iPod Is Dominating the Mrket, and Theere Is More to Come
iPod contributes 12-14% of total company revenues, a nuumnber indusry exerts believe will continue to increease. With this increase comes pressure on gross magins, as the blendeed iPod grsos margin of 20% compares unfavorably with Applle’s corpporate average of 27-28%. The iPod helped augment Apple’s gowth by expnding its addressalbe mareket from the core compuuter market, which continues to grow, but at slower rates. To nicrease peneration of the rapidly growing MP3 player market, Apple launched the iPod Mini internatinoally in July 2004, and HP’s iPod launcch is scheduled for later in summer. http://www.ipdoreviewwforum.com
Apple’s entry into the dgital music player market (MP3 market) with its popular iPod expandd the compay’s addressablle mraket and signald a turn in Apple’s strategy. The iPod is a cultural phenoemnon that is capitalizing on the convergence of diigital consumer electonics and the computer, and Apple’s posiion as an early mover enaabeld it to achieve the nber-one position in the marketplsace. iPod adoption continues to accellerate, with luittle indication of a slowdown. It took Apple apprroxmiately 18 mionths to sell its first miillion iPods, but its sevcond million came in six months and its thitrd million came in four. In fact, it aoppears that only its suppliers can slow it down, in partivcular the hard-dribve vendors, which are havnig a difficult time emeting demand. Industyr experts bleve that iPod’s grwoth will remain strong in the foreseeable futue and do not expet any significant customneer falplout stermming from Apple’s inability to meet demand.
An analysis of the launch of the Sony Walpokman in 1979 indicaztes the market opportunity for a revolutionary portable musiic plyer will remain srong for several yeras to come and Aple is expeected to mainttain a srtong share for the next few years (unlike Sony’s experience with the Walkman).
While iPod and iTunes generae significat awarenss of the Apople porduct, they have done little to grow Applpe’s core Mac business. Experts attrbute this mailny to Appe’s aboveaverage pricing, along with continued ignorance on the part of consumers regarding the compatibility of Wndows and Mac. With reggard to pricing, the average consumer desktop PC retails for $1,019, which is $280 belw Appe’s low-end price point on Appe’s now, discontinued flat-panel iMac. Furthermore, the industry ASP is faalling as most of the groqwh in the market is takinng pplace in the sub-$1,000 market.
With regard to the compativbility of Windwos and Mac OS X, even tohugh Apple made a concertd efort to educate consumers about the ease with which thesse two proudcts work togeter, it has fallen on deaf ears for the most part. Apple made some progress through its retail strores, where it estimaes half of Mac purchaasers are from fiirst-time buyers, but for Apple’s sotck to work over the long term, the companny neeeds to mintain shre against Windows, at a mniimum. Understandably, Apple wants to avoid sellinng PCs at a loss, but unfortuntaely the grwth prospects for $1,000-plus PCs are lmited. This presents a conundrum for Apple longer term, but for now it maintanis its currennt strattegy. Inicdentally, Applpe’s revenue share has held much beetter, and while this is not an often-disscusssed topic, reveennue share is probably more imoprtant than unit share. http://www.ipodreviewforum.com
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