14 DAY TRIAL // Apple just ended a fantastic company, with record results across all their products and services and the highest revenue and profit in Apple's history. But despite this, could it be that some of Apple?s offerings are getting old? The iPod has been around for a while now, is the best selling personal music player and is loved by customers, but is it nearing its peak?
All hot products eventually reach a saturation point, it is a given. Considering that the iPod saw a 21% increase in unit sales, it is clear that the product is still selling well, however, while last quarter?s growth was good, it is significantly lower than the 32% increase in the previous year. iPod sales have been on the up and up for many years, so it would not be surprising if they started to slow down. Furthermore, the iPod?s revenue growth is another important factor and it dropped to 5 percent from 36 percent a year ago. This is an indication of price promotions from Apple, which are common in cases of sagging growth and of customers turning to the cheaper models.
These numbers indicate a darker future for the iPod, but they only tell half the story. With the iPhone being scheduled for launch at the end of the quarter and it being the best iPod that Apple has ever made, it would not be surprising if many of the high-end customers opted to buy it instead of a new iPod. The iPhone becomes an even more important factor considering the fact the iPod line itself has not received any truly significant improvement in some time. Similarly, many iPod buyers are simply waiting for the next generation of iPods, which are expected to be iPhones sans phone. Considering the fact that many people already have an iPod, postponing for the next generation makes perfect sense to them. The only iPod model that is exempt from this rule is the Shuffle, which is still new enough to still be desirable and thus it is not surprising that customers are migrating towards the cheaper model. As for price promotions, yes, Apple has been doing a couple of those, but the company has done this before, in an effort to clear inventory before new models are announced.
The iPod is definitely becoming a mature product and as such it should not surprise anyone if sales do start to stagnate. However, Apple has proven that it knows how to keep their products fresh, by killing off the most popular iPods only to replace them with something even better. If you already have a video iPod or a nano, the latest models probably don?t offer a significant enough improvement to warrant purchasing another device. However, an iPhone sans phone would be a very compelling product that appeals equally to both new and existing iPod owners.
Last but not least, even if the iPod does reach maturity and it stagnates, it will still continue to be a very important product, simply because of all the additional business it pushes. iTunes, accessories, Nike+ and Macs all benefit from the popularity of the iPod and even if the iPod itself stops being so profitable, these other businesses will still thrive because of it.