Has the iPod Lost its Groove?

As The Observer argues today, the iPod is at a crux: It owes much of its mass-market success to its coolness. Now that it is teenagers’ “parents’ player”, however, what happens to the coolness, and thus to sales?

Is the iPod so soaked into the mass market that it no longer needs the support of teen pop culture, or does its loss of groove explain two consecutive quarterly declines in iPod unit sales? It is worth remembering that there is a long history of once-cool (and highly successful) devices rapidly going from cool to cold:

Iconic electronics that reached their sell-by date

Sony Walkman

Launched: 1979

What is it?
Portable music cassette player with headphones. Sales fell in the
Nineties when portable CD and minidisc players arrived; iPod nailed the
coffin shut in 2001. Sony launched an MP3 version last year.

Sales: 60 million sold by 1992, 4 million in the UK.

Sinclair Spectrum

Launched: 1982

What is it? Early
personal computer with up to 48K memory and built-in tape recorder/disk
drive; games included Jet Set Willy and Chuckie Egg. Fell to
competition from other models, particularly the Commodore 64; obsolete
by the Nineties.

Sales: ZX model sold 2 million worldwide. By 1985 Sinclair was producing 200,000 units a month, with 57 per cent market share.

Psion personal organiser

Launched: 1984

What is it?
Looked like a calculator with an alphabetic keyboard and was
essentially an electronic diary for yuppies. Competition from Japanese
companies and advanced laptop and mobile phone technology, plus the
executives’ must-have Blackberry, made it redundant, but Psion is still
producing ‘mobile computers’.

Sales: Sold 1 million in first decade, but sales tailed off as it was superseded.

VHS cassettes

Launched: 1976

What is it?
JVC’s Video Home System, for viewing and recording films and
television. Eclipsed Sony’s short-lived Betamax video format in the
Eighties but, since DVDs were launched in the late Nineties, sales have
collapsed.

Related posts:

  1. iPod Troubles
  2. iPod Accessor-conomy
  3. Live by the iPod, Die by the iPod
  4. iPod Class Action Suit
  5. iPod = Walkman, sayeth Rollins

Comments

  1. Jay Delaney says:

    Sony sold more than 350 MILLION Walkman units in about a decade. Is your Apple/iPod hatred so intense that you’d consider this fact an example of “once-cool devices rapidly going from cool to cold”? Walkman was one of the most lucrative CE franchises, ever. As is the iPod. Except for those who use some other “iPod killer” product. Like yourself?

  2. Jay –
    Not sure where you get the idea I hate the iPod. Because I don’t. Matter of fact, I own a Nano (which is admittedly the kiss of death for its hipness).
    My interest is broader, and has more to do with the iPod phenomenon, both from a social standpoint and from an investing point of view. The “iPod uber alles” story is well told, and given that you’re not likely to make money without a divergent/contrarian view — which is the sort of thing I am fond of providing here.

  3. Jay Delaney says:

    Well, I am just sick and tired of the incessant “iPod killer” stories. Look at your title, “Has the iPod Lost its Groove?” It fits that *conventional,* knee-jerk herd mentality perfectly.
    iPod is *not* just a digital music player, as everyone of its would-be iPod killer competitors should have grokked by now. The iPod/iTunes/iTMS is an *integrated* system, hw/sw/infrastructure/branding. None of its competiors has all the pieces to challenge that system.
    So before that *system* (not just the iPod) loses its groove, you’ll need to come up with another system that not only does it all but offer even more. Where is it?
    If you can’t offer an alternative, please stop with the cute titles. Obviously, Apple doesn’t think it’ll be selling iPods for eternity, everything comes to an end. But before you foretell the end of the iPod era, you need to have some semblance of a credible alternative beyond a sensational title, don’t you think?

  4. Jay — You’re a passionate defender of Apple’s iPod, and that’s great. But if you believe that looking forward for possible risks to a company’s key product is somehow a bad idea — as is titling posts accordingly, with a question mark, no less — then we have irreconcilable differences.
    Because long before iPod disappears — which will, of course, one day happen — there will come a day when the product’s influence on Apple’s shares will wane, perhaps precipitously. After all, many would argue that iPod has been one of the prime recent drivers of AAPL stock; if its momentum is slowing, or could slow soon, that’s worth knowing.
    Being able to think critically about your favorite companies, stocks, and products is important. It’s an old brokerage adage but a good one: Never fall in love with a stock.

  5. Jay Delaney says:

    “[when] the product’s influence on Apple’s shares will wane”
    See, this is the problem. That time is NOT now. Or, frankly, any time soon. If you could somehow show how a credible alternative to the iPod/iTunes/iTMS eco-system has emerged, I’d agree with you.
    For all we know, next Tuesday’s intro of movies on iTMS may well foretelll even greater contribution of the iPod/iTunes/iMovies/iTMS system to AAPL.
    So in the absence of any credible sign of the demise of the system, your title remains FUD and sensationalist at best, with or without the question mark.
    Here’s another adage for you: never bet against a winner now, just because you think laws of gravity will apply sometime in the indeterminate future.

  6. Joe says:

    Why is there such a tendency to accuse anyone critical of Apple as predicting their demise? Paul did no such thing; he simply asked whether the decline in iPod unit sales is the result of it losing its panache? And how much.

  7. Innerdaemon says:

    The question of ipod sales decline has to be put in context. It is down significantly from its holiday sales but year over year sales is up. There is no doubt that iPod sales will wane but the Observer article does not do any due diligence regarding that particular point. The author merely regurgitates talking points and hopes its sticks. And as Jay points out merely arguing that sales will wane without addressing demand, credible alternatives (I say credible since there are many competitors but seemingly few with momentum), or Apple’s own plans paints an incomplete picture.

  8. J.S. says:

    Hi Paul,
    Think you have a good point on the iPods no matter what everyone else here thinks but to me there’s a whole different point that no one is even discussing. The decline in iPod sales I believe will be more than capably offset by Apple’s increase of market share in the personal computer market. Right now it’s only a measly 3%. With their new bootcamp software that allows MACs to run PC software and their incorporation of intel chips, I think the last remaining reason why people stayed away from MACs is gone. I’ve seen estimates that iPod users’ adoption rates of MACs and Powerbook laptops will increase from 19% to 25%.
    First of all I believe this percentage is way too low. Furthermore, I don’t think that anyone would doubt Apple’s marketing genius. Trust me, they’ll find a way to convert a much higher percentage of iPod users and non- iPod users to buy MACs and Powerbooks. That’s the picture I think everyone is missing. What do you think?