Apple Prepares For the Coming iPod Slump

Hugh Pickens writes "Companies like AOL have stagnated along with the products that made them successful as a mature market and downward pressure on prices led to a nasty death spiral, but Saul Hansell writes in the NY Times that Apple has used its amazing six-year run with the iPod to nurture other business lines. Even though the number of iPods sold this quarter grew only 1 percent from the same quarter a year ago, Apple should be able to sustain itself with three business lines that will help it withstand a collapse in the MP3-player market: a continuing revenue stream from the iPods that have already been sold because of the iTunes Store, product upgrades to the iPhone and iPod Touch that are so different that they may well appeal to a significant number of iPod users, and perhaps most significantly, sales of the Macintosh which showed an increase of 51 percent by units and 54 percent by dollars."

A slump?

[CRCulver (715279)]

As economic prosperity spreads to certain parts of Eastern Europe and the Middle East, I'd think there should be a steady stream of new buyers. Of course, in non-Japan and Korea Asia people seem happy with the fake iPods (complete with "iPod" written large on the front to soothe your designer-look lust) and I can imagine competing there is difficult.

Re:A slump?

[alphafoo (319930)]

I wonder if that means the iPod will start supporting Arabic, if there really is such an emerging market in the ME. There were rumors about Arabic language support back in Jan 2006, I believe, but so far nothing.

The iTunes application does support Arabic, but when you sync the music to the iPod, you just see a blank space where the song name would go.

Someone did hack together Hebrew support on the iPod, which tackles the RTL problem, but Arabic needs to be written in cursive, with all the letters connected. It's a solvable rendering problem, but to date, Apple has obviously not felt it to be worth the candle.

Re:A slump?

[CRCulver (715279)]

1.5 billion people who are happy with fakes. Have you been to China and seen their middle class buying habits? Many of them don't even know there is a real difference between the Apple product and the fake.

Re:A slump?

[by Anonymous Coward]

>I'm not even confined to one vendor for application and use.

Spoken as the non-iPod owner you are. Buy music from Amazon and put it in the iPod? How about free podcasts? Audible.com? Transcode your own movies? Download mp4s from bittorrent and play them in your Touch/iPod video? Free apps for jailbroken iPhones/iTouches? All of the above work for me, zero worries. Notice how I can fill my iPod to the brim without even mentioning the iTunes store?

And then, I still that option if I want to exercise it to get commercial music, latest movies an option that you certainly don't have. It might be "absurdly high" for you, it's absurdly convenient for me.

Heh

[by Anonymous Coward]

Right on. I didn't want to pay for a new 8GB iPod, so I bought an 8GB "refurbished" which looks brand new but cost about the same as a 4GB new one. It would sure suck for an MP3 player to be confined to one app, but fortunately the iPod is not that player because I found at least 2 pretty decent (non-iTunes) iPod apps (among several mediocre ones), and chose the better one.

I notice you don't say what kind of player you got, but simply that "the interface is fine". I haven't seen any MP3 player with a half-decent interface that isn't an iPod, so if there was another one, I'd love to hear about it, but I doubt it exists. Good work, though: you're playing off the classic "Apple is expensive!" meme, while not giving slashdot readers an alternative to pick apart. That's the sort of vague memethink that gets you to +5!

Apple has a good schtick going on. I don't know why anybody would buy a new Mac or iPod when you can save a ton of money buying one a couple months old (but which looks brand new). But apparently most people want that new-Mac-smell because their refurb and clearance pages are almost always full.

Re:A slump?

[Sleepy (4551)]

I have heard MANY MP3 owners (who don't have iPods) say the same thing as you, and even use words like "monopoly".
Do you need to see a YouTube video showing Amazon.com media going onto an iPod?

Your statement is 100% false. It's wrong.

For the audience, the reason why non-iPod owners spread the 'compatibility' myth is because some cute girl asked them "Is that an iPod", and the guy says "No, it's a Creative" and the girl says "Oh" and looks away. Guy gets all mad inside, blames Apple. Instead of enjoying his media player as-it-is, he has to justify his purchase to others.

Re:A slump?

