Demise of a Darling: iPod market share crashes to 14% amid management denials

Apple has just released its April to June quarterly sales figures for the iPod. At 8.1 million units, this is the second consecutive drop in sales.

UPDATE JANUARY 2007 - we have just written the final chapter to this iPod saga as Apple reported its final numbers. The final market share of iPod is 12.9% for the year 2006 with musicphones outselling iPods by 7 to 1. Yes, the data is also in that owners of musicphones do listen to, and download music to their phones. Read it all here - Requiem for a Heavyweight: iPod reign is over

UPDATE SEPTEMBER - Welcoming Arstechnica discussion board visitors. We have a welcoming message for you to put this July posting in context. I suggest you read your welcoming message first at this link:  [Welcoming Arstechnica Visitors]

RELATED UPDATE JUNE 2007 - if you would like to see my projection of how the iPhone needs to sell regionally, and quarterly, to achieve 10 Million by Dec 2008, read this blog: Crunching Numbers for iPhone

UPDATE - please observe the two graphs I have posted that explain the matter very quickly for you. Then please return here for the full analysis. I think it helps to see the two graphs first. They are at this link: [Apple quarterly iPod sales, iPod and musicphone sales]

We wrote about the battle of the pocket in our book, Communities Dominate Brands, and in the book predicted the mobile phone would crush pretenders, from PDAs to digital cameras and yes, stand-alone MP3 players like the iPod. At this blogsite last October, when Apple was celebrating 16 consecutive quarters of growth and facing its greatest quarter ever - its 17th up to the record-breaking Christmas sales for 2005, we made that bold prediction that from 2006 the Apple iPod would face a total collapse of its market ("2006 the year when the iPod dies") . As Apple had not indicated any softness in iPod sales in its guidance at the time, and everybody - including us - believed the Christmas quarter would be record-breaking, this was quite a brave - and lonely - prediction. Just read through some of the intense critical comments we received back then by the iPod fanatics.

The first quarter of 2006, January to March, did in fact present Apple's first-ever downturn of iPod sales. Not a slow-down in growth or a "dip" in sales. A catastrophic earth-shattering crash of 40% drop in sales! Most companies would be devastated but Apple put up a brave face cunningly claiming that this was suddenly a "seasonal downturn" after the phenomenally successful Christmas sales of 2005 and misdirecting focus that compared with the previous year, iPod sales were still up.

We pointed out in our blog of April ("Nails into the Coffin of the iPod"), was that in Apple's previous four years there had never been any seasonal downturn of shipments. Every January-March quarter had been better than the previous October-December quarter. And again the April-June quarter again stronger than the first quarter of eachg calendar year. Where did this sudden "seasonal downturn" come from? In the first four years of the dramatic growth for the iPod there never was a seasonal downturn in January.

The whole MP3 player market worldwide for the second quarter of 2006 is not 10 million units, from which Apple could claim four out of five units. In reality the MP3 player market is about 56 million units (48 million MP3 playing musicphones, 8 million iPods, and 2 million non-Apple brand stand-alone MP3 players). So Apple's quarterly market share is not 77% like it was back in 2004 before musicphones. In this quarter Apple's market share is 14%

As we forecast in our book and on this blogsite, at the end of last year the battle for MP3 players shifted and is now fought in the pocket. And the undefeated world champion in that market share war is the mobile phone.

Was unavoidable

We've seen it all before. It was to be just like the brief massacre of the PDA markets - totally crushed by "smartphones" in only two years from 2000 to 2002. The world's bestselling PDA today, by a wide margin, is the Nokia Communicator - a smartphone and also by far the most expensive of all PDAs. As a result of the smartphone cannibalization of the PDA market, one of the world's largest PDA makers, Sony, totally pulled out of the PDA market in 2004. Most PDA makers rushed to bring converged devices in a defensive mode, with cellular phone capability added to the PDAs.

Then we witnessed the equally brief and lopsided market battle of the digital cameras where cameraphones emerged victorious also in just two short years. From 2004 the world's bestselling digital camera brand has not been a traditional camera brand like Nikon, Canon, Minolta or Kodak; the world's bestselling camera brand is been Nokia. Last year fourth-place phone manufacturer SonyEricsson alone shipped more digital cameras than all stand-alone digital cameramakers combined. And again the previous masters of this field admit defeat as the world's second largest camera manufacturer, Minolta-Konica announced in January 2006 they were quitting the camera business.

