How Apple Is Preparing For An iPod Slump
April 24, 2008 at 5:23 AM (PT)
APPLE has a little iPOD problem, blogs SAUL HANSELL in THE NEW YORK TIMES. And he writes it is doing an amazing job of rising above it. APPLE sold 10.6 million IPODS in the first three months of 2008. It has a 73% share of the music player market in the UNITED STATES and a growing share abroad. Still, the number of iPODS sold in the quarter grew only 1% from the same quarter a year ago, and sales of the low-end iPOD SHUFFLE have been falling sharply. In response, APPLE lowered the price of the 1-gigabyte shuffle from $79 to $49, helping to stanch the decline.
For some companies, a mature market and downward pressure on prices could lead to a nasty death spiral. But APPLE has used its amazing six-year run with the iPOD to nurture enough new business lines that it will be able to withstand a collapse in the mp3-player market as well as can be imagined.
First of all, it has a continuing revenue stream from the iPODS that have already been sold because of the iTUNES Store. Second, APPLE has created product upgrades that are so different that they may well appeal to a significant number of iPOD users. Third, and perhaps most significantly, APPLE’s entire adventure with the iPOD is helping it sell computers, although the magnitude is impossible to calculate.
Check out the full article here.