iPod market share ‘has only one way to go’ | iLounge News


iPod market share ‘has only one way to go’

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.”

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And that’s a “problem” how? Why should Apple HAVE to sustain a near-monopoly? What if 92% drops to 75%—in a growing market that’s still MORE iPods sold than now.

As for other competitors offering just as good products for less… you’ll have to search pretty hard to find reviewers OR buyers who agree with that :) But I forgot… the iPod success is one of “marketing” alone.

So in the end this ingenious writer’s criticism comes down to… iPod will be #1 for years, but won’t always be at 92%—and that this is a “problem” for Apple.

Posted by Nagromme on November 4, 2004 at 12:32 PM (CST)


Plus he repeats the bizarre but common statement that Apple’s doomed if Mac marketshare falls (yet makes no mention of short-term G5 shortages).

Apple can sell more Macs every year and still lose “market share” if Windows sales are ALSO growing, and faster. But selling more Macs every year is STILL successful and profitable even so.

Should I mention the longer usable life of Macs, which automatically reduces the buying rate of Macs vs. PCs? Probably not :)

Posted by Nagromme on November 4, 2004 at 12:39 PM (CST)


“Apple can sell more Macs every year and still lose “market share” if Windows sales are ALSO growing, and faster.”

But Apple is not. Its dollar revenue from computer sales when adjusted for return on shareholder equity over the last five years is static or falling.

The plain truth is that Appple’s PC business is withering away, from a combination of classic Apple doffiness and also the same kind of benign neglect that killed its original monopoly cash cow, the Apple ][.

The problem going forward is that you cannot design and market complete vertically integrated systems like the iPod/iTunes/Mac-PC value stack without a huge operation. And sales of the iPod, a relatively cheap gadget, is not going to fund Apple at its current size. Selling trinkets is, as the article points out, a very dodgy proposition for a company like Apple.

If Apple wants to be one-third to one-half its current size then sure, go for it. Become just a seller of low-end consumer geegaws. But then get used to competing in the marketplace as a much smaller company and this is tough. Just ask Creative or iRiver.

The introduction and development of the iPod effectively parasitized Apple’s PC business over the last few years. Apple tried to represent this as a symbiosis, but as the article points out, the Mac sales have continued to decline.

Note that Apple’s shares are doing quite well at the moment - at their highest… for four years. So if you’d bought Apple four years ago you’d have just about made your money back. Well, less for inflation and opportunity cost.

But the key issue is the huge tranche of insider shares that are being offloaded. These are huge numbers of shares - 40% of sindier shares have been sold recently! If Apple’s future prospects were rosy, you can bet all the people on this list would be hanging on to their shares But they are not. Doesn’t that tell you something?

Follow the money!

Posted by Demosthenes on November 4, 2004 at 12:59 PM (CST)


When will all these market researchers realize that it is not about price!?!?  I own and use my iPod because of two equally important reasons:

1) It plays music.  Very well.  With a great interface to do just that.

2) It is a piece of art.  The design of the iPod is just beautiful.  I, for one, care about good design.

I have not seen one “ipod killer” that even comes close on number (2).

Posted by m. sherman on November 4, 2004 at 1:33 PM (CST)


“The design of the iPod is just beautiful. I, for one, care about good design.”

it is a nice design, but it is also a constraining design. Apple’s focus on the esthyetics of the iPod over functionality and expandability leave it vulnerable. I will explain further.

To take a historical analogy, think of Ford and the Model-T. Now, there were car manufacturers before Ford, but nobody had figured out how to sell good quality, well-manufactured autos relatively cheaply and make them a must-have possession.

it worked well for Ford for several decades but they became trapped by the design. Because Ford had invested so much in the design and (black) aesthetics of their autos, the company was caught on the hope as GM and other manufacturers stole market share by offering not a single, mass-produced one-size-fits-all design but a staggering range of customized and lifestyle-influenced designs for autos.

Apple runs the risk of seeing something similar happen with the iPod. The iPods iconic success has come with several risks for Apple. Outside of the simple danger of a fashion shift from “cool” to “uncool”, relying on a single iconic design carries technolgically retarding risks.

For example, the iPod’s lack of bluetooth. Now it might seem that providing Bluetooth would be a slam dunk for Apple. But why has it been delayed so long? Here’s why: Apple has invested so much in the branding of iPod as a small, visible white box with white wires coming out of leading to the possessor’s ears (and by connexion, their brains). It represents a huge amount of branding collateral: witness the success of the ‘iRaq” agitprop about Bush’s use of torture on prisoners.

This strategy worked well in the past for Apple as its distinctive headphones and wires were a public advert converting consumers into walking billboards. In some urban settings now it’s hard to find a bus or walk a block without seeing at least one person wearing an iPod.

