Needham & Co. analyst Charles Wolf expects Apple to sell 13.3 million iPods in 2005 and an impressive 23.5 million iPods in 2006. He is also looking for 100 million Windows users to own iPods by 2008. In a research note to clients, Wolf said that a flash-based iPod could be “an opportunistic move to quickly capture an even higher share of the portable music player market.” He also suggests that iPod mini drive production costs could now have fallen by a third (the costs decline as yields increase, because overheads are spread across more units). “Apple should have sufficient margin to reduce the price of the mini from $249 to $199 once supply catches up with demand,” Wolf said.
Apple today released iPod Updater 2004-11-15, which includes iPod mini Software 1.2 for iPod mini and iPod software 3.0.2 for Click Wheel iPods. This update brings the following to iPod mini: compatibility with iTunes 4.7; the ability to create and delete multiple On-The-Go playlists; the ability to shuffle and play your song library with one click; an option to select reading playback speed for audiobooks; the ability to hear Click Wheel clicker through headphones; and improved disconnect performance when syncing. iPod Updater 2004-11-15 offers compatibility with iTunes 4.7 and improved USB 2.0 connectivity for Click Wheel iPods. Apple said this update contains the same software versions as iPod Updater 2004-10-20 for all other iPod models.
Apple’s iPod U2 Special Edition ($349.00) is now available for purchase in bricks-and-mortar Apple Stores, and iLounge has exclusive first pictures of the newest iPod’s packaging and pack-ins. Our full gallery will go up shortly, but for now, click on Read More for a collection of eleven shots to tide you over.
Shipments of the U2 iPod to fulfill Apple Store online pre-orders commenced several days ago, with anticipated delivery dates over the next several days. As noted in our earlier news stories and the iLounge Buyers’ Guide 2004, each U2 iPod includes a $50 coupon towards the purchase of The Complete U2, a digital box set of U2 music from iTunes, and a fold-out poster including photographs of the band. Other than its packaging, black casing, red Click Wheel and band-engraved back, the U2 iPod is the same as a 20GB fourth-generation iPod, and includes standard white accessories.
View the U2 iPod gallery
In an apparent attempt to unify its iPod product names, Apple has tweaked the name of its iPod Photo to iPod photo (lower case “p”). The product’s name now matches that of the iPod mini. Apple’s Web site appears to have been quietly made over to reflect the name change. According to readers, Apple resellers and members of the Apple Consultants Network received confirmation of the change from the company earlier today.
BusinessWeek’s Alex Salkever is expecting Apple to unveil a flash memory-based iPod that will hit shelves “sometime next year.” Salkever says the flash iPods would sell for significantly less than the current hard drive-based iPods, allowing Apple to reach new consumers who balk at the higher prices. “iPod, which clocked 3.2 million units sold in the last quarter, is logging an annual sales rate of roughly 13 million units. That leaves Apple plenty of room to maneuver if it wants to assault the flash player market… If Apple could sell just 5 million flash IPods in the next year at prices between $120 and $199, that would likely generate revenues of between $600 million and $1 billion. It would certainly push Apple closer to its goal of rejoining the $10 billion revenue club in the next two years. Add it all up, and the flash iPod hardly looks like a flash in the pan.”
In his latest article for The Independent, Charles Arthur asks whether Apple would be smart to open up the iPod to developers in order to secure the device’s long-term dominance. “The hardware add-on market is fiercely energetic, with more than 300 accessories. But that’s only half the story. Lots of independent programmers would love to write their own games and applications for the iPod. Imagine spreadsheet and document readers or mapping systems. The only limit is imagination and there’s little shortage of that around the iPod. Those programs would make the machine even more useful to its buyers and an even bigger source of revenue for companies, which would thus have a vested interest in the iPod’s continued existence. In technology parlance, the iPod would become a ‘platform’—just like Windows, Linux and OS X on personal computers.”
