Too much has already been written about what a great quarter Apple (NASDAQ: AAPL) had. It beat earnings forecasts. It met expectations for Mac sales. It exceeded expectations for iPod sales, and it was a little light on iPhone shipments.
So, what was the key to Apple's success? More than anything else, it is that the iPod keeps selling even though there are more than 200 million of them somewhere out there in the world. Apple sold another 23 million iPods, a record. And, that was the trick.
Have a look at Apple's iPod pricing. The average price between the cheapest version, the Shuffle, and the next cheapest version, the Nano, is about $99. During a holiday slammed by a recession, how may products are available for $99? Especially products that are great gifts?
Buy a friend an iPhone -- it comes with a hefty two-year calling plan that makes it quite expensive. Buy a Mac -- that will probably set the buyer back $1,000.
The iPod is still a desirable present. It is from Apple, after all. But, what earnings did not tell is how little it costs to get one and what that means during hard times.
A $99 gift. And, by the way, with it strong earnings, Apple should trades at about $99 today.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
1-22-2009 @ 10:10AM
Sam Leary said...
Wow. If i got paid to write articles stating the obvious I wouldn't need to trade stocks.
1-23-2009 @ 1:27PM
kenc29 said...
@Sam,
Well, Doug had to trash his original article that he pre-wrote, trashing Apple, so he came up with the obvious.
1-25-2009 @ 1:25PM
Beltway Greg said...
Don't tell the "Woz" who proclaimed the IPod dead on arrival even though I'll bet he has one and has purchased many for friends and family members. Here's the deal: music is consumed primarily by tweens. Most of your record collection dates primarily from your tween years. My mother gave me her records a number of years ago and most of those dated from this period in her life so this phenomena is hardly recent. (Jonie James rocked hard)
Apple changed all of that making it possible to buy music from the comfort of your living room. Even old folks have IPods. Even my mom has one with a stereo that docks the pod. What has this done? Well, mom now downloads all kinds of crap. It's like the 60s again. If she hears a song she likes she goes home and purchases it on ITunes. In the 60s, I was born in 61, you would listen to the radio and run off to the record store and buy the single. (Sound familiar?) Apple recreated that 60s experience; everything old is now new. The record executives ruined the music biz with the AOR format that made people begin to make mix tapes for their friends. Dude, some of those early Floyd albums sucked. Artists began to be far too over indulgent. Listen to "The Long Run" by the Eagles or "Tusk"
by Fleetwood Mac. I love them both but they were hardly the type of records to garner new fans. Don Henley and Glen Frey are still living in the past, but because they rule the roost and have such an extensive back catalogue they have joined forces with Wal-Mart so that they can still release a double album that's essentially a load of crap and make big money. Groups that draw from a younger demographic like Rascal Flatts would never do anything like that at this point in their careers. And, as Doug has pointed out, the Pod is hardly a major investment.
Also, at $199.00 the IPhone is the cheapest computer in the land. But, you'll figure that out in about two years. BTW, how many kids turn thirteen in any given year? There's your market; no offense mom or other AARP members.
Beltway Greg