The writing was on the wall. We foresaw the brief but decisive battle where the iPod and other stand-alone MP3 players were predestined to emerge as the losers. I predicted the battle to last the full year of 2006, even I was not prepared for the total carnage that the phone makers reaped upon the iPods and other stand-alone MP3 players in only the first half of 2006. From a high of near 80% in 2004, the iPod's market share is now down to 14% - and still falling!

How could this happen?

Apple had the MP3 market mostly to itself until last year. Yes Creative Labs and a few others did make rival stand-alone MP3 players, but the big phone makers had ignored the musicplayer market as being too small (yes a market of 10 million per year is too small for the phone makers to even bother with). It wasn't until in 2005 that they decided the MP3 market was growing to be big enough to be worth going after.

Around year-end of 2005-2006 suddenly all major handset makers released their major music phones. Nokia's N-Series. Motorola's iconic Razr series has been upgraded and most Razr V3 phones now include MP3 players, as do all Motorola Pebl, Slvr and Rokr models. SonyEricsson finally capitalized on its global Walkman brand. Samsung pushed the technology boundaries by releasing the first phone with 50% more capacity than the iPod Nano. And not to be left outdone, LG released its Chocolate, another music phone.

During 2005 Apple sold 22.5 million iPods and had accumulated 40 million devices shipped since its launch in 2001. During 2005 alone, Nokia shipped 40 million musicphones. And this was before Nokia got "serious" about the musicphone market. Nokia did that this year with the launch of its N-series. In February Nokia musicphones were shipping so strongly, that Nokia said it would ship over 80 million musicphones this year.

Apple pleads mercy that the MP3 player market is in seasonal decline, while its biggest rival who already sells more than Apple, reporting DOUBLE growth in the same period. Keeping in mind that Apple sales were down 40% in the first quarter, and down a further 5% in the second quarter - since its peak of only six months ago, Apple is now selling only half as many MP3 players.

But Apple has every reason to be satisfied

We need to point out that iPod sales numbers of 8.1 million in a quarter are wonderfully good results within the IT industry accessories and gadgets market. For some contrast and magnitude, another IT industry technology-darling, RIM ships less than a million Blackberries per YEAR. The total global annual market for stand-alone PDAs is about 11-12 million - meaning that Apple ships more than twice as many iPods as all stand-alone PDA makers ship their pocketable gadgets combined. And these all are devices of roughly similar price.

So yes, for Apple the computer manufacturer, this level of sales of iPods is well in excess of what their business projections had for five years into the future; and if viewed only in context of the IT/PC industry, even with its market share crashing, for Apple the iPod is a huge success, even in 2006.

Only don't think of the iPod as a successful MP3 player in 2006. Just by Nokia's numbers alone, Apple has already lost the war. Nokia alone ships more than twice as many MP3 players as Apple does this year. Game over.

But it Its not iPod vs Nokia

Yet to end on Nokia would be totally unfair on the rest of the phone industry. Nokia is a relative late-comer into the MP3 player market which was invented and developed in Korea and Japan, by brands like Samsung, LG, Panasonic, NEC etc.

In the same time that Apple pleaded a decreased seasonal demand for iPods, the world's second largest phone maker, Motorola was proudly reporting that its Razr phones - and yes most Razr V3 models are musicphones - were their phones with the highest demand. For whatever early miscues there had been with the Rokr phones (the so-called "iPod phones"), now the Razr is a surefire hit. Yesterday Motorola reported it has shipped its 50 millionth Razr. So in a little over a year, only one phone model from Motorola's range has all but matched Apple's total iPod effort across all iPod models for five years. This is not a contest, it is a bloodbath.

Not to be outdone, the fourth largest phone maker, SonyEricsson reported on the Walkman branded high-end smartphones it released last year. In its first five months up to Christmas 2005 SonyEricsson shipped 2.5 million Walkman phones. In the first quarter of 2006 SonyEricsson shipped 3 million more Walkman phones. A growth of 100%. Bear in mind, this is that same quarter which Apple claims was a seasonal "downturn". Now, for its second quarter SonyEricsson says its overall sales are up 33% and that growth is led... by the Walkman series of musicphones.

