Apple iPod's Halo Effect - Creative Learning Point? ~ Creative Labs Zen MP3 Players Sound Blaster Card
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Thursday, May 8, 2008

Apple iPod's Halo Effect - Creative Learning Point?

Creative was the mp3 player pioneer back then and started much earlier than Apple. The 'ZEN' patent awarded to Creative and the US$100 million settlement by Apple has proven this point.

Apple if you can recall, in just a few years ago was struggling with its business and its stock price was rock bottom. Nobody wants Apple's share at that time. Then came the little gadget called iPod which did a stunning act and revive the whole of Apple's business.

Now, APPLE has a little iPod problem, and it is doing an amazing job of rising above it.

OK, we should all have this sort of problem. Apple sold 10.6 million iPods in the first three months of 2008. It has a 73 per cent share of the music player market in the United States and a growing share abroad.

Still, the number of iPods sold in the quarter grew only 1 per cent from the same quarter a year ago.

Sales of the low-end iPod Shuffle have been" falling sharply. Apple lowered the price of the 1-Gb shuffle from US$79 to US$49 (S$107 to S$66), helping to stop the decline.

Apple executives speaking on a conference call on Wednesday afternoon gave few details, as is their custom.

For some companies, a mature market and downward pressure on prices could lead to a nasty death spiral.

However, Apple has used its amazing six-year run with the iPod to nurture enough new business lines that it will be able to withstand a collapse in the MP3-player market as well as can be imagined.

First, it has a continuing revenue stream from the iPods that have already been sold because of the iTunes Store.

Apple sold US$881 million worth of music and accessories in the last quarter. That rose 35 per cent from a year ago.

The NPD Group now counts Apple as the largest seller of music in the country, ahead of Wal-Mart.

Apple, in fact, is on track to have greater revenue from selling music (and accessories) this year than the entire revenue estimated for the Warner Music Group.
Second, Apple has created product upgrades that are so different that they may well appeal to a significant number of iPod users. The iPhone, of course, is a product bundle that - if you want it - is completely different from a standalone iPod.

Apple is also now highlighting the iPod Touch, touted as much as a platform for pocket Internet access and mobile computing as it is for playing music and videos.
Already, sales of the Touch have helped Apple to raise its revenue from iPods by 8 per cent to US$1.8 billion in the quarter, compared to that 1 per cent increase in unit sales.

The company didn't say much about iPhone sales on the call, but it did say that the shortage of iPhones in the US in March resulted from higher-than-anticipated demand.
A "significant" number of the 1. 7 million iPhones sold in the quarter, Apple said, were to people who unlocked them and shipped them to countries in which Apple does not have deals with local carriers.

Third, and perhaps most significantly, Apple's entire adventure with the iPod is helping it sell computers, although the extent is impossible to calculate.

Apple sold 2.3 million Macs in the quarter for US$3.5 billion. That is a 5l-per-cent jump by units and 54-per-cent jump by dollars. Not bad in an economy that is more than a little shaky.

Apple computer sales have been growing two to three times as fast as the overall market. But this quarter, it says, it grew 31/2 times faster than the PC market overall.

What's going on? Don't rush to tell me how much easier, safer and more powerful a Mac is than a Windows PC. All that was true a year ago as well, and Mac sales are accelerating.

Microsoft, of course, has fumbled the launch of Windows Vista. But what the analysts call the "halo effect" from the iPod is clearly helping to sell Macs, too.
Apple's retail stores are part of this success story, and they sold 458,000 Macs in the quarter. I don't think these stores would be as mobbed with tourists and other gawkers if they just sold computers and not iPods and iPhones as well.

When we look at all the companies that have stagnated along with the products that made them successful - from AOL to Microsoft - Apple stands out as one company that has been able to flip its business forward so well that it is in a great position to thrive, even if its iPod problems become more than little.

via mypaper


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