Online retail giant Amazon.com has quietly launched a new store dedicated to Apple’s iPod and iPod-related accessories. “Introducing the new Apple iPod Store at Amazon.com, your one-stop shopping destination for everything iPod,” reads a promotion on the retailer’s site. “You’ll find iPods, iPod minis, and the accessories to trick them out.” Unlike Apple’s new iPod Store, Amazon’s store appears to be a work in progress as it currently lacks many accessories.
Merrill Lynch analyst Steven Milunovich has raised his iPod sales estimates for Apple’s December quarter from 3 million units to 3.5 million units based on stronger international sales and increased supply of drives. “December could be particularly strong as the new iPod Photo is getting glowing reviews, and the competition still lags in ease of use,” Milunovich said in a research note obtained by iLounge. “Hitachi’s HDD division (HGST) should increase its 1-inch production by 50 percent in October. HGST is Apple’s main supplier for the iPod Mini. Toshiba, the major suppler for the white iPod, saw its 1.8-inch drive production almost double in September. Also, scrollwheel supplier Synaptics has a bullish outlook.”
A Rolling Stone article reveals that rock band U2 accepted no money for Apple’s iPod+iTunes ad that features its new single “Vertigo.” The band will, however, get royalties on the special edition U2 iPod. U2 manager Paul McGuinness said, “The commercial was an attractive idea because iTunes was already selling our music, and the amount Apple will spend for airtime is out of reach for the record business.” In the article, U2 lead singer Bono called the iPod “the most interesting art object since the electric guitar in terms of music.”
Calling the iPod “nothing more than an enormous marketing success,” CNBC’s Robert Walberg says there is only one direction for the player’s market share to go—lower. “Of course, one problem with the iPod’s market share is that it pretty much has only one way to go—down. In the end, the iPod is nothing more than an enormous marketing success. Sure, it was groundbreaking at first. But today you can find a number of similar products from other leading PC and consumer electronics companies, most at equal or better prices. The company’s iTunes and add-on strategy are likely to keep iPod No. 1 for years to come. Still, it’s tough to sustain a near monopoly in a commodity-based business.”
Apple’s U.S. market share of hard drive-based music players fell nearly 5% in September to 87.3%. The decline was attributed to an increase in sales of flash-based players and the first time inclusion of the HP-branded iPod in the numbers. “Among hard drive-based players, Apple maintained its strong hold on the market with a 87.3% share, down from 92.0%, followed by HP in second with its iPod made by Apple at 3.6%,” reports The Mac Observer. “Combining the HP and Apple percentages, Apple controlled 90.9% of the market share, down 1.1% from August. Finishing out the top five of hard drive-based players was Rio with a 2.8% share, up from 2.5%, Creative in fourth with 2.6% from 2.3%, and iRiver at 1.5% from 1.2%.”
Merrill Lynch analyst Steven Milunovich is expecting Apple to sell 2.68 million iPods in the December quarter—nearly four times higher than a year ago. “Demand for the music players, which let users download, store and play thousands of songs, made Apple the second-best performing stock in the Standard & Poor’s 500 Index this year… Apple, based in Cupertino, Calif., said last month that sales will rise to as much as $2.9 billion in the period that ends Christmas Day, as gift buying fuels a ‘marked increase’ in iPod shipments and customers snap up a new version of the iMac computer released in September.”
After preliminary testing of our new 60GB iPod Photo hardware, iLounge has confirmed the presence of the same audio defect widely reported in the fourth-generation iPod shortly after its release. The defect can be heard in headphones when the iPod Photo’s hard drive reloads its music memory buffer, and sounds like static accompanied by hard drive accessing noises, overlapping for several seconds the beginning of a music track.
As a reader noted in iLounge Backstage earlier this month, an almost identical problem has been reported, acknowledged, and addressed by Rio, the manufacturer of Carbon music players. Though iLounge provided two affected fourth-generation iPods to Apple in late July, the company has to date has had no official comment on or public solution for the defect.
