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Editorial

Editorial - Analysts Looking at iPod Sales with FUD

Friday, March 30th, 2007 at 2:40 PM - by

Analysts are always on the lookout for the slightest signs of softness in the growth of the iPod sales. On Friday, Forbes published a piece called "Apple Says Buy Another iPod." which flopped about quite a bit.

The story noted that some customers have seen signs in Apple stores that ask shoppers, "Why stop at just one?" That led to the question of whether Apple thinks it has saturated the market. Or perhaps Apple thinks that customers may be holding out for an iPhone which also plays music.

What's interesting is the observation that analysts and investors have watched iPod sales slip. All along, the estimate for this quarter's sales of iPods have fluctuated, and some have lowered their estimates slightly. If Apple has noted that, it would be natural thing to respond with an ad campaign to bolster sales, but it's very hard to determine what the ultimate result will be.

Perhaps customers are waiting for the iPhone. Perhaps the market is saturating slightly. Perhaps Apple, as the Forbes story noted, has failed to go after the over 40 crowd, ripe for the picking.

One way to look at it is that Apple sold 8.53 million iPods in calendar Q2 last year, and the estimate is for this quarter somewhere in the 10+ million range. Moreover, iSuppli recently predicted serious growth for media player shipments over the next few years. The net result is that everyone is just fishing about, looking for trends that aren't clear yet.

The conclusion is that there is no conclusion to draw. Apple is seeking to increase sales. They always do that. Year over year sales are up dramtatically for Q2. There is some concern about canibalization of iPod sales by the iPhone, but lots of people can afford an iPod shuffle while far fewer can afford to change carriers and buy a US$500 iPhone and pay associated fees.

What we don't know is how Apple will change their marketing and product mix in the future to maintain robust sales. They seem to be awfully good at that.

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davebarnes said:

member since 12 Jan 2005 with 130 posts, unranked, send him a message or view his profile

Fri Mar 30, 2007 3:07 pm

John,

Over analysis indeed.

My (over 40 wife) owns 3 iPods.

My (over 40 friends) (a couple) own 2 shuffles. And, they call them their "starter iPods".

We plan to switch from Verizon to Cingular and get iPhones. But, my wife is waiting for the 200GB (half joke, half real) iPod as she has filled her current one.

,dave

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mrmgraphics said:

member since 05 Sep 2003 with 825 posts, unranked, send him a message or view his profile

Fri Mar 30, 2007 5:41 pm

+

Sales slowing? Not where I live.

A forty-ish friend at work just recently helped her two tween-ish daughters buy nanos. Now she's looking to get one for herself. Meanwhile, a twenty-something friend at work just bought (this week!) a nano for her twenty-something husband's birthday. And as the "rep" of all things Apple at my workplace, I'm happy to report that all new nano owners are overjoyed with their purchases. I personally got my thirty-something sister a product RED nano for this past Christmas, and she loves it. My own 30 gig 5G iPod rarely leaves my side. (I'm in the forty-ish bracket, for the record.) And everyone I know who sees an iPhone wants one. So if anything, I personally see interest in iPods picking up, rather than slowing down. There are still a LOT of people who have no idea just how much an iPod changes the way they listen to music, until they try one belonging to a friend, spouse, child, etc. I personally never thought I'd want one until I received one as a gift from my brother. Now I wonder how I ever survived without it. iPods are like their own viral marketing campaign: to use one once is to want one. I believe interest and sales will only keep increasing.

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A guest said: (hide)

Fri Mar 30, 2007 6:41 pm

I see no signs of sales slowing. I'm also over 40 and have an iPod Photo and my brother has an iPod and his wife and my wife has an iPod too.

It' not just for teens.

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gslusher said:

member since 13 Nov 2002 with 2088 posts, unranked, send him a message or view his profile

Fri Mar 30, 2007 8:01 pm

The "forty-something" crowd? Gimme a break! They're toddlers who listen to disco music. <G> What about us "mature citizens," 55+? AARP is after us--why isn't Apple? (Hmm, maybe Apple's next partnership should be with AARP ... )

In all seriousness, Apple's marketing has, for the most part, been aimed at the young. Few people my age will be excited by the hip-hop silhouette ads, except that they're well done. I was impressed when Apple released the Dylan Modern Times ad. (It helped that Jobs is a big Dylan fan.) The ad was very well done--almost silhouette, but not quite, and could appeal to a wide range of people, including those who had never heard of Bob Dylan. It seemed to work: Modern Times debuted at the top of Billboard's charts. Dylan became the oldest living artist to have a #1 song/album. (He was 65 at the time.)

