iPod margins slipping as nano, shuffle sales rise | iLounge News

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iPod margins slipping as nano, shuffle sales rise

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By LC Angell

Contributing Editor
Published: Tuesday, January 16, 2007
News Categories: iPod

Despite soaring iPod sales, analysts believe that the popularity of lower-cost nanos and shuffles will result in Apple’s first year-over-year decline in iPod revenue. Bernstein Research analyst Toni Sacconaghi estimates that Apple sold 17.5 million iPods during the holiday quarter, a 25 percent increase compared with last year, but likely at lower prices. “We believe the first ever y/y decline in iPod revenues may be unexpected for some investors,” the analyst wrote in a research note Friday. Sacconaghi estimates that the average sales price declined 22 percent, to $161 from $207, in the quarter compared with a year ago. Apple’s $79 shuffle accounted for 21 percent of all U.S. iPod sales in November, according to the NPD Group. The nano made up 51 percent of iPod sales during the month.

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Comments

1

Given the popularity of the nano and the shuffle over higher-capacity iPod models, *why* are people surprised that the iPhone only has 8 GB of storage?  It’s a cellphone with a nano, people - it’s not a video iPod.  Wait your turn.

Posted by celtic_elk on January 16, 2007 at 9:24 AM (PDT)

2

I believe the breed of iPod users who used to carry their entire music collection on one iPod is “dying out”. As shown by the sales percentages. And I think that is better… less iPod surfing, more iPod listening

Posted by Just me on January 16, 2007 at 9:40 AM (PDT)

3

I have yet to find anyone who just bought the shuffle.  Most everyone that I know who purchased a shuffle is buying it as their second, third, or more iPod.  The problem with the analysts is that they focus on a certain datapoint and lose sight of the big picture.

Posted by Scott on January 16, 2007 at 10:19 AM (PDT)

4

I dunno. One way to look at is that those who bought/received large capacity iPods are realizing that they want a nano or shuffle for working out or other purposes, and are supplementing their first iPod with a second, smaller one. Once they fill up their first iPod, they’ll start looking at replacing it with a higher capacity one.

Personally, I have a 4th Gen 40 GB which I filled up years ago. In the meantime I bought a shuffle and a mini, but won’t replace my 40 GB until the touch-screen interface moves from the iPhone to the new iPod. And many of my friends feel the same way . . .

Posted by PK on January 16, 2007 at 10:22 AM (PDT)

5

Does this really matter? Does anyone really care about what these guys say. They drone on and on and on about nothing. iPods will continue to sell and Apple will continue to make money on them.

Posted by Don Trammell on January 16, 2007 at 10:35 AM (PDT)

6

There is something to be said about having your entire music library on a large-capacity Ipod.
F’ing brilliant! We are not a niche market, and what these analysts fail to realize is that Ipod users graduate. Downloading music (free or otherwise) is very addictive, and shuffle and Nano users will outgrow their limited capacity—I have.

Posted by Best on January 16, 2007 at 11:18 AM (PDT)

7

The math doesn’t make sense.

If we use the lowest available price for the nano and full-sized iPod, we get:

Shuffle = .21 * $79   = $ 16.59
Nano   = .51 * $149 = $ 75.99
iPod   = .28 * $249 = $ 69.72
Average Selling Price = $162.30

That’s close to the analyst’s number, but here’s the problem.  That assumes that all nanos and all full-size iPod sales were the lowest price in the category.  And there’s simply no way that’s the case.

Simply using $179 as the midpoint for the nano’s moves, the ASP into the upper $170’s and I suspect reality is higher.

reinharden

Posted by reinharden on January 16, 2007 at 12:40 PM (PDT)

8

Good eye, Mathy.

Posted by Multimoog on January 16, 2007 at 2:59 PM (PDT)

9

“I believe the breed of iPod users who used to carry their entire music collection on one iPod is “dying out”. As shown by the sales percentages. And I think that is better… less iPod surfing, more iPod listening”
-Just me

Comments like this are absurd and reflect a lack of understanding of why people like the large-capacity iPod. 

I use my 30 GB iPod to carry my entire music collection, so that I will always have every song with me.  That means 11 straight days of music, never hearing the same song twice, if I so desire.  That also means never having to update my iPod in order to get rid of old music to make room for new.  This results in a lot more listening time for me and my 30 GB iPod, and less time fiddling with cables and music files like you with your shuffle.

Posted by jarofchris on January 16, 2007 at 3:09 PM (PDT)

10

And how many people use their hard drive iPods as an actual external hard drive? I do, for sure - I keep a copy of all my music on my computer - it’s only about 7GB - but all my movies and TV shows are just on my iPod, along with a lot of miscellaneous files, artwork and photos that I’ve backed up.

My point is iPods have been large portable hard drives longer than they haven’t, and I imagine a lot of users do what I do. It’s just really convenient and simple. Meaning there’ll probably always be a market for larger-capacity iPods.

Posted by Multimoog on January 16, 2007 at 5:21 PM (PDT)

11

I agree Multimoog, while I have an 30 gig iPod Photo, I use that mainly as an external hard drive.

I carry around my 8 gig nano everywhere, because of the sheer convienience.
(My music collection is a mere 5 gigs)

Posted by Josh on January 17, 2007 at 5:33 AM (PDT)

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