[gobbo (567674)]

1.5 Billion ... potential customers.

More like 200 million, at most 15%, are middle class and buying luxuries. Note that middle class there is less voracious than in USA. It's debatable, but not much larger for a few years. [/stultifying pedantry].

batteries

[berashith (222128)]

Battery replacement to existing units is a great new line of revenue for any customers who aren't willing to just replace the original when it stops holding a charge.

Re:batteries

[astrosmash (3561)]

The 3rd-party iPod battery market has been over-saturated for years. You can get a new battery for any iPod model, including the tools needed to perform the replacement, for under $30 dollars.

Re:batteries

[rodrigoandrade (713371)]

> Do you bitch about the battery on your motherboard to?

No, because that one is user-replaceable...

Re:batteries

[Richard Steiner (1585)]

Lucky you. The mommyboard battery on the older Compaq Deskpro I have at home is spot-welded in place. :-(

Re:batteries

[Technician (215283)]

Lucky you. The mommyboard battery on the older Compaq Deskpro I have at home is spot-welded in place. :-(

Most of those are not spot welded in place. After working in a repair shop for many years, I noticed it was common for many of the coin cells to have spot welded terminals which are then simply soldered onto the PCB. A soldering iron replaces these with ease if you have any soldering skill. Often a standard coin cell socket will go in it's place. Leaving out the socket is a cost cutting move an is seen only on the lowest quality boards made. The battery is replaceable, but not by breaking off it's terminals. Congratulations on getting one of these cheap motherboards. Many of these expect a battery life of about 5 years which is past warranty.

Re:batteries

[Fahrvergnuugen (700293)]

I've replaced the battery in my 1st gen mini twice by myself. the company i ordered the battery from ($9 btw) even included the tools to open the mini's case without damaging it.

Re:batteries

[geekboy642 (799087)]

Most? No. I've been working or playing with IBM PC-compatibles since I was 12 when Dad brought a second-hand 286 home from work. I've never seen a single battery that was welded in. Anecdotal evidence, of course, but I've laid eyes on easily hundreds of different mainboards. I certainly wouldn't purchase a board where you couldn't replace the only piece guaranteed to die in ~5 years.

Re:batteries

[Kenja (541830)]

You mean the 1.50$ battery that I can replace without even using any tools? How is that relevant compared to a sealed consumer device that needs to be sent back to the manufacturer to have its battery replaced?

History repeats itself

[UnknowingFool (672806)]

All Apple has to do is to look at Dell. Dell made gads of money and had huge growth by selling PCs. The PC itself wasn't new, but it was being bought by more and more demographics. That, however, only lasts so long. To keep up with the same growth, Dell would have to sell more computers in a year than there are people on this planet. So they have to sell people a second computer if people aren't ready to replace their existing computer or computers to businesses. But their entire business still revolves only around computers and every thing is just an accessory. They tried getting into other lines like media players, printers, etc with varying degrees of success.

Re:History repeats itself

[raddan (519638)]

OTOH, Apple's been around for nearly a decade longer than Dell, and people have been predicting Apple's demise [folklore.org] since before even Dvorak began his torrent of verbal excrement. And yet, Apple has managed to persevere and surprise all of us over and over again. You may not like Apple, but you can't deny that they know how to weather ups and downs. Steve Jobs seems especially good at getting people excited about even their mundane products. I think Dell should be looking at Apple.

Re:History repeats itself

[falcon5768 (629591)]

Um no, Apple should NOT be looking at Dell.

Unless you have been under a rock for the last 5 years, Dell priced themselves into a hole and now has serious financial issues. They have basically moved all their operations to India, and now are limiting even built to order in the hopes of saving their asses as the economy bombs.

And their model was ALWAYS to sell multiple computers to the same people, through planned obsolescence in 2 years.

No Apple is doing things EXACTLY right, which is why they are the only computer and perpetual manufacturer to make serious profits in a failing economy. If Dell took Apple as their example, they would not be on the brink of firing off a good 1/8th of their workforce to save profits for their management.

Re:History repeats itself

[UnknowingFool (672806)]

Apple should be looking at Dell as a cautionary tale of what can happen if your company doesn't expand their business. I don't think I made that clear. Dell is trying to expand but haven't had much success in other products other than computers.

