Apple's iPod line will drive the company's growth, something that will be evident when the Windows version of iTunes 4 and the iTunes Music Store becomes available, Charles Haddad writes in his latest "Byte of the Apple" column for Business Week Online. Haddad says it doesn't matter how fast the new Power Mac G5s are. Though the Mac will keep improving, it won't set "the computing world on fire" nor will the Mac ever represent more than 3-5 percent of all computer sales.
"What I am saying is that Apple is at one of the most important turning points in its history," Haddad wrote. "It stands at the threshold of crossing over from cult favorite to household name ... Apple is making this crossing on the slender back of its little iPod. This portable digital-music player is at the cusp of doing for music what the original Apple did for computing in the late 1970s: setting the standard as the mass market for these players starts taking off."
The iPod will Apple's first successful product "not tethered to the Mac," Haddad opines. iTunes Music Store sales will increase by a factor of seven with the addition of Windows users, but Apple's real profits will come from sales of the iPods themselves, he adds. Predictions have iPod sales growing to 975,000 units in 2003 (and 1.25 million when Windows users come onboard), giving Apple 54 percent of the digital music player market.
News source: MacCentral
"What I am saying is that Apple is at one of the most important turning points in its history," Haddad wrote. "It stands at the threshold of crossing over from cult favorite to household name ... Apple is making this crossing on the slender back of its little iPod. This portable digital-music player is at the cusp of doing for music what the original Apple did for computing in the late 1970s: setting the standard as the mass market for these players starts taking off."
The iPod will Apple's first successful product "not tethered to the Mac," Haddad opines. iTunes Music Store sales will increase by a factor of seven with the addition of Windows users, but Apple's real profits will come from sales of the iPods themselves, he adds. Predictions have iPod sales growing to 975,000 units in 2003 (and 1.25 million when Windows users come onboard), giving Apple 54 percent of the digital music player market.
News source: MacCentral
Brightmail said that its monitoring has also found that spam email in the UK is rapidly becoming more offensive.
In June 2003 over 20 per cent of spam was pornographic, making it the second largest UK spam category following the 34 per cent of spam offering products for sale.
In the US only 19 per cent of spam fell into the adult category in June.
Speaking at the UK Spam Summit, Enrique Salem, chief executive at Brightmail, said: "No one thought that spam would be the primary use of email, so they did not have solutions built in to provide better security.
"The spam we saw six months ago is not the spam that we see today. We are in an arms race."
Salem believes that the spam problem could be "under control in the next three years", provided that there are combined efforts from ISPs, technology companies, legitimate direct marketing firms and legislation.
While the volume of adult spam is disturbing, the largest category of spam continues to come from illegitimate direct mail companies that offer products to email users who have not requested to be contacted.
Stephen Timms, minister for energy, e-commerce and postal services, said that the government recognised that spam is a growing problem, and one that could put people off using the internet.
"This is an area where there are huge problems and great frustrations. But it is an area where there are solutions as well," he said.
"We don't want to suggest that spam will disappear, but well thought through regulation, industry action and user awareness can help make big inroads."
And BroChaos: if we required people to know what they were talking about before they posted then you'd see very few comments made.
still i'd prefer a creative zen ove ran ipod, i don't find the ipod that good looking, well neither is the zen, but its cheaper
and yes the zen is cheaper and bigger in terms of storage (yes it's physically bigger than ipod we konw
Marketing execs set the price of a product where you work? What dumber than mud company do you work for?
Apple's main competitor (imo) is Microsoft and the hardware manufacturers like AMD and Intel. Apple is already gaining OS popularity with Panther, and is also gaining HUGE hardware popularity. Also, Apple has a lot of backing from other people like Larry Ellison of Oracle who wants to Samurai-chop Gate's head off. When I look at Apple,I see a company that is completely turned around is now fully into "the new era of computing". This company, although not a big enough threat right now, could give its competitors a real run for the money in the future (albiet uninentionally). It would be good to note that at the point in which Microsoft, AMD, and Intel begin to get in a heavy competition, you will know that they are scared. After all, all things being equalled, if you are better and have no fear of your competitor, then why compete against it?
nd
Charles Haddad is an idiot.
Let's do some math. Apple sells about 1 million Macs a year at $1500-2000, on average.
Apple sells .. what? several hundred iPods a year? Let's say it's 1 million. But they cost $300-400 on average.
How many iPods would Apple have to sell to match its Mac sales?
More importantly, what does Apple do when the market for MP3 players dries up? I mean, eventually, everyone that wants one will have one, and other than bigger hard drives, there isn't too far we can go with these things.