So what would happen if Apple provided a Bluetooth interface? People might start wearing an array of Bluetooth earpieces and using Bluetooth remotes. They would stop publicly displaying their iPods. The iPod would become invisible. Commoditized. Background.

I think that’s a big reason why Apple, by denying Bluetooth functionality, is purposely constraining its consumers into public displays.

Posted by Demosthenes on November 4, 2004 at 2:13 PM (CST)


A second acilles heel in the ubiquity of the iPod design is the scroll wheel. It is also part of the iPod’s pseudo-religious iconography. By continuing to provide a click wheel on the Photo iPod, Apple was left with no room for a decent sized screen and is using the same tiny screen size that was roundly condemned when implemented a few years ago by other manufacturers for multimedia devices.

Another issue is Apple’s use of the spinning hard disk for maximal song storage compared with flash players which, as Steve Jobs spent a lot of time ranting about at the launch of the iPod Mini, basically sucked (according to him). I note though that he has been uncharacteristically restrained these past few months about the suckage of flash-based players…

Anyway, by using a spinning disk Apple has sold its athletic users short. yes the iPod has pretty good skip management, for a spinning disk. But it’s easy to spot an iPod jogger - they are the ones either running and holding the iPod with one hand, or wearing it on their arm or on their hip but running with a kind of loping, crab-like gait that minimizes extreme vibrations. Yes if you see people running or playing sports with tiny flash players strapped to their arms, their postures require no similar adjustment because they are not affected by skipping.

So if Apple wants to strech the iPod to do different things or to use different technologies then its core design, storage technologies, and aesthetica will by necessity be altered or obscured.

Where would that leave Apple? Possibly looking in design a lot more like, say, Rio. After nearly ten years in the mp3 player business, Rio (now owned by Denon/Marantz) has a wide variety of mp3 players with startlingly different designs. Some of them are butt ugly, but some are pretty functional.

Posted by Demosthenes on November 4, 2004 at 2:49 PM (CST)


The quantity of mp3 players designs either in the market or coming is vast, and growing. I’ve seen mp3 sunglasses. I’ve seen waterproof mp3 players for watersports and scuba/snorkling. I’m seeing an increasing number of mobile phones with mp3 playback and loudspeakers built in. And outfitting PDAs with many multi-GB cards for mp3 playback is no longer such an insanely expensive proposition…

And yet if Apple wants to grow its brand how can it do so quickly without dissufing the iPod’s “feel”? I’ve already seen people on iPL grousing about the Photo iPod and saying it should be an audio-only device.

Selling not one or two devices at different price points but a whole range of devices within a synthesis and maintaining that momentum and focus over multi-decades is something that a company like Sony excels at yet Apple has never managed throughout its existence. This is the issue that the the analyst is trying to get to: Apple has succeeded as a niche provider of a single time-limited product, but has yet to prove that it can successfully transform into a widely diverse consumer electronics company. It’s attempts to do so can and will be resisted by many of its fans for whom tinkering with the design of its single product is almost heresy.

Posted by Demosthenes on November 4, 2004 at 2:51 PM (CST)


> “Anyway, by using a spinning disk Apple has sold its athletic users short. “

It’s also the only way to get more than 1Gig for any reasonable price!  Can you imagine trying to cram 40 gigs of flash memory in there?

> “Some of them are butt ugly, but some are pretty functional.”

I don’t want just ‘functional’.  I also want beautiful, elegant, simple.  That’s what the iPod is.  It is the result of a company that cares about both form and function.

Posted by m. sherman on November 4, 2004 at 3:03 PM (CST)



I’ll give my version of all that in shorter form:

1. G5s have been in short supply—temporarily.

2. Public ignorance in choosing Windows is slow to change.

3. iPods drive people to Macs—but not overnight.

Posted by Nagromme on November 4, 2004 at 5:29 PM (CST)


“iPods drive people to Macs—but not overnight.”

It’s been years. There’s no evidence of this. On what are you basing this assertion, aside from the public statements of Apple execs?

Posted by Demosthenes on November 4, 2004 at 5:56 PM (CST)


“It’s also the only way to get more than 1Gig for any reasonable price! Can you imagine trying to cram 40 gigs of flash memory in there?”

You’re missing my point. If I am going jogging I don’t want several weeks worth of tunes on there. But I do want something that I can bounce around as much as i want without skipping, and without forcing me to run like I am power walking or something.

My point is that to continue to widen its market penetration, Apple has to stretch the iPod design into new environments. This will necessitate changing, sometimes quite radically, the design and feel of the iPod. Apple will no longer have the luxury of a homogeneous representation of brand. There have been countless case studies done of companies that have failed to properly control the maturation of a brand and its extension into new technological areas.

The aimless, confusing, and profitless proliferation of Macs, Newtons, and Pippins in the early 1990s from Apple is a classic example of this.

