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Taking Back the Market

Death of the iPod 'Way Off in the Future'

Tim Nash - 2008.10.14

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Steve Wozniak's remarks to the Telegraph show how easy it is to not see life outside the Valley - and that his strength for Apple wasn't marketing:

"The iPod has sort of lived a long life at number one," he says. "Things like, that if you look back to transistor radios and Walkmans, they kind of die out after a while.

"It's kind of like everyone has got one or two or three. You get to a point when they are on display everywhere, they get real cheap and they are not selling as much."

Compared to Walkmans, launched by Sony in 1979, the iPod hasn't had a long life at number one. The Walkman era was only really over with the launch of the iPod - and even today Amazon sells cassette -based Walkman models. Simple math shows too, that with sales of over 160 million iPods and 40-50% of those outside the US, the majority of Americans don't even own one. With over 340 million Walkmans sold, iPod apparently has a long way to go.

Walkman sales, its long life as number 1, and that for the iPod the real Crossing the Chasm came in the Christmas quarter 2003 - and sales are still increasing - suggests that the iPod is still somewhere in the "Early Majority" phase in the technology adoption life cycle.

For most people, the Internet has yet to replace word of mouth, and it can take a long time for people to become comfortable with a technology through seeing friends with it and deciding that they want one too, particularly if they don't get the constant visual feedback from living in a city. Worldwide sales of PCs and cellphones are still increasing despite being available for much longer than the iPod and being used by more people.

Walkman had one large advantage over the iPod - the simplicity of the technology. Anyone could put in a cassette and press play. However, this simplicity made it easy for other manufacturers to enter the market, and Sony never had iPod's dominant US market share of over 70%.

It was the cassette, not the Walkman, that was played in the car. In a TMCnet article, iSupply figures 58% of new US cars in 2009 will have iPod support, up from 39% in 2008. Since so many listen to music and recordings in the car, this alone will make more people want one.

Also, iPods are busy entering new and larger markets than were available to the Walkman. While the market for recorded music is about the same size (in usage, not dollars) those, for example, in audio books, podcasts, education, and mobile video either didn't exist or are much larger. They will continue to grow too, as many more people can afford to buy an iPod.

Some will use their cellphone for this instead, but others, although attracted by an iPhone, will be put off by the premium pricing of the "network provider" package and buy a cheap phone, a cheap minutes + text package, and an iPod touch.

If Apple wants to maximise the market, it still has plenty to do before technophobes find iPods "Walkman easy". The idea of managing the iPod through a computer is enough to put many of them off and a huge disincentive for those who don't have easy access to their own or a family computer.

Even if you ignore the iPhone being a super high-end iPod - it was launched by another Steve as a widescreen iPod, new mobile phone, and Internet communications device - and it looks as though iPod sales are stuck at 50-60 million per year, this doesn't mean that sales will start a strong decline any time soon. On October 21st, I expect Apple to report sales of over 11 million - up over 10% from last year. Indeed, sales for the next few years will be more determined by the strength of the world economy than by everyone having one, and with the new and larger markets available iPod, should exceed the Walkman numbers eventually.

One day the iPod will die - when Apple finds it is no longer profitable to sell standalone digital music and video players - but that day looks to be way off in the future.

Tim Nash lives with his wife, her website on the area ariege.com, two daughters, a cat, and a dog in the French Pyrenees. He has worked for computer companies for more years than he cares to remember, lapsed for a while after the Apple II, but became a Mac fan when his wife introduced him to the IIsi. If you find his articles helpful, please consider making a donation to his tip jar.

Recent Taking Back the Market columns

No Verizon iPhone Any Time Soon, but Verizon May Have Another Apple Opportunity, 10.23. Put simply, the iPhone is a GSM device that Apple would have to re-engineer for Verizon's CDMA network. But Apple's tablet could benefit from Verizon's 3G network.
How Apple Will Beat Sony and Nintendo in Handheld Gaming, 10.16. The iPhone platform has more users than Sony's PSP, and it will pass Nintendo's DS platform within two years.
Palm Pre: Cutting Off Business Customers, 10.05. Palm contines to shoot itself in the foot by making the Pre increasingly unattractive to business users.
Competing Visions: Apple, AT&T, Google, the FCC, and Google Voice, 09.03. Apple wants to sell hardware, Google wants to sell advertising, and AT&T wants to sell you minutes. Some conflict is inevitable.
More in the Taking Back the Market index.

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