Now some reality.
The reason Apple sells the iPod is to add value to the Mac. The reason Apple sells an iPod for Windows is so Windows users--99 percent of the world--can see how good Apple's products are. And maybe, just maybe, a small percentage of these people will be curious enough to look at--and buy--a Mac later on. That's how Apple wins.
Apple is a computer company. Sure, they've pretty much embraced the whole digital media thing. But they don't see iMovie, you get it for free with a Mac, and not vice versa. Everything they do is designed to sell more Macs. This, you see, makes sense.
Paul
Stupidest comment made today. I love it when people say this sort of idiocy: "Everyone who wants one will have one." Hah!
So why do TVs, phones, cellphones, consoles, etc... still sell. Hell, everyone I know has more than one TV, in many cases 5, but MIRACULOUSLY TVs still sell.
Sorry for calling you stupid, pt, but you brought it on yourself.
"Apple sells .. what? several hundred iPods a year? Let's say it's 1 million. But they cost $300-400 on average." Haddad says that ONE store alone is selling a hundred a DAY. They just past the 1 million mark. The article includes projections of plus 800,000 this year and possibly as high as 1.25 million per year. So why are you purposefully being an idiot about "several hundred"?
Your snarkiness is lame and pathetic and idiotic.
"How many iPods would Apple have to sell to match its Mac sales?"
When did Haddad say that Apple's only product should be iPods? He doesn't suggest getting out of computers or anything else they are currently in. He is saying the ADDED revenue of this one product is what will save them, not G5s. Don't see where the idiocy is in that. It's pretty damn idiotic to interpret that to mean that he is suggesting not making computers.
But to answer your question: 1.25 million to 1.5 million would be very close to half a billion bucks. So, for any idiots in the room: 1.25-1.5 X 2 = 1 Billion dollars. So 2.5 million to 3 million a year. What's so insane about that number? Sounds like a reasonable chunk of a market which is still nascent. (And quite moist.)
"More importantly, what does Apple do when the market for MP3 players dries up?" You should already understand how assinine this comment is. Don't you, snarky little pt?
"The reason Apple sells the iPod is to add value to the Mac." But can you admit that 300 - 500 million in extra revenue ain't too shabby for a company that has survived on 1 billion a year in revenue for several years, yes? And that's just hardware. That doesn't include added revenue through the iTMS, accesories, and related purchases does it? So you already understand that Apple can potentially grow their revenue 30-50% in the next year, but Haddad's an idiot?
Uh, huh.
Where does Haddad say Apple should get out of the computer market? In fact, he says:
"Oh calm down. I'm not saying the Mac isn't a great computer and won't keep improving, if only incrementally. But it'll no longer set the computing world on fire. Nor will the Mac ever represent more than 3% to 5% of all PC sales."
Is that an idiotic statement? Is it idiotic to interpret this to mean that the iPod will REPLACE Mac sales? Yes.
Is it intelligent for a pseudo-journalist to call another journalist "an idiot"?
Not particularly.
"But they don't see iMovie, you get it for free with a Mac, and not vice versa."
See? Do you mean sell, genius? In fact, they do sell it.
What up, pt?
But then there's the margins. The margins on an iPod are small, and will get smaller as the competition catches up. Because Apple is the only Mac maker, they can keep the margins pretty high, though they can't now touch the margins they had in the late 1980's, thanks to Windows-based PCs killing that market.
So to address specific responses...
dp123. I don't come in here to be "a journalist." I come in here to be a human being, a tech enthusiast. I think Haddad is being silly here, sorry, and writing an article that he knows will cause debate, not because he necessary believes his own tripe, but because he's been away for a while and he wants to stir something up. Like I said, idiotic.
dp123 (#2) - People will eventually upgrade, sure. But it's unclear if the market for expensive MP3 players (a nicety) can replace PCs (a requirement). In any economic downturn, it's the trifles that go first. An MP3 player is a trifle. TVs are part of society. Things that shut you off from society (i.e. anything with headphones) will have more limited impact, naturally. Also, Apple isn't known as the low-cost, high quality portable electronics maker everyone knows about. That would be Sony. My guess is the big players will wake up eventually.
