Earnings Today, And Pressure on the iPod Profit Machine
By Business Week
At least one person has been calling 2006 as >a href="http://communities-dominate.blogs.com/brands/2005/10/2006_the_year_t.html"/> the year the iPod died. That would be Tomi Ahonen a self-styled tech analyst, author and lecturer at Oxford University, who emailed me this week to inform me that the "iPod downturn is terminal, not seasonal." His argument is interesting though I'm not sure I buy it, at least not entirely.His point -- which he blogged about in March -- is simple: Mobile phones are the next great digital music player. Phones that play music will get better at it, and consumers will shift their preference to carrying one device instead of two. Some 90 million MP3 capable phones are in use around the world, versus an installed based of 30 million iPods.
Further
Ahonen's argument would be fine, but there are problems with the conclusion. First, he seems to be assuming that while mobile phones continue to evolve and get better over time -- which they will -- the iPod will remain essentially static. We know it won't. Additionally, there's problems with the model of getting music to the phone. Wireless service providers want to get a peice of the download action and thus boost the price per song. Apple has set the price bar pretty firmly at 99 cents (in the U.S.) and consumers are going to resist anything that goes above a buck a song, which a wireless download would require.
And finally
This doesn't preclude someone from figuring out how to make playing music on all wireless phones as easy as using an iPod and selling that idea the Motorolas, Nokias Samsungs and LGs of the world. But even then, they'd have to also sell it to all the service providers around the world as well.Still, the long-term threat that the mobile phone represents to the iPod is real, and Apple knows it. This is why the rumors about the iPod phone are so persistent. But last I knew that product had run aground.
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