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Analyst: iPod to retain lead ‘for years’

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By LC Angell

Contributing Editor
Published: Tuesday, December 13, 2005
News Categories: iPod

The combination of price and design will keep the iPod in the lead for years to come, according to one Wall Street analyst. After comparing competing MP3 players, Piper Jaffray’s Gene Munster said he believes that other companies simply cannot compete with Apple because they can’t match the iPod’s pricing or its “cool” factor.

“While non-iPod devices often have similar, if not broader, feature sets than the iPod, none of these devices have shown that they can compete in two key areas: 1) user interface and 2) ‘cool’ factor,” Munster wrote in a research note obtained by iLounge. “We believe that non-iPod devices must compete on price to gain adoption, but Apple has such massive relative shipment volume with the iPod that other MP3 player manufacturers are not able to replicate the economies of scale achieved by Apple. We believe this reality will allow Apple to sell iPods at the lowest prices in the market, thus retaining the iPod’s pole position for years.”

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Comments

1

This guy gets paid for this?

1) Any “analyst” who puts the term “cool factor” and a temporal span of “years” together in his conclusion should be fired on principle. “Cool factor” can change about as fast as the seasons (or faster). This time next year the iPod could still be king, or it might be as cool as a Chia pet.

2) I’m sure he thought it sounds cool to be able to toss around things like “economies of scale” and all that, but it’s not like we’re not going to see an entire market of $150 players in a couple of years that make the 5G look a shuffle in comparison.

What he should have said is that “and when I say years, I mean the next 18-24 months. Probably…”

There is serious momentum behind the iPod but nothing that makes it a lock-in for *years*.

Posted by Code Monkey in Midstate New York on December 13, 2005 at 1:56 PM (PDT)

2

Dude, you’re retarded. The nature of an analyst is exactly that. He’s not a fortune teller, you ‘tard. If you understand how the market works, then you’ll know that these are *ONLY* opinions based on his own analysis. It’s *YOUR* decision whether or not to act based on his remarks. God, what a ‘tard.

Stop getting so damn emotional and get some brains. Read what you will and make up your own damn mind.

Sheesh. So ‘tarded.

Posted by Optimus Prime Rib on December 13, 2005 at 3:44 PM (PDT)

3

Code Monkey: The iPod has kept getting bigger for four years, accelerating the growth most of the time. While this At this rate it will won’t exactly hit a brick wall any day now, and I think 2 years is the *minimum* limit for fast iPod sales could completely drop to 0, even if Apple discontinued them tomorrow.

Posted by Jesper on December 13, 2005 at 4:31 PM (PDT)

4

In fact, code monkey is right on the money.

You guys are (last 2 comments) are either blind or have no knowledge of high tech whatsoever.

The Apple marketing machine is what makes the iPod going, nothing else. If Microsoft had the desire to go into hardware, they could put the iPod in the history museum in no time.
Even an almost moronic company like Archos puts the iPod to shame in terms of functionality if not design.

Gates can get the designer of the iPod to work for him in one day. In high tech never say never. digital cameras of $25000 were reduced to $1000 in a matter of a year. The pace of technology makes every one vulnerable.
I’ve had 5 iPods already (and Archos ,Epson and more).

For techno-guys and geeks, the iPod is not very impressive as it is for the wide masses.

I would add to monkey’s perception that the iPod could be a goner in 6 months if Apple doesn’t use their predatory nature or if some other giant wants to swallow them.

In my personal opinion, Sony make kick the iPod’s a$$, if they get their act together.

Picture this: 80GB, 3.5 inch 640X480 high quality screen + mic + wi-fi + PDA capabilities + video recording the size of the 60GB video iPod for $350 and Apple’s iPod bites the dust, baby.

Posted by jshutzman on December 13, 2005 at 5:37 PM (PDT)

5

Adding features is one thing, but making those features easily accessible is another. I have come across waaay to many OTHER mp3 players that surpass the iPod in sound quality (anyone with an objective mind HAS to agree that Creative’s mp3 players have the best sound by far), and features, but trail in ease of use.

For example, I actually own a Xdrum 512meg mp3 player that has features from FM radio and recording, voice recording, user adjustable EQ settings, line-in recording, etc. etc. BUT the manual is 56 pages long!!