Samsung kept on releasing ever more sophisticated musicphones and its local rival LG did the same. A fascinating statement came from Europe's largest phone retailer, Carphone Warehouse - which said that the LG Chocolate - a music phone - is the best-selling phone in their stores - the best-selling phone of all time. This in the supposedly "saturated" European market of mostly replacement phones? Yes, with a fall from 80% to 14% market share in 18 months, the iPod is wilting away before our eyes.

But the iPod is a better music experience.

Some will say that the iPod is technically better than musicphones. They complain that the MP3 player they've tried out on some musicphone was not as good as the iPod (its best described as a toy) or that the iPod user interface, music storage ability, music library etc is better. The "my technology is better than yours" argument.

That is a totally irrelevant argument. I can immediately grant you the argument. You win! Yes! You win! Yes the iPod is inherently better than any musicphone, for listeing to music. I totally completely without a doubt give you that argument. YES the iPod is inherently better.

But that is irrelevant. IRRELEVANT. Just being technically best does not give you market leadership. A Ferrari or Rolls Royce is technically a better car than a Mitsubishi, Chevrolet or Renault. Yet Ferraris and Rolls Royces are niche markets. The Sony Betamax was technically superior at every generation to its VHS video recorder rivals, yet Betamax lost the VCR wars. The Concorde was technically superior to its compatriot, the Boeing 747 Jumbo Jet - and forecasts from 1960s suggested a larger market for Concordes than Jumbo Jets, yet only 14 Concordes were ever manufactured against over 1000 Boeing 747's.

And the ultimate proof lies with the Apple Macintosh computer. For every generation it has been superior to the IBM-compatible (Dos) and Windows PCs yet Macs are a niche proposition with well under 10% of the PC market. If technology decided, we'd all use Macs and Windows would be a forgotten relic. But its the other way around. Macs are the rarity among personal computers, no matter how much every generation of Macs has been technically (and by its user interface etc) better.

So who cares if the music experience is better on an iPod. If Apple's market share has plummetted from 80% two years ago to 14% today, the battle is totally over. Apple cannot recover.

Then there are those who say most musicphones are not used to consume music. First, I'd immediately point out that neither are all iPods. There are plenty of iPods used for example in education for recording lectures, for various podcasts, for video consumption etc. So comparing "apples to apples" - no pun intended - we'd need to compare the iPods and the mobile phone's abilities to consume all digital content, where mobile phone experience is vastly superior.

The phone is always connected. The phone has a built-in response channel (SMS text messaging), a built-in payment channel, and allows placing and receiving phone calls. A phone is far superior overall as a multi-purpose data device, than an iPod. Just on videos alone, the UK mobile phone network Three/Hutchison reports that they have sold 15 million music videos to their 3G phone users in a little over a year, in a market where they have 5 million phone users. Worldwide there are 2.4 billion mobile phone users - over 200 million of those are 3G phones - all which can not only play music, but can download music directly off the air (like iTunes only better) and can "stream" music ie like listening to radio and can identify music via Shazam -type services and can play ringing tones and can display music videos over the air. A vastly superior complete music experience than what iPod could ever hope for. And Apple's total shipped iPod population even now in July 2006 is a bit over 58 million.

As to music consumption? Where does most music come from to iPods? Not from iTunes, it comes from the personal libraries of the users, ripping music from CDs onto MP3 files. Ask those people would they prefer to carry two devices or one - as everybody carries a phone - and so far every person I've ever asked the question said they'd prefer to carry one device, combining the phone and the MP3 player.

But iTunes sells millions of songs?

Then what of iTunes? Yes, a wonderful innovation for the music industry. Yet as the vast majority of portable devices are already mobile phones, not iPods, so too is rapidly the shift in music sales. The IFPI (International Federation of Phonographic Industry) collects the global data on all music sales and coordinates the royalty payments worldwide as the umbrella organization for example for the RIAA (Recording Industry Association of America) for American numbers etc. They have been reporting on iTunes (and other online digital sales) of MP3 songs for many years now.