Dazzla - I think competition will eventually do to the iTunes Music Store what Windows did to the Mac. In other words, they will end up a bit player in a market they jumpstarted. Don't take this the wrong way: I have already purchased hundreds of songs from iTunes, and it works very, very well (though it has idiosychrasies). But Apple won't be the only player in this market.
dp123 (#3) - They just passed the one million mark AFTER BEING AVAILABLE FOR OVER A YEAR AND A HALF. That means they sold well under one million each year, or several hundred thousand, tops. I think that means I can read, because that's the figure I used, but I gave them the benefit of the doubt and used 1 million as a round number. They may (or may not) have been selling 100 a day at a certain store, but come on: Most of that is from the new models coming out. I'm sure sales have evened off nicely to a more typical mid-summer lull right now everywhere.
Oh, and...
I had a WONDERFUL hard drive crash and--after three hours on the phone with Dell support--figured out what it was. That's where I've been today. In hell. So in some ways, Haddad isn't an idiot, as he uses a Mac: My Mac came right up after the electrical issue that rendered my PC useless for a day. Go figure.
Paul
That is the simple question. Haddad isn't decrying any other initiative of Apple's.
He is saying the iPod initiative is more important than the impact of a G5 PowerMac. Simple.
And again I find your arrogance more idiotic than Haddad's simple position.
"I think Haddad is being silly here, sorry, and writing an article that he knows will cause debate, not because he necessary believes his own tripe, but because he's been away for a while and he wants to stir something up." Uh, huh. You've never done this before? Please! I guess you are idiotic and arrogant. And hypocritical.
"They just passed the one million mark AFTER BEING AVAILABLE FOR OVER A YEAR AND A HALF." So? The report was a projection for the coming year. I don't see 1 million in a year and a half, and the next year 800,000 to 1.25 million to be unrealistic.
"I'm sure sales have evened off nicely to a more typical mid-summer lull right now everywhere." So he points to an analytical report and quotes Apple and is an idiot. You PRESUME a lyrically idyllic "mid-summer lull" and are a genius? Whatever, pt.
I find your claims and corrections completely baseless.
And I didn't claim you came here as a journalist. I don't think you are one.
Last edited by 9953 on 03 Jul 2003 - 00:07
It doesn't matter. If there's one thing I think we can all agree on, Apple doesn't have a reputation for making low-cost products and, ultimately, this market will indeed be defined by high-volum, low-cost alternatives. The future of the MP3 player isnt' the iPod, it's the iPod ripoffs that cost 1/5th as much as the iPod. The iPod, like the Mac, frankly, is a luxury item, and it's never--never ever--going to be high volume, or a market leader. Haddad says the iPod has "51 percent of the market" ("according to IDC"
dp123, let's not get mean here. I'm not trying to turn this into a personal battle. But this guy's comments are idiotic, as I said. The iPod is wonderful--I have one, and want one of the new ones--but, again, they're not a mass market item. And the iPod is not Apple's future. The iPod is just one of many devices that will connect to the Apple digital hub which, yes, will continue to center on the Mac.
Paul
Easy, they come out with another, newer, bigger, better model.
1. smaller and smaller form factor (not too much though because of screen size)
2. larger and larger capacity (useful as the functionality expands beyond music)
3. battery life (maybe even removable or piggyback, like cellphones)
4. bluetooth (for wireless headsets and remoting)
5. OLED display (for less power consumption, brighter displays, and color capability)
6. software interactivity, specifically music-related (cannot modify tags, playlists are limited, other editing and modification options)
7. more enhanced dock (allow mixing, advanced editting capabalities in iTunes)
8. enable continuous play (cannot achieve continuous play between tracks yet)
9. speech and other audio recording
10. other software enhancements (games, other apps, better connectivity and syncing)
11. potential to attach iSight and record video
Shall I continue?
And, again, since when does a market die with saturation? It doesn't. There are always new customers. Old players die. Better models with better features come out.
Is the claim that the music player market is to be saturated at 10 million users? 20 million? 500 million? (Apple's only sold 1 million and has 50% of the market.) Sounds to me like market saturation won't happen for another 10 years. Everyone drools over my Pod, but most people really won't see them as mainstream for another 2 or 3 years.
Last edited by 9953 on 02 Jul 2003 - 22:58
BTW. The ability to record is actually built into the current gen. They just haven't added the front-end UI for it yet.
But anyway.
The innovative stuff is hard to see coming, but you know it when you see it. For example, the ability to stream songs from another Mac in the house, through iTunes, is quite innovative. That's an awesome feature, because it's really easy to use and you just know if we did it in Windows, Microsoft would be telling people how to set up file shares or something. Apple just gets simplicity.
Again, smaller sizes and bigger hard drives are not "innovation." They're just obvious product enhancements.
