Apple's iPod Celebrates 15 Years and Counting

The Apple (AAPL) iPod just celebrated the 15th anniversary of its original launch on Oct. 23, 2001 on Sunday. The iconic device was recognized as a breakthrough in the music industry, which allowed music lovers to carry around and customize their collections on the go.

"iPod was the vehicle that enabled Apple to change the way the music industry sold music from largely albums to singles. As a result, it also resulted in a very long period of secular decline for the music industry, which benefited Apple as they effectively drew the operating profits from the music industry into Apple via the sell of the iPod, a piece of hardware," said Nehal Chokshi, Senior Equity Research Analyst at Maxim Group.

Since the first Apple iPod - a 5GB hard-drive-based music player that cost $399 - was sold on Nov. 2001, the company has added iPod touch, iPod nano and iPod Shuffle to its line of portable digital music and media players.

The popularity of iPods proceeded throughout the years as Apple introduced different variations and versions of the increasingly lightweight multimedia device.

Yet with the launch of Apple's smartphone line which quickly became a giant in the industry, the iPod started to lose its appeal for consumers who could now have the capacity of a digital music player, a phone and a camera all in one device.

The decline in iPod sales, which now counts less than 4% in Apple's overall net sales (28% at its peak in 2008), according to the company's most recent 10k on the Securities and Exchange Commission, plus the sag in iPod's design cycle which has extended from what was once a year to two times a year to once every two years to most recently once every three years, all seem to imply that the days of the once iconic device are numbered.

While iPod is no longer the sweetheart of Apple, some analysts are not ready to write its obituary just yet.

"It still provides a significantly lower price point than what the iPhone does. For those that just want to consume music or have a small form factor for consuming video," said Chokshi, the Maxim analyst. "Many of the innovations that they bring into the iPhone or iPad can often be leveraged by the iPod as well."

Apple is set to report fourth quarter results at 2:00 p.m. PDT on Oct. 25, 2016.

Apple is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.

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