The first MP3 songs sold to phones were introduced in the summer of 2003 in South Korea. The IFPI said that for 2004 the total sales of music to mobile phones worldwide was so trivial that they did not bother to break it down (ie much less than 1% of all digital music sold). But with enormous growth, for 2005 the IFPI reported that MP3 full-track music sold to mobile phones was 40% of all digital music sold. iTunes was the biggest part, but there were also other legal online sales outlets such as the re-introduced legal version of Napster, etc.

Now for the first quarter 2006, the IFPI reports that already half of all music sold goes directly to mobile phones. (oh, and this is true MP3 music, not ringing tones. The Ringing Tone business is more than ten times larger than iTunes, over 5.1 Billion dollars worldwide in 2005. I'm not talking about ringing tones here). And as the IFPI reports music sales to phones growing rapidly, what did Apple tell us in its quarterly review? its other music revenues (iTunes) are DOWN by 6%. Again the same shift from iPods to musicphones.

The tide is turning. Inevitably. Irreversably. The majority of the devices are there, the majority of the users are there. The majority of the money is there. The majority of music sold is also there, on mobile phones, not on iPods.

And what of the users themselves? The first landmark independent study by TNS of 6,800 adult users came out earlier this year reporting that already twice as many people consume music on musicphones than on any brand stand-alone MP3 players including iPods, and more tellingly 35% of the total population wanted to consume music expressly on their mobile phones. Nobody wants to consume music on a separate portable MP3 player when they have to carry their mobile phone with them anyway. It is common sense, after all, but now we have the definitive study on it as well.

All numbers stacked against iPod

I want to remind readers of the big picture economics. In Apple's record year it shipped 22.5 million iPods last year and has shipped about 58 million iPods in the past 5 years in total. The mobile phone industry ships between 950 million and 1 billion mobile phones this year alone. Yes, last year about 40 times as many phones shipped as iPods.

Not all have MP3 players, obviously. But this year at least 20% of those - more than likely 25% - will be musicphones. So anywhere from 190 million to 250 million musicphones will ship this year. Even if Apple somehow managed to DOUBLE its annual sales from last year and reach 45 million units sold this year - and trust me they won't perform this kind of miracle - NONE of the market analysts suggest Apple would double its sales for iPods this year - its market share this year would still be between 18% and 23%. Apple cannot recover from this loss.

How often are iPods replaced? I don't know. Certainly some of the iPods go to existing users who want for example a smaller iPod like a Nano, or who have issues with reliabilty, broken screens, battery problems, etc. Therefore the total iPod user base is significantly LESS than the total shipped units of under 58 million so far. The total phone population is 2.4 billion worldwide.

Phones are replaced every 18 months. 20% of Europeans have two phones (or more precisely have two subscriptions, most of those people also have two phones, but not all). For those who have two phones, the effective replacement cycle is 9 months. How rapidly does everybody who ever wanted a portable music player, get it "automatically" as part of their next upgrade?

What happens to the older phone? It gets passed onto kids - who all want the new musicphones but often cannot afford them. While the replacement cycle is very rapid in mobile telecoms, most of the cool phones that have been replaced by newer models, are recycled within the families to children, younger nephews and nieces and cousins etc.

But who is the competition. Apple is doomed here. The big five phone makers, Nokia, Motorola, Samsung, SonyEricsson and LG are all companies with deep pockets in research, and about a decade of history of doing pocketable consumer devices. No matter how much Apple can create iconic designs, they are now up to the world's best rivals in this space.

And by now every phone maker has released their first or second generation of musicphones. But the phone market is not only 40 times larger than the MP3 player market, the phone market is fierce in its competition. Apple releases a couple of new iPods per year. Nokia alone releases a couple of new phone models every month. With global competition and dozens of smaller rivals from Taiwan and China, and creative input from the major mobile operators like NTT DoCoMo, Orange, Vodafone, etc, the phones rapidly keep getting better and better. There are literally several hundred new phone models every year. Cameras were introduced four years ago and in 2005 over half of all phones shipping had built-in cameras. It does not take long for most phones to incorporate MP3 players. Apple cannot hope to compete against this many rivals in so many diverse markets.

Already today, in the Spring of 2006, the independent technology press reviews of SonyEricsson Walkman Phones, the Nokia N-Series and the LG Cocolate phones are all on par with iPod Nanos. Bear in mind you don't NEED to have technical superiority to win in the market place. But if Apple's rivals catch up on the technical side of the MP3 player on the phone, Apple's second-to-last competitive advantage is lost.

