Archive for the ‘iPod Touch’ Category
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Apple has a little iPod problem. And it is doing an amazing job of rising above it.
O.K., we should all have this sort of problem. Apple sold 10.6 million iPods in the first three months of 2008. It has a 73 percent share of the music player market in the United States and a growing share abroad.
Still, the number of iPods sold in the quarter grew only 1 percent from the same quarter a year ago. And sales of the low-end iPod Shuffle have been falling sharply. In response, Apple lowered the price of the 1-gigabyte shuffle from $79 to $49, helping to stanch the decline. Apple executives speaking on a conference call Wednesday afternoon gave few details, as is their custom.
For some companies, a mature market and downward pressure on prices could lead to a nasty death spiral. But Apple has used its amazing six-year run with the iPod to nurture enough new business lines that it will be able to withstand a collapse in the MP3-player market as well as can be imagined.
First of all, it has a continuing revenue stream from the iPods that have already been sold because of the iTunes Store. Apple sold $881 million worth of music and accessories in the last quarter. That figure rose 35 percent from a year ago. And the NPD Group now counts Apple as the largest seller of music in the country, ahead of Wal-Mart. Apple, in fact, is on track to have greater revenue from selling music (and accessories) this year than the entire revenue estimated for the Warner Music Group.
Second, Apple has created product upgrades that are so different that they may well appeal to a significant number of iPod users. The iPhone, of course, is a product bundle that –- if you want it — is completely different from a standalone iPod.
Apple is also now putting a lot of emphasis as well on the iPod Touch, which is being touted as much as a platform for pocket Internet access and mobile computing as it is for playing music and videos. Already, sales of the Touch helped Apple increase its revenue from iPods by 8 percent to $1.8 billion in the quarter, compared to that 1 percent increase in unit sales.
The company didn’t say much about iPhone sales on the call, but it did say that the shortage of iPhones in the United States in March resulted from higher-than-anticipated demand. A “significant” number of the 1.7 million iPhones Apple sold in the quarter, the company said, were to people who unlocked them and shipped them to countries in which Apple does not have deals with local carriers. (No news on any new iPhone models, but it did say inventory continues to be tight, a good way to manage things if you are about to introduce a new model.)
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