Posted by Demosthenes on November 4, 2004 at 6:00 PM (CST)


1. Demosthenes what are you fighting for? apple kicks ass and if you don’t like em then eat your heart out because ALL iPod owners are satisfied. They are ALL happy with there pruchase more then they would with any other digital music player.

2. Theres more iPod lovers then haters.

3. I won’t be checking back on this post so don’t brother commenting on what I just said Demosthenes.

Posted by Bite The Curb on November 4, 2004 at 9:04 PM (CST)



That was very well written.  Your point is very well taken.  Bite The Curb shame on you for your garbage of a rebuttle. 

Apple has been and will continue to exist for the niche consumers.  Ipod has been affective yet will no doubt lose their leverage - it plays music - others have immitated and gaining ground- differentiation will be difficult - its just a matter of time - in the meanwhile i will have 2 run like a crab - goddamn that cracked me up - sometimes i do in fact have 2 hold it up in front of me so it wont freaking skip - 
but in agreement with the other ipod users - i have yet 2 run across a device that is so easy 2 use and functional -   
As for that user that said the ipod is beautiful—seriously - whats wrong with you? 
Apple should begin marketing home appliances - oh they would sell by the millions for their ‘pretty’ designs.  this just in - the iCoffee maker -

Posted by reactions on November 5, 2004 at 5:14 AM (CST)


>1. Demosthenes what are you fighting for? apple kicks a** and if you don’t like em then eat your heart out because ALL iPod owners are satisfied. They are ALL happy with there pruchase more then they would with any other digital music player.

Absolutely not true.  I think my 3G iPod’s battery life sucks.  It has a form of the audio bug (which I believe is a hardware bug for which there is no software solution), Apple support hacked me off royally with their attitude of finding ways *not* to help me, where other companies are finding ways to help me.  In the end, I agree with the source article - I don’t see how Apple can compete successfully with their current strategy, including support, etc.

And for all you people who love your iPod for it’s physical design - that is *exactly* what a marketing success is - choosing form over function.

Posted by kokketiel on November 5, 2004 at 5:36 AM (CST)


“Demosthenes what are you fighting for?”

For the right to party, of course!  What’s your reason?

Posted by Demosthenes on November 5, 2004 at 5:39 AM (CST)


“The plain truth is that Apple’s PC business is withering away…”

BS.  Another clueless armchair MBA spitting out the same old rehashed inaccuracies.  iPods are helping to sell Macs, plain and simple.

Posted by Quoth_the_Raven on November 5, 2004 at 6:53 AM (CST)



What the hell is a nitwit like you even doing on an iPod related site.  Its obvious you’re just here to make an ass of yourself.  Well, you’ve succeeded.  Now go home and take your medication.

Posted by Quoth_the_Raven on November 5, 2004 at 7:09 AM (CST)


“Another clueless armchair MBA spitting out the same old rehashed inaccuracies.”

I don’t have an MBA, thanks very much. But I do admire your quick attempt at lebelling people in order to dismiss their arguments. Some might call that unthinking stereotyping, but I will be kind.

“iPods are helping to sell Macs, plain and simple.”

So far I’ve seen two people repeat this Article of Faith here, yet not offer a single shred of evidence to back it up. I guess that’s why they call it the Cult of Steve then.

iPod sales exploded over the past year! If iPod sales led to Mac sales we would have seen similar velocity in Mac sales. But we have not. Wither then your Article of Faith?

Posted by Demosthenes on November 5, 2004 at 10:11 AM (CST)



Two points:

1)  Didn’t I recently see an analyst’s report that said that iPod sales seemed to be spurring sales of Apple computers?  I think the data are out there suggesting that there is some sort of coattail effect.

2)  Anecdotal evidence:  I’ve never owned an Apple, and I’m definitely not a member of the Cult of Steve.  But I am decidedly a member of the Cult of iPod, not because of the way it looks, but because of the way it works.  Its elegant simplicity combined with enormous capacity has reconnected me with my (450-CD) music collection and my love of music.  And because I’ve literally had my life changed for the better by the iPod, I’m seriously considering buying an Apple for my next computer, just to see if Apple can improve my computing experience in the same way they’ve improved my music-listening experience.

Just my two cents.  YMMV.

Posted by tpmn on November 5, 2004 at 3:25 PM (CST)


I think you’re all a bunch of babies(to put it mildly) for bickering about a piece of electronic equipment. Good god, get a life.  If you don’t like the Apple iPod or iPod Mini or Apple products in general….....don’t buy them. Stop wasting everyone’s time by your unnecessary whining.  If you have some thing constructive to say…say it, but don’t sound like a presidential debate where all they did was take jabs at each other.
Christine (yes, I own an Apple product…... iPod Mini & I’m happy w/ it).

Posted by christine1973 on November 6, 2004 at 4:25 AM (CST)

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