And on the "drooling" thing. Everyone drools over the Mercedes SLK too, but we all end up buying Corollas. There's a reason for that. Both cars get you from point A to point B, but the SLK is a bit too expensive for most people. Or more than a bit. The iPod is similar. I try to sell people on it, but virtually everyone who's asked me about portable music players recently has bought something like the Creative MUVO. "But you can put ALL your music on this thing," I tell them. Yeah. That's nice. The MUVO is $100. And so it goes.
Paul
The wider market for "portable digital audio players" may never be saturated. Like you said, people buy lots of TVs. But people don't buy lots of 40" plasma TVs. Again, there's a reason: Cost. There is only a limited market for luxury items. That's why there are now low-cost Pocket PCs (albeit at the risk of diluting the market) and that's why you can now buy a server from HP for only $349. If you price yourself out of the market, you can only reach so many people.
On that note, Apple has *never* been successful selling a high-volume, low-cost product. Never. So the idea of a $150 iPod is fanciful, because a company like Sony or Creative has far more reach than Apple with consumers.
Paul
Sorry but who cares if the codec is open source or not? Please don't bring up silly points like licensing fees or proprietary formats. If you have Ogg files then write a script to batch transcode them to MP3s as you copy them to the iPod. It is pretty easy to do.
So you have to adapt.
I have an iPod and, like many people, prefer to use WMA on the PC. So I have a collection of music I've ripped in MP3 as well, for use on the iPod. It's not elegant. It's not convenient. But hey, I'm willing to take that step in order to use the iPod. I suspect many people would not be cool with doing that.
Given the size and cost of today's hard drives, however, there's precious little reason to hang on to outdated notions about technological superiority. Unless you're a geeky audiophile, a 160 Kbps or 192 Kbps MP3 should be fine for almost anyone. As Yoda might say, "Size matters not."
I'll give you OLED displays, thats innovation, but please, making things 1 or 2 mm smaller or give the battery a minute of extra battery life is not. If you begin to call that innovation, then you might as well call all the patches that are released an "innovation". Just like with desktop computers, there is little room for innovation, fine, we keep getting faster processors etc, but nothing really new.
A company is responsible to constantly improving the product they release, and if Apple wanted to, they could end the iPod generations at this line. A company only innovates and updates their product lines when profit is involved.
Paul, I found the last part of your post to be quite correct. Most of the hardware/software developed by Apple for the Intel platform could be used (and is) as a mechanism to propel users towards the Apple platform, however, thats not really motive. Could it be at ALL possible that the motive is also... profit driven? I believe so. The fact that Microsoft compatible products drive people to the OS X platform is just an unintended biproduct of a profit driven venture, period. If the intent of such a system was purely to propel users to OS X, then Apple would be releasing a lot more software/hardware for the PC platform. Don't say there isn't any software/hardware to port, we have the new iSight along with iChat, iCal, iSync, iDVD.
Colonal Sanders, I find your post intriguing, you make a point but you don't eeven warrant it. Using pure guesstimation, the cheapest mac goes at around 899$ which is approximately 3 times the base iPod. Even if you divided the Mac Computer purchases by 3, it would still be more than the iPod profit because there are apple computers that go for 3299, and a fully loaded PowerMac will slam you down around 9,000$. This is where you make a huge flaw in argumentation, just because Apple SELLS more iPods than computers, that doesn't necessarely mean that they outproft the Apple Computers. Thats just like saying the iTMS sales outnumber the iPod sales, hence the profit is larger. Big flaw in your logic man, go read Kant.
nd
After three revs, the iPod is decent. It has many, many more things that can be added or improved (as mentioned) that haven't been thought of by other companies, but Apple has probably already tested most of them.
That's my point. Plenty of room for improvement. Apple has the lead, the mindshare, the market thus far.
Sound like a Mac yet?
It *only* supports MP3. Most of my collection is in WMA format.
Thus, since Apple has done nothing to expand the format support of the iPod, I'm forced to consider a Nomad Zen.
I may buy one very soon in fact and sell the iPod. It's a very good device and I really do love it. But as usual, Apple's own stupidity holds their product back.
Just because a company doesn't which to support another format, that doesn't make them stupid. If that were the case, I can go ahead and start vandalizing the MS campus because they dont support the Apple products anymore.
Microsoft supports Apple with Office (two new versions in the works), Virtual PC, MSN 8, MSN Messenger, and a variety of other products, including hardware.
I'm not quick to call Haddad an idiot, btw. I've been watching this buffoon for a long time. Does that help?
Paul
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