What of the iconic state of the iPod?

It is easy to fall into the trap of the white earphones. Next time on a longer journey in public transport - whether in a train, bus, underground, etc - observe those with white earphones. Then observe what device emerges when they change tunes? Its no longer that white earphones equals iPod user. Now many phone makers - and other MP3 maker rivals - as well as independent earphone manufacturers - offer white earphones. More than likely those white earphones are connected to a device other than an iPod. The person wants to appear cool - with white earphones - without actually having an iPod. So much for iconic.

Phone is addictive - and iPod is not

As to the phone? No device has as severe addiction as the mobile phone. The recent study by Queensland University in Australia revealed that the addiction to mobile phones is as strong as that to cigarette smoking. We cannot live without our phones. We take them literally everywhere including to the bathroom. The BDDO study from last year revealed that 60% of the phone owners on the planet take the phone physically to bed at night. And the Nokia survey of 5000 users this spring showed that already 72% of us use the phone as our alarm clock (and extrapolating from these two studies, apparently 12% place the phone at our bedside table...)

The most severe punishment you can inflect upon your child is not to take away Playstation privileges or remove the iPod. It is if you take away their mobile phone for the weekend. The Mobile Youth study showed that teenagers in the UK today - the world's third biggest music market after USA and Japan - spend 8 times more of their disposable income on mobile phones than on music. Yes the iPod is iconic. But the mobile phone is the only must-have device. The iPod is an optional extra. Game over.

Last nail into the coffin: Subsidised handsets

Then the ultimate killer. Subsidies. Most Western markets have handset subsidies, which mean that a new mobile phone will be sold at a nominal price of anything from zero dollars to 20-50 dollars. A small fraction of the true off-the-shelf price in the 200-300-400 dollar range. But iPods are never subsidised. So compare 200 dollars for the iPod or 25 dollars for a musicphone? The economics totally tip the balance against the iPod. So people can get their MP3 player "for free" as simply part of the upgrade and contract renewal for next year.

And finally, if you don't like our view on this. Lets go ask the big boys themselves? What does the music industry say? Here are comments from the senior management in the music industry, all released within the last year:

The world's largest music label is EMI. Its Senior VP of Digital Distribution, Ted Cohen says "Mobile phone will become the digital music player of choice" 

Another of the big four global music labels, Sony BMG SVP of Digital Business JJ Rosen explains why this will happen as he says "Everyone likes music, and everyone has a cell phone"

Universal Music is the third of the four. Universal Music's General Manager Rio Caraeff explains why music on mobiles: "Music is inherently mobile and something you enjoy on the go"

And finally the fourth of the big labels, Warner Music CEO Edgar Bronfman states where the focus will be: "Wireless will become the most formidable music platform on the planet"

After we've reported the trend from stand-alone MP3 players to musicphones, and arguing from the analogy of the PDA wars and the digital camera wars, now the first major analysts are also committing to this future. Yankee Group and Strategy Analytics have both come out now in June of 2006 stating that the battle will definitely be won by the musicphone.

No expert is committing to an unpredecented dramatic sudden Apple recovery. No expert believes Apple could ever come back from this total thrashing it received in the first half of 2006. The game is truly over.

Epitaph for the iPod

The iPod. It was the technology darling. Alan and I both love Apple and totally adored the iPod for all it brought us and the industry.

When the portable music player market was deemed dead in 2001 - Walkman cassette players and portable CD players had supposedly "saturated" the market, and whatever little growth was seen, global giants like Sony were pushing the minidisk as the evolution to the Walkman experience. Nobody believed in MP3 players.

In 2001 Apple had the vision to launch the iPod. A company not known for a consumer music brand, but rather a geeky and proprietary PC brand, nonetheless Apple released its iPod. And most bravely of all, at a time when the whole music industry was in panic about the napsterization and illegal file-sharing of digital MP3 files, Apple collected the industry together for the revolutionary iTunes.

We applaud all that. Like we wrote in our book Communities Dominate Brands as one of the 13 case studies, Apple was brave, visionary, bold and successful in creating a new market space with the iPod and iTunes. They were brilliant.

