Why the iPod is Losing its Cool

An anonymous reader writes "The Guardian Unlimited has a provocative article on the recent decline in iPod sales: 'Analysts warn that the iPod has passed its peak. From its launch five years ago its sales graph showed a consistent upward curve, culminating in a period around last Christmas that saw a record 14 million sold. But sales fell to 8.5 million in the following quarter, and down to 8.1 million in the most recent three-month period. Wall Street is reportedly starting to worry that the bubble will burst.'"

60M sold? that's a lot.

From the article:

Although it has sold nearly 60 million actual iPods and a billion downloaded songs worldwide, cracks have begun to appear in the edifice.

There doesn't seem so much of a crack in any edifice as much as there's ultimately a saturation of the marketplace. At some point, pretty much everyone who wants an iPod gets one, and by now that's pretty much done (anyone hear any recent "I want an iPod" whines from anyone?).

Jobs (from Apple) isn't letting the grass grow ... with his

most ambitious iPod service yet - the sale of feature-length films via the internet for viewing on the devices, which may receive an expanded 'widescreen' and improved storage capacity. If downloading movies from a computer to an iPod proves even half as revolutionary as it did for music, the multibillion-pound DVD industry could be quaking.

As seen in a previous slashdot discussion (the Amazon Unbox article [slashdot.org]) on video download, it isn't going to happen, or is at least unlikely. There is a slew of articles and surveys showing consumers, especially the target demographic of "younger folk" aren't that interested in long (full length features) videos. Video downloads, management, etc., is just a messier beast for consumers, enough so it's a long way from emergent (storage considerations, price, quality of small devices, battery power for video, DRM, download times, backups, etc.).

Also, consumers are getting hip to the snake oil that is iTunes: (from the article)

..., We have heard from some conspiracy theorists that the batteries are made to die soon after the warranty ends.

'Other complaints are that iTunes [Apple's online music store] is overpriced and the format is not easily transferred on to other players. In our ethnography interviews, some long-time iPod-users told us that they have stopped updating their iPods because it's too much work, while other consumers who had bought iPods more recently had not even taken theirs out of the package to set it up.'

Yeah, initially all were in love with the iPod because for the return on effort, it seemed like magic. Consumers eventually get tired of jumping through even the tiniest of hoops to continue "enjoying" their gadgets. They want to turn it on, and not have to worry that the computer from which they're trying to transfer music is "iTunes anointed" or not. DRM-fatigue, finally, sets in (it's about time!).

This is the SONY walkman all over again, then the SONY CD walkman... it's done. It's hard to imagine quantum leaps of coolness and convenience beyond an iPod or video iPod. The curve had to level, there just isn't any there there. Apple should be happy with what they've done, but I don't think this is a growth niche any longer.

Re:60M sold? that's a lot.

Yeah, initially all were in love with the iPod because for the return on effort, it seemed like magic. Consumers eventually get tired of jumping through even the tiniest of hoops to continue "enjoying" their gadgets. They want to turn it on, and not have to worry that the computer from which they're trying to transfer music is "iTunes anointed" or not. DRM-fatigue, finally, sets in (it's about time!).

The majority of iPod users use MP3s, which aren't affected by DRM. And DRM isn't anything at all new to iPod, either. There's no reason to assume the correlation that you take as a given. Any random anti-DRM screed is sure to get modded +5 on Slashdot, but you should put in the extra work and have it at least make some kind of sense.

And it isn't a scientific survey, but every person I know who's technologically savvy enough to be downloading MP3s is also downloadings .avi's. Here in China MP4 compliance is a big selling point for cell phones, PDAs, and other random gadgets. I gotta believe it's the same in the US. Amazon may not be impressing people, but that has more to do with the price than the fundamental concept.

Re:60M sold? that's a lot.

In my opinion, portable video will never be really as successful as portable music.
Music, unlike video, requires only one sense (hearing) and can be passive while one is doing other things.
You can listen to music while you browse the web, jog, write code.
You can't really watch a video using a portable device while doing those things. (other than porn...)

It can work though for people who travel a lot in public transportation.
That niche is partly filled by portable gaming which is also an activity that requires your attention.

Re:60M sold? that's a lot.

You can listen to music while you browse the web, jog, write code.
You can't really watch a video using a portable device while doing those things. (other than porn...)

Unless you're impotent, watching porn while jogging doesn't sound like a comfortable thing to do. Especially when you're wearing those jogging pants.

"Dude is that your....??"
"That's my ehm IPOD sticking out! That's right"

Re:60M sold? that's a lot.

I agree. People don't buy music to listen to it. They buy music so that they can do something else and not get so bored doing it.

Portable movies pointless

In my opinion, portable video will never be really as successful as portable music.

