Apple iPod Sales To Take Off Again? (AAPL)

This clown also thought Google would beat their Q4 numbers and went on CNBC that afternoon to reiterate his strong buy on big G. He was wrong then and could be now.

I think this clown actually knows what he is talking about compared to the imbecile pack of analysts otherwise out there.
Subrime and recession fears are taking down stocks, that does not mean that the analysis in itself is wrong.
watch out!

he is right about the upgrade i would love to have wi fi web access if its available with out hauling my laptop i would upgrade my i pod for that gladly what i will never do however is renew any sort of contract with AT&T they are an awful company to be a customer of and i think apple regrets this bad marriage.

on the other hand my local apple store is PACKED all the time and an employee i discreetly questioned said sales were brisker this quarter than christmas. i expect another set of Jobs "surprises" any minute now and am not worried about the company's future any investor that complains about "only 5%" sales growth in this economy should be buying municipal bonds anyway. the higer end pod sales and phone sales are still sales and the total number will push apples bank to add some zeros to keep their money from spilling out of the vaults

Can you also provide the revenue numbers for comparison? I could rationalize the unit slowdown if the revenue picture was rosier.

I keep hearin that the ipod sales growth is droping and that it is supposedly such a bad sign. I can't figure out why nobody is questioning it and wondering if maybe its because everyone already has an ipod!!! Look at the market share that the ipod has, the market for people that will buy a portable music devise is saturated with ipods. It very similar to where I live, Gwinnett County, Georgia. Gwinnett was the fastest growing county in the nation for several years in a row. Well now we have fallen back several places.... The reason is not that less people are moving in, its that there are already so many people here now. To grow 20 % from 1000 people only takes 200 people but to grow 20% when there are 100,000 people it takes 20,000!!! I think the ipod suffers from this a little as well.

Looking at iPod sales growth year over year, and charting this number to produce a landslide drop graph, isn't really a very useful way to look at the iPod market.

Your previous article pointed out that Apple had 527% Q1 (December quarter) growth in 2004, 207% growth in 2005, 50% growth in 2006, and "only 5%" growth in 2007. That sounds bad until you actually look at the sales numbers. Had Apple sustained 527% growth over the last three years, it would have had to sell:

10.5 million ipods in Q1 2005
55.5 million ipods in Q1 2006
292.7 million ipods in Q1 2007

Next winter, Apple would have to sell 1.55 billion ipods in 3 months of winter, and the world just doesn't have that much wealth.

Additionally, by only looking at growth in the blowout December quarters, you conveniently step around the fact that annually, iPod sales grew by 17% in 2007. That's a lot of new sales for a market Apple owns the majority of: 39.4 million to 51.6 million.

Now compare sales of another consumer electronics product: Microsoft's Xbox 360. From 2006 to 2007, Xbox shipments didn't increase by 17 or even 6%, but FELL by over 33%. Nobody worries about the freefall in Xbox sales, only about the percentage of growth on the iPod. Why is that? And why are contrived statistics required to inspire panic in a profitable product that is leading the industry and faces little effective competition?

That's an exercise for the reader to analyze.

well said once again, daniel eran dilger. the new strategy of lower entry price with a stronger upper end (Touch) means that sales can increase while margins also even possibly increasing....

I think that one of the biggest variables here is whether Apple is successful turning the touch line into the mainstream Wi-Fi platform that they aspire it to be.

If they do -- a big if -- they could see slower unit growth (in short run) but higher ASP/profits per unit and position themselves to convert/upsell the 100M base of iPod units sold into touch owners over the long haul.

The iPod touch/iPhone combo is fundamentally a platform play, and the use of iTunes as the marketplace for third-parties to distribute and sell those apps makes for some interesting scenarios.

A lot has to go right here, which I have recently blogged about from perspective of iPod touch owner and from developer perspective (in anticipation of SDK). Check out the post if interested:

iPod touch: Take two
http://thenetworkgarden.com/weblog/2008/02/ipod-touch-take.html

Cheers,

Mark

Good discussion, folks. Will follow up with some revenue stats tomorrow.

Daniel: I think you're misunderstanding our goal here. We're not trying to paint a bleak picture for Apple or criticize its products or inspire panic. We're just looking at growth statistics to see where Apple is growing and where it isn't.

While iPod sales were up only 5% last quarter, the revenue garnered from those sales was up 17%. What does this mean? It means that Apple is making more money for each iPod sold because customers are migrating to the higher end of the iPod line. Of course iPod sales growth is slowing-they've sold 120 million iPods since introduction. The market for this device has matured. Apple of course knows this and is banking on the iPhone as its next great device. What people also perhaps fail to realize is that the iPhone is also an iPod and people who would perhaps have opted for another iPod instead bought the phone with the iPod built in. Had you lumped the iPhone sales in with the iPod sales last quarter (generally conceding that the iPhone is, in fact, an iPod), sales growth would have been more on the order of 25%, not 5%. The old iPod is a great product but Apple is moving along the WiFi path and hopes that consumers opt for the more profitable and functional iPod Touch and the iPhone for their next iPod purchases. And, oh yeah, Mac sales were up 40+% last Q while the rest of the computer industry is limping along at barely 10% growth. The CFO, on the conference call, conceding the the company's computer business was "on fire." This is strong language from a man who is usually very conservative in his projections and comments to the media.

Apple stock is victimized by manipulative short sellers because they can do it with impunity and the products are criticized by naysayers who have nothing comparable to offer. No other company brings more elegantly innovative easy to operate appliances consistently to the market and is loved by its customers for it. The rest are history.