As they now report Macintosh PC sales growth, the iPod has brought a lot of additional sales to Apple in another market that was said to be stagnant - the PC sales. Apple has been able to create a niche market almost all to itself for nearly 5 years, and in that process added sales to its main product - PCs - all along also increasing its profit margins very strongly.

Brilliant strategy Apple. We applaud you.

But we also have to face reality. Apple had the MP3 player market almost exclusively to itself - with essentially only Creative Labs and a few other small IT players on the stand-alone MP3 player market. That all changed in 2005 when the big phone makers decided to launch musicphones.

The final battle was as brutal as it was brief. Apple lost out in the first half of 2006. What was the ultimate darling of the IT industry, was coldly sweeped to the sideheap of history. The iPod market share this year is about 14% and dropping. Like the Financial Times quoted me August 30 of 2005 in the story about music phones fighting against the iPod, "Next year the game will be totally over," says Mr Ahonen.

The iPod is dead. Long live the iPod.

UPDATE 2 - I've blogged a rebuttal blog answering the first 32 people commenting on this story. Please see [Stampeded by Mac Fanatics]

UPDATE 3 - The story received very broad coverage by several dozen blogsites, websites, news aggregators and discussion groups. This blog has been called excellent as well as the worst writing of all time. I've collected the commentary to this posting [Electronic Echoes]

Comments

[UranIdiot]

Um, dude... the best, most objective summary of your article I can write, is that you're an idiot. Rarely has such an ad-hominem attack been so justified. Idiot.

[Adam]

Best joke of the day...hahahahahahahahahaha

BTW get a REAL job and stop making a fool of yourself...

[Jim]

> The first quarter of 2006...[Apple had a] catastrophic
> earth-shattering crash of 40% drop in sales!

Here's Business Week's analysis of those same figures:

> IPOD ROCKS ON. IPod sales held their own at 8.1 million units
> or 32% more than a year ago ...
>
> "iPod sales held up really well, considering they haven't had
> anything new since October," Wolf said [financial analysist at
> Needham & Co. in New York]

http://yahoo.businessweek.com/technology/content/jul2006/tc20060719_557792.htm

Jim

[Riot Nrrrd™]

I started to read this article 'til I hit the concocted "14% market share" and then I realized how retarded you are.

So I skipped down to the Comments and found out that everyone else thinks you're retarded, too.

What part of "Just because we may own a phone that can play MP3's doesn't mean we use it instead of our iPods" don't you understand?

As everyone else except you seems to grasp, phones sound crappier and no one wants to chew up their battery life playing MP3's when they need it to make phone calls. The predominant use of phones is to make phone calls and send text messages. When all the phone cameras exceed 3.2 megapixels they will become useful as it's really nice to have a camera "everywhere", especially if you don't want to tote a large(r) camera around wherever you go, just in case there's a good shot opportunity that you would've missed otherwise. (I've got a Nikon CoolPix 5700, and I definitely don't want to take that with me everywhere. I'd rather have a Elph or similar form-factor camera for that type of handy access. If they can put 5 megapixels into a phone, then I wouldn't need the Elph equivalent.) But the bottom line here is, anything that's a phone feature which directly competes for battery life with actual phone use as a telephone is doomed to failure - until someone comes up with a battery/hard drive combination that allows both massive storage and extremely long battery life.

[peyote]

this article is laughable (especially when you're quoting from past articles that show you predicted something).

as others have said, mobile phone market means nothing if you don't know the features of the phones are being used over others (ipods, cameras). just because phone (a) has sold more then cameras & ipods does not make it the dominate camera & mp3 player in the market, lol. :P

prognasticator wannabe's come out of the woodwork every other qtr predicting the demise & quoting the last time they predicted a failed demise of the ipod only to be scoffed at the following qtr. good luck on this prediction. if there was any reason of a downturn, it would be from saturation or the fact that many are waiting for the widescreen video ipod rumor mills have reported.

[Tonio Loewald]

I think that the SD memory card, or its successors, will defeat the iPod and the CellPhone. The best data storage/transfer device is use-agnostic. Who wants to load their music collection onto a cellphone if it will be stuck there when, inevitably, the cellphone is obsolete in a year?

Tiny, unpowered 2G+ storage devices which can plug into anything, store anything, and be used for anything, will devour all of these transient technologies. An iPod minus its storage is just a $10 device with a cute UI. A cellphone is just a $20 device with a less cute UI. The value, content, et al is in the storage device.