I'm sure they predicted it

[line-bundle (235965)]

Eventually the market would saturate and I am sure Apple economists must have known it. I don't think they are really surprised at the slump.

Nothing to see here..... move along.

Eureka! The iPod killer

[Anonymous Monkey (795756)]

Are you kidding me! We have finally found the perfect iPod killer! This is something Microsoft has been after for a long time (not to mention Sony, Creative, Samsung, and many others). The iPod it self will create it's own demise. Some one should call Microsoft and tell them to start selling iPods so that they can kill it faster.

Re:I'm sure they predicted it

[UnknowingFool (672806)]

Apple is pretty good at planning things but they are secretive so you don't know what they are planning. The iPhone was in development for 2 years before they announced it last January. And the only reason they announced it 6 months before they were able to sell it was that Apple had to apply for a FCC license on it.

Over 10 years ago, Apple bought NeXT to save themselves. Some analysts couldn't understand why Apple with it's faltering personal computer product line would buy a Unix computer company whose product line wasn't very successful. Was Apple going to start selling 2 product lines? What few understood was Apple bought NeXT for their OS expertise not their hardware business. That expertise became OS X.

Just yesterday, Apple bought PA Semi. This slump might be something that planned for a long time and PA Semi is just the start. We don't know what Apple has in store for PA Semi if NeXT is a good example.

What about an 80-column card?

[xxxJonBoyxxx (565205)]

What about an 80-column card? (If you get that, I know how old you are...)

Re:

[tjstork (137384)]

What about an 80-column card? (If you get that, I know how old you are..

I'd pass on that, as it doesn't really benefit my favorite SubLogic program.

Re:What about an 80-column card?

[Jherek Carnelian (831679)]

What about an 80-column card? (If you get that, I know how old you are...)

Young enough to use wikipedia [wikipedia.org]?

Re:What about an 80-column card?

[Digi-John (692918)]

Damn kids and your Apple hardware. In my day, an 80 column card was one of these [wikimedia.org]

Is this the iPod slump from three years ago?

[noewun (591275)]

Or is this the one which was supposed to hit two years ago? Or the one from last year? You see, I get them confused, as it seems every year someone is predicting that Apple's iPod growth will suddenly crater as Teh Next Big Thing comes along and steals Apple's thunder.

I don't know if iPod growth will crater, or slowly slow down or whatever. But I am pretty well convinced that, whatever happens, no "expert" will predict it.

Re:Is this the iPod slump from three years ago?

[by Anonymous Coward]

Or is this the one which was supposed to hit two years ago? Or the one from last year?

No, no, you're getting that confused with the Year of the Linux Desktop(TM) again. Keep it straight, man!

Re:Is this the iPod slump from three years ago?

[archen (447353)]

Actually I think he has it right. THIS is always the year of the linux desktop. Apple will always be bankrupt by NEXT year. And the next version of windows will be the most secure ever.

Mac Sales Affected by Vista?

[mpapet (761907)]

If the number of Mac units sold is accurate, then Vista is absolutely killing HP and Dell unit sales.

That would suggest that Dell and HP's consumer PC business will show unit and dollar sales declines.

Mac Sales

[ForexCoder (1208982)]

" sales of the Macintosh which showed an increase of 51 percent by units and 54 percent by dollars."

Sounds like Vista is paying dividends for somebody.

Re:Mac Sales

[I'm Don Giovanni (598558)]

Actually, not as much as one might think, according to this chart showing the OS userbase trend from May 2007 to March 2008 [hitslink.com].

According to the chart, Vista's share increased from 3.75% a year ago to 14% today. The chart also shows that XP's share decreased from 82% to 73.6%. Vista has been cannibalizing XP's share, but Vista+XP today has a 1.6 percentage points greater share today than a year ago (86% in March 2007 to 87.6% in March 2008).

The chart shows that Mac share went from 6.5% a year ago to 7.5% today, which is a significant increase. But note that the chart separates PPC Macs ("Mac OS") from Intel Macs ("MacIntel"), and here you can see that MacIntel's share has increased from 2.5% to 4.5% while PPC Mac OS decreased from 4% down to 3%. That is, most Mac sales are due to people upgrading from Mac PPC to Mac Intel in the same way that most Vista sales are at the expense of XP's share.

