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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerRumors are all over the place that Apple (NASDAQ: AAPL) will upgrade the iPod to a home entertainment device, cut prices, or simply offer the product in more colors.
The company is expected to comment on the music player's future at a conference on September 9.
According to The New York Times, "An analyst at American Technology Research, Shaw Wu, said the iPod line needed to be refreshed and the price of its iPod Touch models needed to be cut because they have a higher starting price than the iPhone."
It is too bad that it is not that simple. Price cuts are not going to cause a big rise in iPod sales. It would be wrong to say that the number the digital music players sold is not growing at all, Apple moves about 10 million iPods a quarter but that is not likely to spike up because of a modest addition of new features. With over 150 million units already sold, the iPod is reaching a point of saturation.
Dropping prices is always a way to stimulate sales, but it also does big damage to margins, something that Apple shareholders do not want to hear. As for upgrading the product so that it can help manage home entertainment systems, that would put it in competition with a dozen other big companies trying to do the same thing.
The iPod's best years are behind it. Apple has to manage those expectations on Wall St. and hope that the iPhone sells like hot cakes.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
9-03-2008 @ 8:58AM
Beltway Greg said...
How many human beings turn 13 every year? Well, that's the potential market for the IPod. Music is bought disproportionately by tweens, witness Hanna Montana, The Jonas Bros., Cheetah Squirrels, and even Madonna. When The Material Girl was still not too far removed from her virginity and her audience consisted of those that still were she sold boatloads of albums. Now that Madge is a little long in the tooth and a little flat on the abs both she and her concerts are still spectacles but her music really now longer has the impact because it no longer sells in the quantities it once did. So please stop hatin' on the Ipod, dawg. DISCLAIMER: Madonna is still a robo babe and I'm certain an evening with her would be better than a lifetime with Lindsay, Miley, the Olsen Sins, or any other of those ladies that owe so much to her. Madonna, give me a call, all is forgiven.
Beltway Greg
9-06-2008 @ 4:37PM
subtledoctor said...
You're not getting it. Look at the first iPod: five GB of space, mechanical wheel, big and fat, monochrome screen, and seven hours of music. Look at all the small innovations Apple has built into the device over the last ten (ten? how old is the iPod anyway?) years. Look at last year's ipod Classic: 160 GB of space, color screen that shows pictures and plays movies, 24 hours of music playback, the slimmest iPod ever, etc. etc. It's the ultimate iPod; there's really nothing left to improve. Apple has gotten billions of dollars from people's desire to periodically upgrade to the latest and greatest version of the device. That's why, contrary to the title of this article, Apple CAN replace the iPod.
My prediction: the original iPod is gone as of next Tuesday. The 'Classic' moniker is evidence that the device is all but EOL. They will have a new product matrix: the Shuffle at the low end, for impulse purchases; the Nano to continue the original iPod form factor (memory will likely fo to 32 GB for the high-end Nano); and the iPod Touch will fully replace the traditional iPod. The iPod Touch is the future of the platform. They've already sold a bunch; and the 2.0 OS and App Store create new value for new buyers, and there will be continued hardware and software updates to create more and more sales, just as there was with the iPod itself for so long.