Falling iPod sales for Apple

Apple might have to deal with falling iPod sales, according to Arik Hesseldahl of Business Week.

Some analysts are predicting that the current quarter will be the first to see a year-on-year decline in iPod sales since the device was launched in 2001. Hesseldahl says this is because legions of iPod owners see little reason in upgrading, especially in the current economic downturn.

The iPod has been a powerful growth engine for Apple, explains the author, boosting the company's sales from $5billion in 2001 to $32billion in the last financial year to 30th September. However, quoted in the article is analyst Gene Munster of Piper Jaffray who expects the number of iPods sold to fall by 12% next year, to approximately 48 million units.

Munster says: "The reality is there's a limited group of people who want an iPod or any other portable media player."

The good news for Apple is that its other businesses are healthy, with brisk sales for iPhones and Macintosh computers. In fact, Hesseldahl points out that the iPod's biggest benefit to Apple these days is the help it offers in the sale of Macs.

"People who use PCs with Microsoft's Windows operating system tend to be more likely to switch to Macs after they use one of Apple's music players, a phenomenon that has been called the iPod Halo Effect," explains Hesseldahl.

Charles Wolf of Needham & Co agrees, saying: "The iPod may still be attracting Windows users to the Mac. And for Apple, that's pretty important."

Apple's iPod Problem
Arik Hesseldahl, Business Week, 03/12/08