Apple's iPod Problem With fewer iPod users upgrading, the days of explosive growth are over. And that leaves iPhones and Macs picking up the slack
By Arik Hesseldahl December 3, 2008, 12:01AM EST Business Week Chris Wysopal is the head of a four-iPod family. His wife and two kids all carry the pint-size nano music player from Apple (AAPL), while he uses a 2003-vintage device he got as a hand-me-down from his wife. But as much they love their iPods, the Wysopal family has no plans to buy any new ones in the foreseeable future. "They're all working, so there's no need to buy more," says Chris. Strange as it may sound, Apple may have an iPod problem. The iconic music player cemented the company's reputation for innovation and fueled its financial success in recent years. But those days appear to be over. Legions of iPod owners see little reason to upgrade, especially with the rocky economy. As a result, some analysts believe this will be the first quarter since the iPod was introduced in 2001 that sales will decline from the year-earlier quarter. "The reality is there's a limited group of people who want an iPod or any other portable media player," says analyst Gene Munster of Piper Jaffray (PJC). "So the question becomes, what does Apple do about it?" The iPod has been a powerful growth engine, helping to boost Apple's sales from $5 billion in 2001 to $32 billion in the fiscal year ended on Sept. 30. Growth for the music player franchise averaged more than 200% in 2006 and 2007, before falling to 6% in fiscal 2008. Munster expects the number of iPods sold to tumble 12% next year, to about 48 million units. Apple's other businesses are healthy, with its iPhones and Macintosh computers selling briskly. But the decline of the iPod franchise means those other businesses will need to make up the difference as music player sales slide. That may prove particularly challenging as consumers cut back on their spending in the face of the recession. Wall Street has high expectations for the company, with analysts forecasting revenues will rise 15% next year, to $37 billion. ... http://www.businessweek.com/technology/content/dec2008/tc2008122_679456.htm *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