However, that was only one ad. All the rest have been aimed at 20-somethings and younger. Yet, when I go to my local Mac dealer (certainly not the only place to buy iPods locally), many of the people buying iPods have been older, including an opera fan who rips CDs in Apple Lossless and uses $300+ headphones. He was delighted when "gapless" playback was added. (Most opera CDs are intended to be listened to straight through.)

Perhaps Apple should aim some magazine ads at older folks, emphasizing not only high-quality music, but

1) the "oldies" available on the iTunes Store (where else can one get "The Loco-Motion," not a cover but with Little Eva, or "Peggy Sue" with Buddy Holly, without buying a $15 compilation CD?);

2) the huge jazz library on the iTunes Store (I'm no jazz fan, but friends who are have said that it's quite good)--even classic jazz from the '30s and '40s;

3) 30 Grateful Dead albums;

4) audiobooks (I've listened to dozens of mysteries, science books, political books, etc., while I drive. That way, I'm working on two books at a time, one in print, the other in audio.);

5) photos and videos, aimed at parents and grandparents. Want to give a great gift to a grandparent? Buy 'em an iPod 5.5G and load it with photos and videos of their grandchildren and an AV cable to connect it to their TV set.

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Sir Harry Flashman said:

member since 08 Feb 2007 with 792 posts, unranked, send him a message or view his profile

Fri Mar 30, 2007 9:48 pm

gslusher wrote:
The &quot;forty-something&quot; crowd? Gimme a break! They're toddlers who listen to disco music. <G> What about us &quot;mature citizens,&quot; 55+? AARP is after us--why isn't Apple? (Hmm, maybe Apple's next partnership should be with AARP ... )

In all seriousness, Apple's marketing has, for the most part, been aimed at the young. Few people my age will be excited by the hip-hop silhouette ads, except that they're well done. I was impressed when Apple released the Dylan Modern Times ad. (It helped that Jobs is a big Dylan fan.) The ad was very well done--almost silhouette, but not quite, and could appeal to a wide range of people, including those who had never heard of Bob Dylan. It seemed to work: Modern Times debuted at the top of Billboard's charts. Dylan became the oldest living artist to have a #1 song/album. (He was 65 at the time.)

However, that was only one ad. All the rest have been aimed at 20-somethings and younger. Yet, when I go to my local Mac dealer (certainly not the only place to buy iPods locally), many of the people buying iPods have been older, including an opera fan who rips CDs in Apple Lossless and uses $300+ headphones. He was delighted when &quot;gapless&quot; playback was added. (Most opera CDs are intended to be listened to straight through.)

Perhaps Apple should aim some magazine ads at older folks, emphasizing not only high-quality music, but

1) the &quot;oldies&quot; available on the iTunes Store (where else can one get &quot;The Loco-Motion,&quot; not a cover but with Little Eva, or &quot;Peggy Sue&quot; with Buddy Holly, without buying a $15 compilation CD?);

2) the huge jazz library on the iTunes Store (I'm no jazz fan, but friends who are have said that it's quite good)--even classic jazz from the '30s and '40s;

3) 30 Grateful Dead albums;

4) audiobooks (I've listened to dozens of mysteries, science books, political books, etc., while I drive. That way, I'm working on two books at a time, one in print, the other in audio.);

5) photos and videos, aimed at parents and grandparents. Want to give a great gift to a grandparent? Buy 'em an iPod 5.5G and load it with photos and videos of their grandchildren and an AV cable to connect it to their TV set.

I agree they can target more than one demographic. My mother is 75 and wasn't interested in an iPod until I bought her one and now she is hooked. How about an iPod advert with some senior enjoying big band, classical, audio books, photos and videos of the grandkids.

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A guest said: (hide)

Sun Apr 01, 2007 11:02 am

My wife and I are over 40, and we both own iPods. iPod connectivity was near the top of the list in my criteria when I chose a new car last summer.

Between my wife, myself, and our two daughters, we're a six iPod family that is eagerly awaiting the release of iPhone and/or the much anticipated wide screen iPod. Bring it on, Apple, to hell with the "analysts"!

By the way, we're a four Mac (Intel) family.

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