This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Era of the Apple iPod May Have Passed

Stocks in this article: AAPL

After a decade spent blanketing the world of 260 million iPods with twee tunes from Jet, Feist, CSS, the Fratellis and every other act of the moment, Apple has to wean its worshippers off a product they love with the vigor of vinyl LPs and VCRs. Unlike those tech-museum relics, though, it's not the medium's obsolescence that's killing the iPod -- it's the iPod itself. The iPod's peak in 2008 came just as all the cool kids were picking up the iPhone, whose 1.4 million sales in 2007 jumped to 11.6 million. Last year, for the first time, the iPhone's total global revenue ($13 billion) surpassed the iPod ($8 billion). People are still listening to MP3s and watching videos -- but on their smartphones.

Consequently, iPod isn't getting the screen time, store space or even market share to which it became accustomed. Roughly 23 million portable digital players were sold just in the U.S. last year, according to NPD Group. That's down 14% from the 26.7 million sold in 2008. The top five sellers in the first half of this year were still all iPod Nano, Touch and Classic models -- with the 8-gigabyte Touch firmly in the lead -- but the field is crowding with cheaper products of similar quality produced by Sony (SNE), Samsung, Cowon, SanDisk (SNDK) and others. The Apple products tend to rate higher, but a Microsoft (MSFT) Zune owner -- or a Japanese consumer who chose the Walkman over an iPod when sales of Sony's player bested Apple there last fall -- knows the quality gap narrowed as the price divide widened.

"We are seeing more inexpensive playback devices enter the market and private-label products in the sub-$100 space," NPD's Rubin says. "Even though the Nano continues to be a pretty strong product, the market is starting to bifurcate more, with these less expensive competitors in the low end and the iPod Touch taking over the high end."

After a decade of being nearly as indispensable as human plasma, if the ads and earbudded subway riders were to be believed, the iPod faces the same face-in-the-crowd fate as portable cassette players, boom boxes and other thrift-store gems. The problem is that it isn't a video cassette recorder, compact disc, cathode-ray television or piece of stereo equipment -- it's the equivalent of all of it hitting unsuspecting consumers at the same time.

It made Apple's iTunes store a $4 billion enterprise while making hipsters' stacks of records and CDs about as desirable as piles of stone tablets, and VHS and DVD libraries seem as unwieldy as cans of highly flammable nitrate films. Even before the housing bubble burst, the iPod and its podcasts gave gluttonous consumers a valuable lesson: You don't always have to own the things you love.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs