iPod sales appear to be peaking. Apple reported the sale of 10.6 million iPods in FY Q2 on Wednesday, but that reflected only a one percent growth year over year. Even so, Apple is doing a amazing job of dealing with the situation, according to Saul Hansell with the New York Times.

For some companies, this could spell big trouble. Apple, however, appears to be dealing with the potential problem well. First, the iPods in place have generated a healthy revenue stream for iTunes, and Apple is now the #1 seller of legal, online music in the U.S. In addition, Apple is transitioning from a simple MP3 player concept to handheld devices like the iPod touch, a Mobile Internet Device (MID), and of course the iPhone.

While the iPod sales were up only 1 percent for the quarter, iPod revenue was up 8 percent, reflecting the fact that Apple is moving its customer base over to more sophisticated, expensive models like the iPod touch.

Finally, and most important, the iPod Halo Effect is helping sell computers -- although the exact effect is hard to calculate. What we do know is that Vista has faltered, an enormous number of people are visiting the Apple stores and that the growth of the Mac’s market share is 3.5 times that of the PC market overall.

"When we look at all the companies that have stagnated along with the products that made them successful � from AOL to Microsoft � Apple stands out as one company that has been able to flip its business forward so well that it is in a great position to thrive, even if its iPod problems become more than little," Mr. Hansell concluded.