The age of the iPod is over (?)
Over the holidays, Apple’s iPad and iPhone sold better than they’ve ever sold before: 51 million iPhones and 26 million iPads in a single quarter. The lowly iPod, however, didn’t do nearly as well. The company moved just six million of the trademark MP3 players, a 52 percent decline compared to the same period last year. All told, iPod accounted for just $973 million of the company’s record $57.6 billion revenue last quarter. While some would probably be happy to claim they ran a slightly-less-than-a-billion-dollar business, it’s getting pretty small for a company the size of Apple. You might even call it a hobby — if not now, then by this time next year.
What happened to the iPod? Simple cannibalization, for one: every one of those 51 million iPhones can take the place of an iPod. (Steve Jobs famously called the iPhone “the best iPod we’ve ever made.”) And as people increasingly get their music from streaming services, a constant internet connection could be key, something you don’t get with an iPod or even a iPod touch unless you have a Wi-Fi hotspot to pair with.
The decline of MP3 players shouldn’t be news to anyone though, certainly not to anyone who follows Apple closely. In June 2009, Apple CFO Peter Oppenheimer admitted that cannibalizing the company’s MP3 players was all part of the plan:
For traditional MP3 players, which includes Shuffle, Nano, and Classic, we saw a year-over-year decline which we internally had forecasted to occur. This is one of the original reasons we developed the iPhone and the iPod Touch. We expect our traditional MP3 players to decline over time as we cannibalize ourselves with the iPod Touch and the iPhone.
The lack of new iPods could certainly be responsible for the most recent decline in sales. Usually, purchases pick up drastically every time Apple releases a new iPod, and this year they clearly did not. Still, that’s not the whole story: as you can see in the chart above, the peaks had been shrinking even before Apple stopped updating the iPod nano like clockwork.