[Musictasty]

You're obviously not into music so your premises
seem rather naive.

It's hard to find songs you like - I've been into
this for years and I'm always putting off my music
research. Due to 'sensory saturation" I work to
expand my library of "listenable" songs beyond 800
or so and research takes time, yet I eventually do
it because the payoff is worth it. But forget about shuffling among a hundred or so tracks on my Moto
SLVR when I can shuffle 800 and growing on my iPod.

[Mike]

Good luck in trying to justify your prediction some months ago that 2006 will be the death of the iPod. While most of the points are covered above regarding battery life, what to do with incoming calls as people done like to be interupted by text messages/calls when listening to music, cost of data transfer (especially when roaming overseas), transferring music from old phone to new, the users recluctance to share a music phone with others compared to an iPod, new iPod release pre-Christmas etc ...all lead to the question as to whether you will rgive tour fortune teller prediction. I rather leave the prections to the markets specialists and the stock market.. BTW, the market reacted very postively to the results. Why would it do that if Apple ipOds were Doomed?

[Cameron]

The big problem with this argument is that people are not buying phones BECAUSE they play music ... they buy phone because they are phones. Music is just an extra ... often an extra you cannot escape. It is a toy to play with.

Similar to the camera phone, you are now hard pressed to get a decent phone that does not come with the camera built in ... but people don't replace their digital cameras their cell phone -- or avoid buying a camera because the phone does the job ... no. It is just a "cool" feature that came with the phone ... heck take away the camera and music play and sell me the same phone for 1/2 the price -- nope ... can't do it. But I would love it.

You have large sales ... but it is not because of the music player ... it is because of the phone. The markets are different.

Now, do they play ball in the same park ... sometimes. While my #1 concern remains battery life. (Do I listen to music until my phone dies -- or save the battery for the call from the boss??). Having only one device is convenient, which is why the phone/PDA merge was effective - PDAs were used for contact management, scheduling, and simple notes. I don't like the larger size of the phones to fit the screens needed for email and web usage - but they are there for some. The music phone will no doubt hit a similar placement - used due to convenience.

However, the phone can not be all things ... products that try suck. They end up large, clunky, unstable, and difficult to use. The future of the iPod will be capturing those areas where the phones don't work well ... larger capacity drives and screen, small very dedicated devices, and possibly move more towards a smaller tablet/PDA merge for better video playing.

The phones will win the numbers - but by no means is that the death to the iPod ... just as phones have not been the death to digital cameras ... they just can't fit the bill. It becomes just a funky extra.

On top of that ... don't ignore the possibility that there may be other iPod based phones in the pipeline, just so they have a piece of the "convenience" pie.

[JPO]

I own an iPod shuffle (1GB-love the size and portability). I also own a 3G iPod (30gb). I recently bought a motorola phone that has the ability to play mp3 and take pictures (it's not the iPod phones). YAWN. Never have taken a picture with the phone, and I have no desire to play music on the thing. In order to get music on it I have to pay an extra $30 for a USB data cable (Motorola disabled the bluetooth to PC connection because they want you to connect to their Network to download expensive junk) or connect to their network for high priced junk. No thanks. My phone does what it's supposed to do - make and answer phone calls.

The new phones that integrate email/computer with phone are pretty cool. I believe this is useful. Would you replace your PC with these phones - NO WAY! Let's get real here.

[vego]

wow you guys are criticle. non english speaking

i thin he brings up good ideas as do all the comments.

the actual reality of the mp3 player/mp3 mobilephone space must ly somewhere in between.

i thin ipod sales growth year over year is a good sign for the ipod.

though i have a work cellphone and a personal cellphone that can, i have never used either to listen to music or to take a picture.

i thin the itunes music store/ ipod is by far the best experience for digital media consumption.

is it possible for the mp3 playing cellphone to eat ipod market share? for sure but it is trully a different thing.