My iPod’s manual has 4 pages, and 2 of those pages are legal disclaimers. I was able to navigate to my music and other features within 20 minutes of it’s purchase. I still have yet to remember how to get to some of my XDrum’s.

Let’s not forget the tight integration between the iTMS and the iPod that no-one else has yet been able to equal.

Until some other mp3 player can match AND surpass the iPod and iTMS’s ease of use, they will remain king of the hill for quite some time.

Posted by ahMEmon on December 13, 2005 at 6:06 PM (PDT)

6

jshutzman: I’m not disputing that if a better product comes out backed by good marketing people would start to buy that instead of the iPod. What I’m saying - much like the analyst, as much as that pains me to write - is the fact that Sony, Creative, iRiver or any other manufacturer has failed to create a product that even half as many people buy as an iPod, more features or not, and I don’t think it’s because they haven’t tried. You’re right that it’s not as impressive to “techno-guys and geeks”, but that’s a rounding error in the “wide masses”, and it’s not like there aren’t projects like the version of Linux for iPods going already.

If a product like the one you’re specifying would come along for that exact price and not eat batteries for breakfast and gain momentum and be at least as good as the iPod in every other aspect, I would be in line for it too. But that’s a lot of “if"s, and it doesn’t sound very tenable right now, especially not the “size of the 60GB video iPod” part; getting all the parts together could probably be done, but the question is how anyone would turn a profit on such a device. I might be blind and have no knowledge of high tech whatsoever (actually, I do, but let’s not let facts get in the way of anything), but I do know that a company needs to profit, and I don’t see any company within the next year - including Apple - that could pull this off.

Posted by Jesper on December 13, 2005 at 6:06 PM (PDT)

7

I personally think it will keep going for a few years at least as it keeps getting better. It, like most things, will hit a brick wall eventually and lose it’s share. But at this rate, it will only get better…

Posted by Maxman on December 13, 2005 at 6:08 PM (PDT)

8

jshutzman….

It’s not the Techies that are driving the iPod’s sales. My grandmother knows what an iPod is, everything else is “iPod-like”.

It is the simplicity of an iPod that makes it so appealing to the masses, not the number of features. If the number of features was what sold MP3 players…the iPod would have been history along time ago.

I consider myself a Techie and like the simplcity of the iPod as well. When it comes down to it…it is just a music (now video) player. And I just want it to work. I shouldn’t NEED to be a techie to know how to use one.

...anyway, just my 2 cents

Posted by chunkymonkey on December 13, 2005 at 6:11 PM (PDT)

9

The “cool factor” of Apple isn’t so much the fact that everyone and their grannies have one, it’s the fact that they have retained an image and a design that shows they are high above the rest. Most people are prone to buy an iPod because of the way it looks. ALthough I may be part of the minority, I buy Apple products not because they are rich with features that clutter it’s interface and design, but because they are not afraid and are willing to compromise. While I love Sony, and is probably the best company this side of Apple, it is far from the “designer” look that Apple is able to achieve. The xbox 360 is a step in the right direction for Microsoft, but it doesnt quite meet the stylishnesh and simplicity of Apple, a modern, contemporary twist that complements an Andy Warhol painting more than others. I love having and using my Sony PSP, but it often doesn’t match my outfits as well as the iPod does. Hehehe.

Posted by designerfreak on December 13, 2005 at 6:33 PM (PDT)

10

The thing that nobody in this discussion seems to realize is that the iPod’s success is all about iTunes, the “3rd party” support (A vast collection of titles from record labels, and a staggering variety of titles), and the iPod’s integration therof.  The hardware only plays a small, if important part in the total user experience.

Let me use an example.  As far as game consoles go; based on PURELY a hardware capability standpoint, the Xbox is, in virtually every single way, clearly superior to the Playstation 2 in capability.  And yet, in that generation of consoles, the Playstation 2 sold, by no small margain, far more units.

The reason, again, is support.  By the time the Xbox came out, the PS2 already had an ample library, and even throughout the time both were out to present, more titles came out for the Playstation 2 than for the Xbox, of a wider variety.  Japanese support for the console was, in many ways, its driving force. 

I won’t even begin about the existing-user-base-of-Playstation users, in addition to continuing support, the existing archetecture available and established user-base of the previous generation did indeed factor in.

