Why the iPod is Losing its Cool

An anonymous reader writes "The Guardian Unlimited has a provocative article on the recent decline in iPod sales: 'Analysts warn that the iPod has passed its peak. From its launch five years ago its sales graph showed a consistent upward curve, culminating in a period around last Christmas that saw a record 14 million sold. But sales fell to 8.5 million in the following quarter, and down to 8.1 million in the most recent three-month period. Wall Street is reportedly starting to worry that the bubble will burst.'"

Comments

60M sold? that's a lot.

[yagu]

From the article:

Although it has sold nearly 60 million actual iPods and a billion downloaded songs worldwide, cracks have begun to appear in the edifice.

There doesn't seem so much of a crack in any edifice as much as there's ultimately a saturation of the marketplace. At some point, pretty much everyone who wants an iPod gets one, and by now that's pretty much done (anyone hear any recent "I want an iPod" whines from anyone?).

Jobs (from Apple) isn't letting the grass grow ... with his

most ambitious iPod service yet - the sale of feature-length films via the internet for viewing on the devices, which may receive an expanded 'widescreen' and improved storage capacity. If downloading movies from a computer to an iPod proves even half as revolutionary as it did for music, the multibillion-pound DVD industry could be quaking.

As seen in a previous slashdot discussion (the Amazon Unbox article) on video download, it isn't going to happen, or is at least unlikely. There is a slew of articles and surveys showing consumers, especially the target demographic of "younger folk" aren't that interested in long (full length features) videos. Video downloads, management, etc., is just a messier beast for consumers, enough so it's a long way from emergent (storage considerations, price, quality of small devices, battery power for video, DRM, download times, backups, etc.).

Also, consumers are getting hip to the snake oil that is iTunes: (from the article)

..., We have heard from some conspiracy theorists that the batteries are made to die soon after the warranty ends.

'Other complaints are that iTunes [Apple's online music store] is overpriced and the format is not easily transferred on to other players. In our ethnography interviews, some long-time iPod-users told us that they have stopped updating their iPods because it's too much work, while other consumers who had bought iPods more recently had not even taken theirs out of the package to set it up.'

Yeah, initially all were in love with the iPod because for the return on effort, it seemed like magic. Consumers eventually get tired of jumping through even the tiniest of hoops to continue "enjoying" their gadgets. They want to turn it on, and not have to worry that the computer from which they're trying to transfer music is "iTunes anointed" or not. DRM-fatigue, finally, sets in (it's about time!).

This is the SONY walkman all over again, then the SONY CD walkman... it's done. It's hard to imagine quantum leaps of coolness and convenience beyond an iPod or video iPod. The curve had to level, there just isn't any there there. Apple should be happy with what they've done, but I don't think this is a growth niche any longer.

Running out of Customers??

[EEBaum]

Seems kinda obvious to me... we're running out of people who want one and don't have one already.

Duh

[Supersonic1425]

it's basic business. product lifecycles are virtually all the same. launch, rise, saturation and decline. right now ipod reaching saturation, and it will go into decline sooner or later. that said, it is still very profitable for Apple, and the brand is still stupidly strong. it will most likely stay like that for a few more years at least.

this is news?

Gasp!

[Jerf]

Market not infinite. Film at 11.

What to worry about?

[Klaidas]

Wall Street is reportedly starting to worry that the bubble will burst.

What's to worry about? IT WILL.
We had cassette walkmans popular. No more.
We had CD players popular. No more
We had mp3 players popular. No more
We have iPods popular. After some time, we will not.
That's how hardware, software and all the computing works. After some time we will be laughing at those iPods, because we will have something new.

Re:60M sold? that's a lot.

[kamapuaa]

Yeah, initially all were in love with the iPod because for the return on effort, it seemed like magic. Consumers eventually get tired of jumping through even the tiniest of hoops to continue "enjoying" their gadgets. They want to turn it on, and not have to worry that the computer from which they're trying to transfer music is "iTunes anointed" or not. DRM-fatigue, finally, sets in (it's about time!).

The majority of iPod users use MP3s, which aren't affected by DRM. And DRM isn't anything at all new to iPod, either. There's no reason to assume the correlation that you take as a given. Any random anti-DRM screed is sure to get modded +5 on Slashdot, but you should put in the extra work and have it at least make some kind of sense.

And it isn't a scientific survey, but every person I know who's technologically savvy enough to be downloading MP3s is also downloadings .avi's. Here in China MP4 compliance is a big selling point for cell phones, PDAs, and other random gadgets. I gotta believe it's the same in the US. Amazon may not be impressing people, but that has more to do with the price than the fundamental concept.

According to MacDailyNews.com...

[jcr]

Q4 03: 336,000
  Q1 04: 733,000 (holiday quarter)
  Q2 04: 807,000
  Q3 04: 860,000
  Q4 04: 2,016,000
  Q1 05: 4,580,000 (holiday quarter)
  Q2 05: 5,311,000
  Q3 05: 6,155,000
  Q4 05: 6,451,000
  Q1 06: 14,043,000 (holiday quarter)
  Q2 06: 8,526,000
  Q3 06: 8,111,000

We have yet to see a year-over-year decline in sales. It is of course to be expected, that pundits seeking attention will continue to troll with "the sky is falling" articles, just like we'll keep hearing about how every also-ran is an "iPod killer".

-jcr

Re:60M sold? that's a lot.

[Soul-Burn666]

In my opinion, portable video will never be really as successful as portable music.
Music, unlike video, requires only one sense (hearing) and can be passive while one is doing other things.
You can listen to music while you browse the web, jog, write code.
You can't really watch a video using a portable device while doing those things. (other than porn...)

It can work though for people who travel a lot in public transportation.
That niche is partly filled by portable gaming which is also an activity that requires your attention.

"Fad" not a poorly chosen word, iPod = fashion

[AHumbleOpinion]

I'm sure the Apple faithful (*) will violently disagree, but the parent's use of the word "fad" is not poorly chosen. Recently local MBA students (**) in a marketing class surveyed hundreds of kids in local high schools regard digital music players. Stress "digital music players", they did not ask about iPod, they did not lead the respondents(***). The kids were pretty well informed, there was a lot of comparing and contrasting of various players at school. iPods were the most popular device, no surprise there, but there was a surprise. The most popular reason for choosing the iPod over competitors was fashion, a status symbol. It was not ease of use, although ease of use was identified as a category iPod wins in. For technology and features Creative was the winner, the lack of radio was a negative for the iPod.

The team that did the survey and focus groups was very quick to point out that this was just a class project, small scale and localized. However it was similar to a pilot program that found interesting results and could be used to justify a larger national study.

(*) I own an iPod, I love it, I would buy another. I own PCs and Macs and use iTunes on both platforms. However I am not religious about music players or operating systems.

(**) Working professionals who have real jobs in industry, under the supervision of a marketing professor who does this sort of thing for rather large firms. This was a class project, not a consulting project.

(***) I was not involved in the project but did I sit in on the presentation of the results. My recollection is that the questions went something like:
Do you own a digital music player?
What models did you consider?
What model did you purchase?
Why did you purchase that model?
etc.

Re:60M sold? that's a lot.

[exp(pi*sqrt(163))]

I agree. People don't buy music to listen to it. They buy music so that they can do something else and not get so bored doing it.