Its quite a famous saying from Apple. Calling a product a “hobby,” indicates that it doesn’t necessarily have the attention that its other product categories have, and that refreshing it is often a rare sight. In my eyes the only “hobby” – with the exception of software – that Apple produce, is the Mac Pro. Other than that, we can see their other products getting updated or refreshed at least every two years. But are we about to add another product to that category?
Looking its the companies iPod sales, we can see two things that stand out. The first is how they stack up against the Mac product lineup. In Q4 2013 we can see the Mac actually outperformed the iPod, with just over 3,000 units being sold compared to over 4,000. The sales did pick up in the quarter just gone, but they are 56 percent lower than the previous quarter year-over-year, with the product line accounting for just $973 million of the $57.6 billion in revenue it gained.
Its still a large amount of money for a company to bring in, in fact, it's nearly more than what Blackberry managed to bring in revenue last quarter. But for a company like Apple and for a product in such a competitive category, its hard to see how its now an appealing option for its target demographic.
The second is how Apple have used cannibalisation to get to this point. By entering the mid-range smartphone market with the iPhone 4S and 5c, the likes of teenagers and kids already have some sort of device capable of doing the same things as an iPod Touch, and some more. Steve Jobs himself called the iPhone the “best iPod we’ve ever made.” Then there is the iPad, another device that kids and teens seem to want more, if only because it offers more features at £100 – £250 extra [depending on the model] and is available in multiple form factors.
There is also the soul purpose of the device. Music streaming services are becoming increasingly popular with people, especially now devices are shipping with limited storage that could be better used up for games, TV shows, movies, or general apps. People have always wanted access to their music, but they don’t want to have to store it on their computer.
Peter Oppenheimer: ”We expect our traditional MP3 players to decline over time as we cannibalize ourselves with the iPod Touch and the iPhone.”
The cannibalisation of the iPod product lineup isn’t unexpected though. As The Vergepoints out , CFO Peter Oppenheimer admitted back in 2009 that “we expect our traditional MP3 players to decline over time as we cannibalize ourselves with the iPod Touch and the iPhone.” Looking at the sales of the iPod, we can see that there has been significant decline in the last five years. Whilst they picked up when the company released new models, it still hasn’t produced the record sales numbers the iPhone or iPad have quarter, after quarter.
The lack of new iPod’s for the last twelve months could be responsible for the recent decline in sales. But the decline has happened ever since the company introduced more and more devices that can pretty much do what the iPod can, but have further internet capabilities [3G].
Does the decline in sales and the lack of attention mean Apple is killing off the product? Not necessarily. As we’ve already established, its still near enough a billion dollar business for Apple. But it could be given less attention in years to come. A great example would be the iPod Classic. Its basically just a legacy product at this stage, and is probably something they make when it gets ordered, rather than on demand like its iPad or iPhone. But if you look at how detached it is from iOS and the next generation of Apple’s mobile devices [no thinner form factor, lack of lightning connector, no fingerprint sensors], we can see that its just a product that has been forgotten about entirely.
We probably won’t see this level of diversity from the iPhone and iPad for the iPod Touch/Nano, but don’t expect to see this product lineup being the first to be updated with new features when they are introduced. Native MP3 players are living on borrowed time. The lack of next-gen cellular internet functions and pretty much every other device being able to play/store music, means that this is no longer the flagship product for the company synonymous with kickstarting the online music revolution.