So XP+Vista increased by 1.6 percentage points from a year ago, while PPC Mac + Intel Mac increased by 2% from a year ago. Not much difference, and with Vista well ahead of the combined Mac total (14% vs 7%) it's difficult to argue that Vista caused mass defections to the Mac.

However it CAN be argued when you look at the Windows 2000 stats. Windows 2000 went from 4.3% to 2.3% during that same time period. It appears that of that loss of 2 percentage points, 1.7 went to Vista and the other 0.3 went to MacIntel. I think that Mac also gained from the decrease in "Other", which decreased from 2.5% to 1.9%.

Something to look forward to in 2010

[CowboyNealOption (1262194)]

I wonder what Apple will release around the same time that Microsoft releases their next OS? A version of OSX that runs on any "Vista Ready" machine before then would be kinda cool. The press seems to be split on how Vista is helping/hindering Apple, but I am sure things are already percolating based on the 2010 release of the next Microsoft OS.

Re:Something to look forward to in 2010

[cowscows (103644)]

I think the big flaw in your numbers is business users. The vast majority of them are not going to pay the premium for Apple hardware, and I don't see Apple selling budget boxes or licensing their OS anytime soon.

If you take businesses out of the count and look at a consumer level, then your numbers seems more feasible to me. You just have to walk into a college lecture hall and count the Apple logos to see the inroads that they're making.

Apple in driver's seat, rest can't keep up

[Ilyon (1150115)]

Apple is driving the market and has been doing so since introducing the iMac. Apple invests in technology years in advance while the Dells and HPs are running their businesses on a quarterly basis.

The punditry will be surprised when they finally notice Apple's growth in the enterprise, at 2-3 times the industry rate. Anyone who's paying attention will realize that the features and capabilities that will make Apple unstoppable in the enterprise in a few years are being designed into Apple products today.

Similar things can be said for Apple TV's prospects for becoming a more ubiquitous consumer appliance - but don't be surprised if even Apple TV shows up in the enterprise, as a device to stream corporate training podcasts hosted on a MacOS X Server.

Apple introduces useful new capabilities that provide compelling reasons to buy new Apple products. What compelling reason is there to upgrade Windows PCs, other than for the sake of upgrading?

Apple now has two highly successful platforms

[Apple Acolyte (517892)]

Apple now has two highly successful, separate platforms that feed one another: it's iPod/iPhone platform (handheld) and its Mac platform (PC). As others have noted, the iPod isn't going anywhere; the iPhone/iTouch sub-platform is very compelling and has a lot of room to grow; the Mac is enjoying growth unprecedented in the platform's history (to my chagrin, largely thanks to Apple's defection to Intel, which allows people to replace their PCs with Mactels). The substantial growth seen in Mac market share will cause developers to take the platform a lot more seriously than they have in the past and may spur traditionally unfriendly developers to enter the Mac market. Apple's corporate image is great in most quarters. Now I'd love to see a consumer Mac tower for those who are never going to buy iMacs, but that's probably not coming any time soon.

Why I bought something else

[assertation (1255714)]

I almost went mac this year in a serious way. The prices were about right and I was tired of the hassles of the OSS world. Why didn't I go mac?

I went to a very nice mac store, 3 times. The first time I asked one of the sales people a question I knew the answer to. I could see in her face she didn't know the answer. Instead of telling me that she gave me wrong information that could have cost me money. The 3rd time I went back I spent a lot of time playing on one of their systems to get a feel for it. I liked it very much. I didn't like the idea of having to relearn everything to migrate and I thought Ubuntu is very nice. Then a young clerk with a snotty attitude asked me to get off the chair I was using to check out the computer. I guess I wasn't as important as the class they were holding in the store. I figure if I was going to deal with snotty 20 somethings I should do it with the linux community and save myself a grand.

Then I wanted an MP3 player.

I was seriously considering an iPod.

Then I found out I could not use iTunes on Ubuntu without an emulator. Then I read a few "fuck you" articles from the mac high priesthood addressed to linux people who used iPods. then I read articles about how the iPod would get changes making more work necessary to get it going with linux.

