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iPod market share ‘has only one way to go’

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By LC Angell

Contributing Editor
Published: Thursday, November 4, 2004
News Categories: iPod

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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Comments

21

“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.”

Everyone seems to have *seen* this data, or knows about it, but when push comes to shove all they can offer is, like you, anecdotal evidence.

Posted by Demosthenes on November 6, 2004 at 5:33 AM (PDT)

22

Yes, the iPod is helping to sell Macs, but another point (an often overlooked point) is that the Dell Jukebox is also helping Dell to keep customers, if not also win customers.

The simple point is that the iPod is great, but still has room for improvement.  Everyone on this site could probably name a couple obvious tings they would like to add to, or change about the iPod.

The iPod has made me think often about switching from PC to Mac, but it’s not strong enough to compel me to abandon all my investments in Windows software and knowledge.

If Apple truly wants to drive people to the Mac, then I believe they should’ve never opened the iPod up to the Windows market.

I believe their desire is to simply sell as many iPods as possible, and also enjoy the benefit of a few people switching over…but many will not switch.

Posted by Talking Madness in Los Angeles on November 8, 2004 at 1:35 PM (PDT)

23

Linking the two items of data below, the total sales of the iTMS does not even equal half the revenue from mobile phone ringtones.

Surely this makes an iPod Mobile a question of when? and not if?

http://www.economist.com/displaystory.cfm?story_id=3329169

Although they have mushroomed, legal online downloads account for less than 5% of industry revenues.
...
The best distribution of all will come when, as many expect, the iPod or some other music device becomes one with the mobile phone. Music fans can already hold their phones up to the sound from a radio, identify a song and later buy the CD. At $3.5 billion in annual sales, the mobile ringtone market has grown to one-tenth the size of the recorded music business.

Posted by Demosthenes on November 8, 2004 at 6:57 PM (PDT)

24

Demosthenes,

I never did get around to posting the analyst reports that I’d seen, but today’s ipodlounge news has an analyst report with both data and forecasting supporting the “halo effect” of satisfied iPod users switching from PC to Mac:

iPod creates ‘word-of-mouth wildfire’
Piper Jaffray raised its target price on Apple stock to $100 from $52, citing a “halo effect” from satisfied iPod users. The firm said that in a survey of 200 users, 6 percent were former PC users who have purchased a Mac after becoming an iPod owner, while 7 percent were former PC users who plan to buy a Mac within the next 12 months. “We believe that the remarkable satisfaction with the iPod creates a word-of-mouth wildfire that generates new customer interest in Apple products,” Piper Jaffray said.

I’ve never owned a Mac, but I want Apple to thrive, so I hope this pans out.

Posted by tpmn on November 22, 2004 at 9:18 AM (PDT)

25

http://www.ipodlounge.com/ipodnews_comments.php?id=5448_0_7_0_C

6 percent were former PC users who have purchased a Mac after becoming an iPod owner ... <a>7 percent</b> were former PC users who plan to buy a Mac within the next 12 months

These analyst reports are nearly worthless taken singularly. Some Apple boosters have been foretelling a Mac sales bounce from the iPod for over two years now. The only proof will be seen in increased Mac sales in the future. I note that the PJ report anticipates almost all profit growth coming from iPod sales, leaving Apple’s PC business still stagnant, with revenues growing in pace with the general market’s organic growth.

Apple lost its best shot at increasing Mac sales when it brought out the Windows iPod and then Windows iTunes.

This was a failure of nerve. If you look back at Apple’s last killer “app”, he LaserWriter, this was the lynchpin that saved the Mac from oblivion.

Steve Jobs’ idea, of a compellingly beautiful PC that people would simply buy for the hell of it, had failed miserably. “The computer for the rest of us” was hollow.

Then along Aldus with PageMaker and the office hardware division in Apple developed the LaserWriter in tandem with Aldus for deployment. Macs went from a curiosity to a staple in offices, and this wedge enabled them to expand market share.

Think back then if, after only a few months, Apple had abandoned the Mac and released the LaserWriter and PageMaker for the PC. Where would the Mac be now?

Posted by Demosthenes on November 23, 2004 at 3:35 AM (PDT)

26

this thread is really funny to read through now after macworld. flash ipod for the joggers. mac mini for the switchers (maybe). and financial results. profits way up, ipod sales way up.

is it not true that mac units shipped have been going up? if so, then i don’t get the argument that apple’s pc biz is withering away. the imac is a huge hit—apple’s biggest seller ever. anyone read reviews of it? in pc mag? increased market share would be nice, but is not necessary for apple’s viability. it has less than 3% market share but is the 10th largest pc maker in the world—and the least likely (aside from dell) to drop out of the consumer pc market. some of these criticisms just don’t make sense to me.

sure the ipod could be improved, but what couldn’t? if people love it and buy millions of them and continue to buy them and tell their friends to buy them then maybe it’s more than a marketing success. maybe apple actually creates good products? oh, and for those partaking in the form vs. function debate… FORM IS FUNCTION! FUNCTION IS FORM! people won’t use what they don’t like to hold/look at (unlessed they are forced to—or don’t percieve that there is a choice). i’m surprised so many people don’t understand this simple principle.

when a company is selling more units, increasing profits quarter over quarter and year over year, has a huge hit in a growing sector of the tech market, created the first truly successful online music sales model, and is a top-rated brand among consumers, one would think that it would be the definition of success. only in the strange world of apple analysis can these things add up to gloom and doom and ultimate failure. incredible.

Posted by reverb on January 13, 2005 at 7:20 AM (PDT)

27

from macnn:

Overall, Apple saw a 26 percent increase from the year-ago quarter in Mac sales.

doesn’t sound like a withering pc business to me. anyone? anyone?

Posted by reverb on January 13, 2005 at 8:05 AM (PDT)

28

doesn’t sound like a withering pc business to me. anyone? anyone?

Mac sales had plummetted over the last couple of years because the lineup was so stale and unexicting. So really, releasing the G5 was *bound* to lead to an increase in sales as people replaced their aging rigs. Apple was coming up from a disturbingly low trough. How low?

http://www.macobserver.com/article/2004/10/29.6.shtml

Apple Computer’s worldwide market share fell to 1.8% in the third quarter of this year from 2.1%, and dropped to 3.2% from 3.6% in the U.S., according to figures from research company Gartner. The numbers also showed dramatic declines in the quarter-to-quarter growth rate of Macs sold while Apple’s Windows-based competitors saw double digit increases in the U.S and an almost 10% rise worldwide ... Compared to other PC vendors, Apple had a 5.0% decline in unit growth worldwide from the previous quarter. While Apple declined, its competitors gained 9.8% in unit growth from Q2. Year-to-year figures showed Apple with a 5.7% jump, as other vendors rose 9.8%. No other PC vendor in the top ten posted a decline in year-to-year unit growth worldwide but Apple. The leader in worldwide market share was Dell in first place with a 16.8% share, followed by HP with 15.0% and IBM at 5.6%.

———————-

It’s great news that Apple has managed to eke out some gains, but hardly surprising.

Posted by Demosthenes on January 13, 2005 at 8:30 AM (PDT)

29

Demosthenes is really pissing me off. Is he being payed to spread FUD? He must be a professional…who else could make bluetooth look like an unwelcome feature? And look at all the time and care spent on research for every post!
I hope he goes away and gets a real job, maybe they’ll let him clean the toilets at Microsoft now.
This thread is old, but since he appears to check it every day I’m sure I will get a curteous professional reply full of well-researched facts and figures that took an hour to write.

Posted by DS44 on May 2, 2005 at 6:24 PM (PDT)

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