is a great way of appealing to younger consumers that are maybe too young to have an iPhone,” suggests Mr Fogg.
“It’s getting them on board with Apple, getting them downloading apps from the App Store.”
New products needed
But $973m out of Apple’s total revenues this quarter – $57.6bn (£34.7bn) – is just a minor sideline or, as technology news site The Verge put it, “a hobby”.
Which leads most people in-the-know to predict that while Apple may not discontinue the iPod in the very near future, we’re unlikely to see any kind of significant update of the devices.
“As long as the iPod can stay a quality product and not have them lose money, I really don’t see any reason for them to kill it,” argues Alex Heath, a writer for Cult of Mac.
But Mr Heath and others stress that since the iPod can no longer be seen as a major Apple product line, Tim Cook needs to introduce an entirely new product if he is to keep investors – and fans – on his side.
Apple has patented what looks like smart watch technology
“They’re going to need to branch into new categories,” says Eric Slivka, editor in chief of MacRumors.com.
“An Apple TV has been on the radar for a long time, and now it seems rumours like the iWatch and other wearables are starting to take over.”
Mr Heath adds: “It’s looking like, unless there some production issues, Apple is on track to release some kind of wearable, by late 2014.
“It will either send Apple’s stock soaring, or crash it. 2014 is going to be a very interesting year.”
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Related story:
Apple Sold More iDevices and Macs Than All Windows PC Sales Last Quarter
From MacLife
It’s often said that we live in a “post-PC” world, but few reports verify the truth of that statement quite like analyst Benedict Evans’ recent research. During the holiday quarter, according to Evans, Apple achieved higher sales numbers with combined sales of iPhones, iPads, iPod Touch units, and Macs than were achieved by the global Windows PC industry. It also marks the first time Apple has outdone PCs in terms of hardware sales.
The wild card is the inclusion of Macs in Evans’ data, but even without them (as the chart below shows), Apple is close to outpacing the PC market based on the sales of its iOS devices alone.
MacRumors included some research of their own in response to the data. In their words, “Two years ago, we noted that Apple’s hardware ecosystem — the iPhone, iPad and Mac — had a combined average selling price well above that of the PC market as a whole, and that statistic remains accurate to this day. For the just-ended holiday quarter, Apple saw an average hardware selling price of $584 across the iPhone, iPad, iPod, and Mac lines, according to MacRumors research.”
The research suggests that Apple’s not only selling more units than the PC market, but it’s also bringing in more money. During the last quarter of 2013, for instance, a typical Windows PC sold for $544.30.
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