I think you're right, and I think Apple knows this, which is probably why each new Mac Mini (now with Front Row, a remote control and TV output) has been inching closer and closer to the TV set. I suspect people will download videos via iTunes just so they can watch them on TV almost instantly, without the fuss of having to leave the house, probably ignoring whether they can watch them on their iPod or not.

Re:60M sold? that's a lot.

You missed the point, again. iTunes, by default is set to import CDs to AAC (I forget which bit rate). Changing to mp3 requires the user to go into the scary "Advanced > Importing" tab in the preference pane. MANY people, if not most, don't even notice that their ripping to AAC instead of MP3, since they use the "import" button on their CDs instead of choosing the "Convert Selection to [whatever]" option. The point is, to switch to mp3s you have to:

1. Know that iTunes is NOT innitially setup to rip to MP3
2. Have a desire to switch from AACs to MP3s
3. Know how and where to switch the settings over, or have a desire enough to look it up in help

Only a very small segment of the population are going to go "out of their way" (even if it's a fairly small trip) to switch, and most don't even know it. By the time many people do realize that they're encoding AACs, they've been already working out fine for them on the iPod, so they have no real desire to switch. On top of that, when they DO get interested in learning the difference, they have the entire internet, as well as Apple Computer saying, "AACs are better than MP3s" (which they are).

So no, I would be willing to guess that a good 75% of ALL CD imported tunes on digital music players are AACs. The MP3 is dead, most people don't even know it.

Re:Not just DRM but client fatigue. Free is better

You need a special client to load it and it only loads AAC.

No, it will load AAC, MP3, AIFF, WAV and Apple Lossless files.

-jcr

Re:Not just DRM but client fatigue. Free is better

You need a special client to load it and it only loads AAC.

In your overbearing zeal you either don't know what you are talking about or you are lying. In addition to AAC files from iTMS you also have the choices of mp3, AIFF, and Apple lossless. That is just the audio music formats. You also have video and spoken audio (audio books) as choices. In your excitement to declare the king is dead you should be more careful about your accuracy or face being dismissed as an untrustworthy voice motivated more by spite than knowledge.

Re:60M sold? that's a lot.

...DRM-fatigue, finally, sets in (it's about time!).

You know I'm glad people are finally starting to realise they're being screwed in the ass by DRM. Over the last few months I've been asked various questions by (non technical) family, friends and colleagues that all involve DRM'ed content making things awkward, and not allowing them to do what they want with their legally bought music. I'm happy to tell them why they can't play their iTunes/Napster sourced music wherever they like; hopefully they'll wake up and see where their apathy has got them.

I then mention there are plenty of places people can get all the music they like without DRM, for nothing ;-) Personally I buy quite a lot of music (about 5-6 albums a week at times). Since the RIAA consider their customers, including me, to be criminals, I've decided to act like one. I burn, rip and share it, and give away copies to anyone who asks ;-) Ironically, if there were no DRM, I wouldn't act this way.

Re:60M sold? that's a lot.

I burn, rip and share it, and give away copies to anyone who asks ;-)

Link please.

Inevitable

Well we are speaking the inevitable here. No fad ever lasts forever.

Re:Inevitable

Of course. Because the iPod only sold 1/3 more in both the first and second quarters than last year. But wait - it's down on last year's Christmas rush sales!!!! It's in decline!! The death of the iPod is here!!!!!!! Oh wait. WTF??

Come on people, your supposed to be geeks and nerds and so inclined to actually care about real figures. Or is that not cool any longer?

Humor on a Sunday

Want to read something funny in retrospect? Read Microsoft's Press Pass interview released to combat the press coverage when iTunes for Windows came out: Q&A: Choosing a Digital Music Service for Windows Users [microsoft.com].

It's one big advertisement given in the form of a staged interview with Microsoft's general manager of their Windows Digital Media Division. Revel in the humor as he gives choice quotes such as, "iTunes captured some early media interest with their store on the Mac, but I think the Windows platform will be a significant challenge for them." Or "With Windows Media 9 Series, you get faster starts, better quality music, and support for the most devices."

Tee-hee...

Making a prediction here

Honestly, all doom-and-gloom iPod discussion in this article is going to look silly after this Tuesday's media event by Apple, which is rumored to be offering new metal-enclosed nanos in multiple colors, new iPods, a cell phone, a video streaming device, and movie downloads from Disney (which also means studios like Miramax).

Let's sit back and enjoy the negative comments from iPod haters wanting to look really cool and outside-the-norm for bashing a popular piece of technology that's left them behind. After all, it's par for course around here--let's not forget the original iPod announcement or the iPod mini discussions which were oh-so-accurate in their future predictions. Ahem.