Both of these factors are present for the iPod, and, in any of its competitors, though many do indeed deliver, as far as hardware capabilities go, none of them have grasped the level of integration and sheer, easy-to-access variety of media available for the iPod.

I highly doubt that Apple is going to let themselves ever fall too far behind the capability curve, and until someone else realizes that they need something that delivers an easy, satisfying, and content-filled user experience on every level—NOT just through the base hardware—but through extensive software, third party support via media and peripherals—the iPod is going to remain the dominant player on the market.

Posted by Clockwork Llama on December 13, 2005 at 6:37 PM (PDT)

11

Additonally, the “economies to scale” was a very valid reference.  Apple has already flexed their purchasing muscle as seen with the Samsung deal, and are in a position to price very agressivly if another player is able to usurp some of their market share.

Posted by Bryce on December 13, 2005 at 6:40 PM (PDT)

12

You know, I wasn’t even bashing the iPod, I was bashing the article which didn’t say anything valid. “Cool factor” is not anything an analyst should be using with the term “years” for ANY device. Once upon a time Tamagotchis were actually cool. Once upon a time Cabbage Patch Dolls caused riots in toy stores. Not that long ago you could auction off a Furby on eBay and nab 3-5X its value they were so hot.

Cool does not last and its status is at the whim of the public. Ergo, the analyst trying to argue for the iPod’s long term success based on “cool factor” is a specious argument.

As for the economies of scale, yes, its true *right this minute*; however, “years” should mean something more than 24 months from now and Apple’s lead is not going to make them a leader because of price point indefinitely, particularly given Apple’s long history of higher than industry standard margins.

On those two points I believe the analyst is full of it. This has nothing whatsoever to do with the merits of the iPod but the arguments for why it will continue to dominate for years.

Posted by Code Monkey in Midstate New York on December 13, 2005 at 7:16 PM (PDT)

13

jshutzman
the marketing for the ipod didnt make me go out and buy it. i was sick and tired of putting songs onto cds. and buying crappy mp3 players.
apple got the mp3 player right. its easy and simple.

Posted by navas on December 13, 2005 at 7:24 PM (PDT)

14

One factor nobody has mentioned is accessories.

Article the other day said the annual sales would be $500 million and that in a lot of stores, the tie-ratio is greater than one-to-one meaning people are buying a case and maybe an FM transmitter or two cases for their iPods.

It’s becoming more and more a bigger part of the iPod’s appeal.  MS recognizes this because they’re trying to lead an effort to develop a standardized interface for electronic accessories for DAPs.  The idea is to try to accessory makers to develop docks, speakers, car kits, etc. for the rest of the DAPs out there.

Posted by wco81 in West Coast on December 13, 2005 at 7:48 PM (PDT)

15

Well, everyone here is a bit right, but “wco81” has hit upon the most driving iPod success stability and growth reasons these days: aftermarket.

Like Harley-Davidson, the iPod has spun off a myriad of businesses, some who are solely dependent on the iPod and its success. However, like Harley-Davidson, the iPod can become a victim of its own success and be driven so much by its iconic status that it begins to fall behind. Only time will tell, but there is no questioning Apple’s current success with the iPod.

Posted by FahrenheiPod 451 on December 13, 2005 at 11:49 PM (PDT)

16

I’m not going to go bashing Creative or go pitting DAP vs DAP…

I’m just going to throw my lot in with those who are saying iTMS and the aftermarket are what’s keeping the iPod and Apple at the top.

As far as those two points are concerned, Apple exploited them and their appeal to the fullest and it’s continuing to pay off for all involved.

In the grand scheme of things, design, features and other related aspects of DAP’s fall down a few rungs in importance compared to 3rd party/aftermarket support. 

For example….you can go on and on and on debating Creative’s new ‘iPod-clone’.......but does Creative have a well-stocked online Music Store of its own ready and waiting for customers?  Is there a decent selection of aftermarket accessories (cases, radio tuners etc.) either out or ready to launch in the near future??

No way.  Maybe it’s just me, but I haven’t seen any kind of substantial effort either launched or supported by Creative since they entered the DAP realm.

For any other company, whether it be Creative, Microsoft, Archos or whoever…....if they want to truly kick Apple and the iPod down a few notches, they’ll have to look at devoting serious attention to these two areas, in addition to backing up their DAP all the way.

Until then, the iPod reigns as king of the hill.

