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Report: iPod shipments tracking towards first yearly decline

Shipments of Apple's iPod digital music players could see their first yearly decline come the end of the company's March quarter, investment bank Piper Jaffray said Monday.

In a research note to clients, analyst Gene Munster said he's analyzed the first month (January) of NPD market research data for the three-month period ending March and found it to suggest total iPod unit shipments of between 9.5 million and 10.3 million units for the quarter.

Should Apple manage to hit the midpoint of that 9.5 to 10.3 million estimate, shipments would have still declined by approximately 6 percent from the same period last year when the company shipped 10.54 million units — marking the first time iPod shipments have fallen on a yearly basis since Apple began providing sales figures for the digital media player line back in the fourth quarter of 2003.

Munster's findings also come in shy of Wall Street's current consensus estimates, which have the Cupertino-based electronics maker shipping approximately 10.8 million iPods during the quarter, representing 2 percent yearly growth.

Still, Munster viewed his findings as "a slight positive" given all the recent Street chatter of extremely weak iPod numbers for the quarter and the potential for the recently announced iPod shuffle price cut to fuel higher than expected shipments during the months of February and March.

"The 9.5 million -10.3 million unit approximation is based on various assumptions and is an extrapolation of one month of data," he explained. "When the second month of data is released, our analysis will likely lead to a slightly different iPod unit figure than what our analysis suggests based on the first month of data, so we believe investors should supplement this data point with other information."

Declining growth of the standalone MP3 player market, as well as Apple's overall iPod business, has been a cause of concern for investors following the company's December quarter results, which had sales of the players come in relatively flat in the US for the first time in recent history.

While some have feared the declines are indicative of an iPod business that has reached its saturation point, Apple executives have discounted that notion, noting that iPod revenues grew 17 percent year-over-year during the December quarter, a figure they maintain is "uncharacteristic of a saturated market."

Moving forward, the company said it hopes to evolve the iPod beyond an advanced music player and into the first "mainstream Wi-Fi mobile platform" capable of running "all kinds of mobile applications." This strategy would indicate a focus on selling quality and functionality at a higher price, rather than quantity and less functionality at the absolute lowest price. As such, Apple has suggested that the best way to measure the overall growth and performance of the segment is no longer by unit metrics, but rather by revenues.



41 Comments

zandros 18 Years · 533 comments

Is it silly of me to think that iPhone sales really should be considered when they assess whether the PMP business of Apple has begun experiencing negative growth, even if it should not be included in total and average iPod revenue?

/Adrian

SpamSandwich 19 Years · 32917 comments

Y'know, it's not exactly like Apple has put itself in the position of having just a few hit consumer products. AAPL is feeling the pinch, though for the current perception is that all business is just iPhone and iPod business. Am i rambling?

zandros 18 Years · 533 comments

Quote:
Originally Posted by SpamSandwich

Y'know, it's not exactly like Apple has put itself in the position of having just a few hit consumer products. AAPL is feeling the pinch, though for the current perception is that all business is just iPhone and iPod business. Am i rambling?

I do not think so. Was Mac revenues not up more than iPod revenues this last year anyway?

/Adrian

grandmastergar3th 16 Years · 1 comment

Quote:
Originally Posted by Zandros

I do not think so. Was Mac revenues not up more than iPod revenues this last year anyway?

/Adrian

iGene is fawning again.
Face it fanboy it's the Zune cannibalizing iPod sales.
appl was planning to hold off 32gb iTouch, Shuffle till Sept but were compelled to do this quarter to boost lagging sales.

jmadlena 17 Years · 43 comments

Quote:
Originally Posted by GrandmasterGar3th

iGene is fawning again.
Face it fanboy it's the Zune cannibalizing iPod sales.
appl was planning to hold off 32gb iTouch, Shuffle till Sept but were compelled to do this quarter to boost lagging sales.

Show us some numbers showing that it is the Zune cannibalizing iPod sales. Perhaps it is other competitors as a whole doing damage to iPod growth, but I haven't heard anything that would indicate the Zune is the cause for the possible iPod slow-down. I don't really research the Zune, so if someone has some numbers or links please post them.

But Zandros was right, iPods may be a high volume seller for Apple, but Macs are the meat of their business. They have much higher margins on Macs, IIRC. I'm not upset with Apple that they might be having a slow-down in iPod sales because the iPod numbers for the past few years have been phenomenal. It has to end sometime.

Also, is the 'fanboy' comment really necessary? He was just stating a fact, so I don't believe it is necessary to start name calling. Let's start acting like grownups now, thanks.