iPod: The Rise And Fall Of Apple’s Cash Cow
Some of us may be too young to remember the glory days of Apple’s iPod.
A long time ago in a galaxy far, far away, iPods accounted for 40% of Apple’s revenues. The year was 2006, or 1 B.C.E. (before the common era of the iPhone). Apple was only a couple months away from announcing the sale of its 100 millionth iPod unit. The device was a success.
The age of Napster
The iPod was introduced in 2001, immediately following the tragic events of September 11 and about eight months after the launch of iTunes for the Macintosh. The early 2000s were also the years of free peer-to-peer music file sharing over the internet. Remember Napster and LimeWire?
The iPod rode the tailwinds of an increasingly popular digital music market. For about half a decade, the device grew in popularity and peaked at nearly 23 million units sold in the 2008 holiday quarter – smack in the middle of the Great Recession.
Rise and fall of the iPod
The iPod’s mature and decline years came fast. Not that there was something wrong with the product itself. But the smartphone era was too disruptive, and the music player did not stand a chance.
Apple decided to stop reporting the iPod as a product category in its financial documents in late 2014. By then, unit sales of the device were 15 times smaller than the volume of iPhones sold. Today, I believe that the ratio is likely closer to 100 times, if not more.
Investors can ignore the iPod
The iPod is still featured in Apple’s product lineup. But to purchase the device on the company’s website, one must dig into the Music menu and look past the little-known HomePod icon. The iPod is merely a shadow of its former self.
To be fair, there may still be a market for the product. The price for the entry-level iPod Touch is only $199, which looks even more compelling once free access to Apple TV+ for one year is considered (a $60 value).
With the iPod Touch, children, young teenagers and budget-conscious consumers can get access to features like Apple Arcade and augmented reality applications for cheap. This is possible because the device is now equipped with the A10 Fusion chip and supports iOS 13.
Who knows, the iPod may be “the hook” that turns a younger audience into users of Apple’s more sophisticated products and services in the future. Still, I can not imagine the iPod being a relevant product category for Apple’s financial results today – or becoming one any time in the future.