Posted by huskerz85 on December 14, 2005 at 1:59 AM (PDT)

17

“Cool factor? is not anything an analyst should be using with the term “years? for ANY device

Havent ipods had cool factor for years already? Why not speculate they will retain that factor for years to come?

Posted by mbayuk on December 14, 2005 at 9:32 AM (PDT)

18

”“Cool factor? is not anything an analyst should be using with the term “years? for ANY device

Havent ipods had cool factor for years already? Why not speculate they will retain that factor for years to come?

iPods hit critical mass in early-mid 2004, they’ve only been serious hits since the combination of the (discontinued) mini and the already not-so-cool silhouette ads began to become popular. You can’t even figure out a way to get years out of that span.

I’m sure there are people who *think* iPods had “cool factor” before that, but they’d be wrong. They were a good player with good software in 2001, 2002, and even 2003, they just weren’t cool or hits with the general public (largely on account of their mostly Macintosh following since it was also in 2004 that Apple fully ported iTunes to Windows).

Posted by Code Monkey in Midstate New York on December 14, 2005 at 7:16 PM (PDT)

19

As far as I’M concerned there was a time when Apple could sit back and print cash with the iPod…

That time has passed, rival companies are STARTING to get on the ball and put up some compitition, not great compitition mind you, but compitition none the less.  Wheather the iPod continues to dominate for the forseeable future or wheather it falls by the way side in a year or two depends on Apples NEXT move….

Sure video was pretty well a no brainer, but a MAJOR portion of what keeps the iPod in front is the bleeding edge technology.  The iPod was the first really usable Hd Mp3 player, then it was available to windows users, then the 3rd gen cam out and all hell broke loose….

Apple needs to keep coming up with (and adding) inovations that WORK and work WELL without letting the core of the beast fail.  If they don’t creative, iRiver, and *shudder* Sony WILL catch up, and Apple will be toast in 2 years….

Balls in your court Apple, lets see you hit a winner again! :D

Posted by Ipodder@Heart on December 14, 2005 at 11:03 PM (PDT)

20

Four years ago this month, I aquired my first iPod. It was a first generation 5 gig model that I received as a Christmas present. Being a Mac man since 1998, I had heard about this new device, but didn’t think that much of it. I would have much rather received more ram, or a new hard drive instead. I wasn’t excited about the iPod in the least. Then I got home and started checking it out.

It took me all of maybe an hour to realize the potential of the iPod. It was similar to the way I felt when CD’s first came out. I would never again have to remember to grab the right CD as I was heading out. I quickly figured out a way of using it through my truck’s head unit by wiring it into the multi-CD controller (this was before any iPod accessories existed). I was in love.

It wasn’t long before I was telling everyone I knew about this incredible gadget. Very few people had ever heard of it, and those that had weren’t very excited. I had one friend that insisted that the iPod would only be “king” for another month or two because other companies would make models that blew it away. He named one, that I can’t remember, but when I looked into it, discovered it was the size of a small lunchbox, and was very cumbersome. I told him then that this was a product that wouldn’t be equalled anytime soon.

Two years later, I bought a 3rd gen iPod. The iPod was much better known by then, but still hadn’t quite hit the big time yet. My pessimistic, Apple-hating buddy still insisted that competing products would be better than the iPod “any day now”, and that it was going to fail miserably by Easter. That summer is when the iPod became “cool”, and everyone had to have one.

iPod may not have been the first, the most feature packed, or the best sounding, but it still defined the market, much like Sony did for personal cassette players with the Walkman. Apple has been a cutting edge company for years, and has often set the standard, but in this case, they did even more. Until a completely new technology comes around, the devices that fall into this category will aways be known as iPod or iPod-like players. They managed to get their foot in the door like Microsoft did with Windows 95. Even though Windows was nothing more than a weak copy of the Mac OS, it became the standard, and will always be the leader when it comes to operating systems, no matter how much better competing OS’s are. I truly believe the same is true for the iPod. Even if apple fumbles the ball once or twice, they still will have the lion’s share of this market. Hopefully they learned from past mistakes, and won’t rest on their laurels again like they did with their OS 10 years ago.

BTW, now that I own a 5th gen iPod, that anti-Apple buddy of mine wants to buy my 3rd gen iPod. smile

Posted by PKRWUD on December 15, 2005 at 3:11 AM (PDT)

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