I went on the ubuntuforums got some recommendations for linux friendly mp3 players. Then I bought a used one for $50 that does everything the iPod would have done for me and more.

Re:Why I bought something else

[sxltrex (198448)]

Wow, somebody needs a hug!

Too much focus on individual products.

[MaWeiTao (908546)]

If Apple's success is so heavily dependent on a single product I think they've got more important things to worry about.

Honestly, I think this is a problem with American companies and media. All they seem to care about is that one hit. They're desperate to come up with the one product that will ensure success, at least temporarily. Because then all too often they seem content to rest on their laurels or worse go to extreme lengths to prevent competition.

So what do we constantly hear from the media, nonsense about this-killer and that-killer, how a particular product is going to change everything and there apparently is little patience for methodical, evolving improvements.

The iPod didn't just fall out of Apple's collective ass. It really was the embodiment of Apple's design philosophy and corporate vision. It also helped that Apple actually had the resources to design the device, develop the software and actually have a direct hand in it's manufacture.

Contrast that with other companies who claim they want to develop something to compete with the iPod. In many cases, like Microsoft, they take an existing product, a Toshiba MP3 player, and customize it for their use. For that reason alone it will never be as well integrated as the iPod.

In many other cases companies will take existing products, particularly Chinese-made products, rebrand them, maybe modify the external design slightly, and resell them here. So the American consumer gets stuck with a subpar product. In the short-term the company earns some easy money but in the long-term they've hurt their brand.

There are many other issues here, but this is one of the bigger problems I see afflicting American companies. Many American companies don't actually make anything anymore. They've effectively dumping the engineering and manufacturing core of the business and have focused almost completely on marketing. Innovation seems to only exist within marketing departments. They're constantly hunting for new advertising gimmick to sucker people into buying more of the same.

Instead of taking the approach of focusing on quality at a premium they're still trying to compete on price. Then they wonder why they lose to the, usually foreign, competition. And when things go south they always blame everyone and everything but their own decision-making. Granted, I'm over-simplifying a bit, but I do think it's a big problem nonetheless.

Re:iPod choices are going downhill

[Sciros (986030)]

You could check out the Cowon Q5W. It competes with the high-end Archos PMPs. I have a Cowon A2 and for the kind of player it is, it's easily the best one I've used. Though the next player I plan on getting will be Cowon's successor to the D2, whatever that will be, as the idea of just swapping out high-capacity SD cards works for me.

Re:iPod choices are going downhill

[Digi-John (692918)]

Your argument is like renting a 5' by 10' apartment on the reasoning that you can just store everything you're not using in a storage unit, then haul it in when you need it. When you finish watching TV, just carry the whole TV and stand out and bring in your bookshelf so you can do some reading.

Re:iPod choices are going downhill

[Fear the Clam (230933)]

Your argument is like renting a 5' by 10' apartment on the reasoning that you can just store everything you're not using in a storage unit, then haul it in when you need it. When you finish watching TV, just carry the whole TV and stand out and bring in your bookshelf so you can do some reading.

I live in NYC, you insensitive clod.

Re:cant wait for those 64gb iPod Touch's...

[sjf (3790)]

My Gf is so sure I will do that, that she is already expecting it and promised me not to complain If I go ahead and do it. How else is in this same boat?

Yup, your Gf is unlikely to complain if I buy one also

Re:cant wait for those 64gb iPod Touch's...

[moderatorrater (1095745)]

Interesting point: apple updates their products so fast and brings out new products so fast that a lot of people wait to buy something. When I was considering getting an iphone, everyone that already had one was advising that I wait another 6 months to get one since they're bound to come out with something better.

Overall I think it works for them just fine, since they time things well and their products are always a good value. But part of me wonders if they wouldn't make more money if they would just wait a little longer before bringing out new generations/products.

Re:cant wait for those 64gb iPod Touch's...

[DECS (891519)]

Apple could likely make just as much money with a slower rate of new products coming out. However, that would make it far easier for competitors to catch up.

Microsoft's second generation Zune, had it arrived a year earlier, would have been competitive hardware wise with the then current iPods. As it was, Apple's rapid upgrading left it looking like nothing special.