"Fad" not a poorly chosen word, iPod = fashion

I'm sure the Apple faithful (*) will violently disagree, but the parent's use of the word "fad" is not poorly chosen. Recently local MBA students (**) in a marketing class surveyed hundreds of kids in local high schools regard digital music players. Stress "digital music players", they did not ask about iPod, they did not lead the respondents(***). The kids were pretty well informed, there was a lot of comparing and contrasting of various players at school. iPods were the most popular device, no surprise there, but there was a surprise. The most popular reason for choosing the iPod over competitors was fashion, a status symbol. It was not ease of use, although ease of use was identified as a category iPod wins in. For technology and features Creative was the winner, the lack of radio was a negative for the iPod.

The team that did the survey and focus groups was very quick to point out that this was just a class project, small scale and localized. However it was similar to a pilot program that found interesting results and could be used to justify a larger national study.

(*) I own an iPod, I love it, I would buy another. I own PCs and Macs and use iTunes on both platforms. However I am not religious about music players or operating systems.

(**) Working professionals who have real jobs in industry, under the supervision of a marketing professor who does this sort of thing for rather large firms. This was a class project, not a consulting project.

(***) I was not involved in the project but did I sit in on the presentation of the results. My recollection is that the questions went something like:
Do you own a digital music player?
What models did you consider?
What model did you purchase?
Why did you purchase that model?
etc.

Ecosystem is what is important to me.

I don't have one, I have an ancient 32K RCA K@zoo with 64mb SD card (the biggest it can handle) that I have not used in a while.

When I next upgrade it will be an Ipod, not because it is fashionable or faddish or popular, but because there is now a supporting ecosystem. Cars come with IPOD docks, you can get a cheap, nifty running package from Nike that tracks speed/distance while you are listening too music while your run.

In short I think it is the perfect choice for taking my music with me everywhere, moving seamlessly from jogging, to work, to driving cross country. I am just waiting for an 8Gig Nano to make the driving across country more feasable.

Running out of Customers??

Seems kinda obvious to me... we're running out of people who want one and don't have one already.

No surprise

I think its a mixture of the DRM/format lock-in, regular market saturation and growing competition. Personally I think that the lack of on the fly recording is one of the many reasons why I would get another mp3-player and not an iPod. But lets wait for Apples Showtime event and then talk about it again. Steve might have something to fix the xmas sales.

Re:No surprise

I think its a mixture of the DRM/format lock-in, regular market saturation and growing competition.

The mainstream public absolutely doesn't give a crap about iTunes DRM. It's so lax that you never notice it's there (and when people bring up iTunes DRM as a negative point, in almost every case you find that they've never tried it themselves). Most people's music collections are made up of ripped MP3s anyway.

As for the other two points, market saturation and growing competition have been around since the iPod came out in 2001, so that's nothing new. The market was saturated when Apple came to the game, yet they still won (pissing Creative off something awful). It seems the company performs its best when people are assuming they're down for the count. For the last 20 years, armchair pundits have been claiming Apple was dead, their products weren't selling, that "saturation and growing competition" were going to take them out, and so on.

I don't get this pervasive need to always hope for Apple's demise all the time. Without them, it'd be all Microsoft, all the time, with the awful WMA-based "PlaysForSure" dominating your music players and turning them into the typical Microsoft experience--unreliable, weird bugs and quirks, a hundred ugly little pieces of hardware running Microsoft software with no seamless vertical experience like you get from Apple.

Look, new automobiles have freakin' iPod dock ports built into them. The iPod isn't going away anytime soon.

Personally I think that the lack of on the fly recording is one of the many reasons why I would get another mp3-player and not an iPod.

I assume you mean you want it built-in, because the iPod has had built-in recording functionality for years now, accessible with add-ons like the Griffin iTalk.

Re:Coolness factor

When it comes to "Coolness Factor" I think it's safe to say that the Microsoft Zune is pretty much dead on arrival.

Duh

it's basic business. product lifecycles are virtually all the same. launch, rise, saturation and decline. right now ipod reaching saturation, and it will go into decline sooner or later. that said, it is still very profitable for Apple, and the brand is still stupidly strong. it will most likely stay like that for a few more years at least.

this is news?

because one you buy one...

.. you don't need to have another one, unless the first one breaks. Its like TV's. You go out, buy a TV. For most people the next time they buy a TV is when their TV breaks. My TV's have lasted about 10+ years. I'd imagine that the iPod should last at least 3 years.

Re:You'll eventually need new Apple batteries

I don't use my iPod that often, but the battery has lasted fine since 2004-10. Even if I needed to replace twice already at ~$17 (seems to be the going rate for a 4th gen) I'd still be better off vs. buying AA batteries. Not to mention the environmental damage fro