I thin he makes good points or he may be mad that ipods can't answer phone calls and is trying to prick apple's blog watchers into incorporating that functionality sooner especially if he can get enough exposure.?

i thin the ipod is here to stay and even though i am now on my what 7th cellphone since 1999 and 3 of them could play music i have never used my phone for that.

but i thin apple should include that funcionality into their deivces as soon as they feel a more converged device would be both technically and commercialy prudent.

i thin we no longer have any tollerance for divergent opinons. he brings up things to thin about.

i thin liar is a strong word. we all have a way of seeing things and his way is different. don't get upset cause he trys to exlain and prove his point of view. that fear of other opinions harms debate. the more weirder strange and out of the box opinions, the better.

i back your ability to be wrong or even way wrong. you go boy!

[Paul Jardine]

Tomi, I think the comments to this article should make you realise you've lost this argument.
Take a step back and stop trying to blindly justify your prediction. Take a deep breath, re-examine your logic and give credit where credit's due.
Apple completely dominate the music player market. The only statistics that would disprove that would be something which showed that people's primary reason for buying a music phone was to listen to music (and not to make phone calls!)
Mobile phones can do a lot of things, but their use is typically secondary, i.e. people who take a lot of photos have a digital camera, people who listen to a lot of music have an iPod, people who browse the internet a lot have a laptop.
I use my phone to do many things, but it's not usually my first choice, it's only if I don't have my 'specialist device' with me. It's not even my first choice for voice if I have my laptop and Skype available.
Ask yourself this; How many of the 8.1 million that bought iPods last quarter already have MP3 capable phones? I suspect it's not a single digit percentage...

[Chap Harrison]

From MacSurfer:

"Apple income jumps 48 percent" ( Inside Bay Area )
"Apple bucks Wall Street skepticism" ( New York Times )
"Demise of a Darling: iPod market share crashes to 14% amid management denials" ( Communities Dominate Brands )
"Apple's Macintosh market share soars 16 percent" ( MacCentral )

I was expecting a parody! :-(

[Tomi T Ahonen]

Dear Piers, Sandeep, BobAB, Bert C, Kevin, Swissfondue, Bela, William (twice), Curious, Jim, Rus, D9, Barney F, Johnny Appleseed, David, MacKeyser, Rue, UranIdiot, Adam, Jim, Riot Nrrd, peyote, Tonio Loewald, Musictasty, Mike, Cameron, JPO, Vego, Paul and Chap

Thank you for writing. As this blog entry has already attracted 33 replies (we usually only get a few at best) - I don't want to try one enormous comment entry reply here.

I will post a reply now to the blogsite, where I will respond to each of you individually next, and post an update/response blog entry and address each of you and your comments so far.

Thank you for writing. We greatly appreciate the time you took to post a comment and we will of course keep them all here and we embrace the dialogue that this medium allows.

Tomi Ahonen :-)

[zato]

Tomi wrote: "I will post a reply now to the blogsite, where I will respond to each of you individually next, and post an update/response blog entry and address each of you and your comments so far."

Don't bother.

[fmaousfoto]

Demise of a Darling?? yada yada yada.

[Dazza]

Did anyone look at Tomi's bio? It turns out he's (shame on me if he's a she) a--wait for it--mobile phone consultant. Imagine!

"I am an author and independent consultant in the emerging areas of next generation wireless, with expertise in the business application, services, partnering and marketing of wireless technologies such as 3G (UMTS, W-CDMA, CDMA2000, IMT2000, EDGE & TD-SCDMA), 2.5G GPRS, W-LAN (Wi-Fi, 802.11), WiMax (802.16), 802.20, as well as 3.5G and 4G, and related wireless technologies including GSM/SMS, WAP and Bluetooth.

I can provide advanced wireless service marketing plan workshops and business case audits for operators/carriers; new service creation workshops; and value chain analysis for content providers and their support such as intellectual property attorneys."

[RP]

I believe that your penchant for taking numbers that nearly every other business analyst sees as good and slapping a DOOM moniker on them makes for additional hits to your website but that's about it. It got me to read your drivel driven analysis didn't it? I wouldn't call this the most unique way to sell a book but in this sensationalistic sound bite culture it's certainly the most tried and true.

[Jim from Davao]

How many of the mobile phone/digital music player owners actually use their phones to listen to digital music exclusively? Can you show us the numbers? Actual, real numbers from reliable sources and not from those in your head. Thank you.

[Joseph Matt]

Communities Dominate Brands is dead. Long live Communitites Dominate Brands.