The old Apple of the late 80s basically stopped the frantic pace of upgrades, and that's exactly what allowed Microsoft to catch up over a ten year period from 1985-1995. The bumper sticker that said "Windows 95 = Mac 89" was funny, but the sad part was that Mac 89 wasn't so far behind Mac 95.

Now the tables are turned, and Microsoft is the one coasting along on past performance, allowing Apple to catch up and surpass it.

Windows Vista, 7, and Singularity: The New Copland, Gershwin, Taligent [roughlydrafted.com]

Re:cant wait for those 64gb iPod Touch's...

[Admiral Ag (829695)]

And there you have the answer. The smaller iPods will remain, but the real money is in the new convergence wireless touch devices. Once those hit $250-300 in decent sizes (and that will probably happen in the next iteration - the 8 gig is already $300), and the SDK means that there will be games and apps and allsorts, who wouldn't want one? There have been promises of such devices from companies like Nokia, and the PSP is probably the closest, but the iPod Touch and iPhone look like the first real winners.

(FD: I bought a 16 gig, but gave it to my wife so I had an excuse to buy a 32gig - it's enough for the essentials. I'll have to find someone else that needs a gift when the 64gig comes out)

Re:Macintosh

[Gotung (571984)]

The next big thing? You mean like a touchscreen ipod/phone/mobile computer? Yea that would be awesome. Apple should make one of those!!

Re:Here's one way they can prepare

[beelsebob (529313)]

I'm not sure how this got modded interesting. They already make a 12 or 13 inch MacBook Pro -- it's called the MacBook. It's one distinguishing feature is the small screen and lower spec graphics. I guess you can complain about lower spec graphics, but when was the last time you saw a high spec graphics card in that space? The mac books already get really hot, I don't want to know what would happen with a Geforks 8600 in there.

Re:Here's one way they can prepare

[gstoddart (321705)]

Make a 12" or 13" MacBook Pro. If that happens, then I will buy a new Mac. Otherwise, they can see how many suckers they can sell a $2500 manila of hot air to...

While I don't own a Mac Book Pro, and I haven't looked at its specs ....

when I first saw those commercials, I immediately though Wow!!! I remember ads for laptops and luggables in the late 80's/early 90's -- they didn't fit in no inter-office envelope.

I know someone a few years ago who bought himself an Apple laptop, because he was frustrated with his Windows laptop work provided. He seemed to think it was well worth the money, as it just worked.

I honestly can't say if it's a lot of hype and hot air or not ... but, the people I know who have spent the money on them feel they actually did get something for their money. In the end, they're the final decision makers on if it was worth it or not.

I guess it's all a matter of what you want and need.

Cheers

Re:Apple will continue to sell Ipods...

[reidconti (219106)]

Ipod's will continue to sell to yuppies who enjoy paying for an overpriced mp3 player with a network of music that lacks diversity to foreign markets. As a US consume I can enjoy not having access to England, Hollands and Germany's fine selections of electronica, which Itunes America lacks almost
entirely.

Awesome, which is why I load all of my electronica onto my iPods from CDs.

Mac sales have gone up, most likely to the yuppies who cannot sync the Itunes software to a Windows box and decide to buy the Mac due to the customer support representative with Mac stating, "it works better with a Mac," or the idiots logical thought process that decides a Mac is a cost effective option (cough, cough).

... or because their experience with Apple products is light years ahead of their experience with the bargain-basement electronics companies that try to push their hacked-together products as computing solutions for the masses?

Buying a Mac is for the glorified rich who eat too many donuts and watch too much TV. If you enjoy my lovely view of the world, read my blog.

No thanks.

What's really funny about this is that you seem to have it totally backwards. Your attitude puts you smack dab in the middle of the Mac stereotype.

Check out stuffwhitepeoplelike sometime. The Mac user is supposed to be a yuppie elitist who likes to brag about not owning a TV, drives a Hybrid, shops at flea markets, participates in athletic activities for fun (jogging, cycling, etc), listens to electronic music, and generally disdains middle america. In other words, you.

I'm a Mac user, but I guess it all makes sense because I'm a Bay Area elitist who drives a BMW and commuted 60 miles to work by bicycle today.

My only failing is that I refuse to apologize for the fact that I watch TV when I have nothing better to do.