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The age of the iPod is over

The age of the iPod is over


Apple's game changer is riding into the sunset

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iPod stock
iPod stock

Over the holidays, Apple's iPad and iPhone sold better than they've ever sold before: 51 million iPhones and 26 million iPads in a single quarter. The lowly iPod, however, didn't do nearly as well. The company moved just 6 million of the trademark MP3 players, a 52 percent decline compared to the same period last year. All told, iPod accounted for just $973 million of the company's record $57.6 billion revenue last quarter. While some would probably be happy to claim they ran a slightly-less-than-a-billion-dollar business, it's getting pretty small for a company the size of Apple. You might even call it a hobby — if not now, then by this time next year.

What happened to the iPod? Simple cannibalization, for one: every one of those 51 million iPhones can take the place of an iPod. (Steve Jobs famously called the iPhone "the best iPod we've ever made.") And as people increasingly get their music from streaming services, a constant internet connection could be key, something you don't get with an iPod or even a iPod touch unless you have a Wi-Fi hotspot to pair with.

The decline of MP3 players shouldn't be news to anyone though, certainly not to anyone who follows Apple closely. In June, 2009, Apple CFO Peter Oppenheimer admitted that cannibalizing the company's MP3 players was all part of the plan:

For traditional MP3 players, which includes Shuffle, Nano, and Classic, we saw a year-over-year decline which we internally had forecasted to occur. This is one of the original reasons we developed the iPhone and the iPod Touch. We expect our traditional MP3 players to decline over time as we cannibalize ourselves with the iPod Touch and the iPhone. [emphasis ours]

Since 2009, iPod sales have declined time and again. For five years, every quarterly financial call would include a dedicated mention of how the company's "music product" sales had slipped by a million units here, a couple million units there. Every time, Apple would soften the blow by saying how the iPod still had a 70 percent market share in MP3 players in the US, and remained the top-selling MP3 player around the world.

But in the middle of last year, the company changed its tune. It failed to introduce any new iPods (unless you count the cheaper $229 iPod touch) and removed that dedicated section from its quarterly conference calls.

New iPods or no, a downhill trend

The lack of new iPods could certainly be responsible for the most recent decline in sales. Usually, purchases pick up drastically every time Apple releases a new iPod, and this year they clearly did not. Still, that's not the whole story: as you can see in the chart above, the peaks had been shrinking even before Apple stopped updating the iPod nano like clockwork.

But does the lack of attention and decline in sales mean the company's killing off the iPod entirely? That's completely uncertain. It's not the first time we've gone without an iPod refresh, and there appear to be plenty of dollars left to scrape out of the bottom of the iPod barrel. And even that assumes that Apple isn't about to pull another Mac Pro. After neglecting the Mac Pro for nearly three whole years, it unveiled a radically redefined version of the workstation computer in 2013 with the resounding phrase "Can't innovate anymore, my ass."

It might be premature to write the iPod's obituary, but barring another such move, it seems like the MP3 player's days are finally running out.