Though we realize that few of our readers will have purchased the $599 60GB unit, we ask that those with iPod Photos read the prior reports and testing procedure, and add comments to this story’s thread so that we can determine the scope of these issues. We note that the sounds appear to be more faint and intermittent in our iPod Photo hardware than in our 4G iPods, however, they can still be heard.
Certain retail Apple Stores in the United States have received and started to sell through their first shipments of the company’s new 60-Gigabyte iPod Photo ($599), which though announced only yesterday is already attracting significant attention. Forty-Gigabyte units ($499) have not arrived yet at these stores, but Apple Store employees confirmed that the 60GB model is selling surprisingly well despite its high price tag and lack of any known advertising to support the launch.
iLounge is proud to present the world’s first independent pictures of the new 60GB iPod Photo, the premium color-screened iPod announced yesterday and released today by Apple Computer, with its packaging. Use the Photos link below to see our photo gallery.
The gallery includes pictures of the iPod Photo’s remarkable new screen, which is far crisper and brighter than we had imagined it would be, and a variety of the new color applications included with the hardware. Our first screenshot of the iPod Photo’s new Photo menu shows the menu choices available to the user, and you can also see the unit’s new cables, Photo Dock, and all of its packaging. Notably, the iPod Photo is the first to include Apple logo stickers, which used to be packed-in only with Macintosh computers.
The iPod Photo (40GB, $499 and 60GB, $599) is Apple’s new top-of-class iPod hardware, holding up to 25,000 digital photos and featuring 15 hours of Music Playback or 5 hours of Slideshow playback. The same general physical size as current iPods but slightly thicker, and with a color screen, the iPod Photo now syncs with iTunes 4.7 (released today) for music and pictures, integrating with iPhoto, Adobe photo programs, and Windows’ My Pictures folder. It features a dock with Audio and Video out, a 1.4m AV cable, and a black carrying case. It ships today.
The U2 iPod, also called the iPod U2 Special Edition ($349) is a 20GB black and red iPod with the engraved signatures of U2’s band members Bono, Larry Mullen, Adam Clayton and The Edge on the back. Available in three weeks, the new iPod will not include U2 music as widely rumored, but will include a $50 voucher for purchase of a new Apple “Digital Box Set” called “The Complete U2” with over 400 U2 tracks, including all of U2’s albums and a collection of rare and unreleased tracks. The Complete U2 will sell for $149.
MacMinute reports: “While Merrill Lynch analyst Steve Milunovich expects a U2-edition iPod, flash-based iPod and photo iPod, he does not think Apple will introduce a video player iPod or add wireless capability in the near future.” Milunovich, who spoke with key Apple executives, walked away with strong evidence that a photo iPod would include A/V output jacks for television viewing, but that video or wireless (Bluetooth/802.11G) functionality was unlikely based on practicality, power consumption and other issues.
iLounge’s Dennis Lloyd is in attendance at today’s joint Apple/U2 press event at the California Theater in San Jose, California, and will be filing updates as the event takes place. We will be adding to this news story with live information and (as possible) photos from the event, which is widely anticipated to include the introduction of a limited edition U2 iPod and international expansion of the iTunes Music Store. Keep checking back with iLounge for text updates to this piece, and see the photos at the link below.
Update (9:53AM PST): MacMinute reports that the iTunes Music Store now includes the following countries:
Austria, Belgium, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Portugal, Spain, the UK, and USA.
Update 2: A number of additional photos have been added, including first photos of iPod Socks ($29) from Apple (colored cases) and the new iPod Photo Dock.
Three years ago today, Apple’s CEO Steve Jobs introduced the iPod to the world at a media event on October 23, 2001. Many now call it the best digital music player in the world. The iPod wouldn’t be available for sale until November 10, 2001.
I remember watching the announcement via a live QuickTime broadcast on the Internet. Three years later it would become the number one digital player and a cultural icon. Who knew? That day changed my life forever, literally. I launched iLounge.com only two weeks after its announcement. And now, 3 years later, I sit here in my home office (iLounge HQ) writing to you about its 3rd birthday. Strange how things work out. Happy Birthday iPod.