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This is a selection made from among articles on Free 60gb Ipod Video. For a permanent link to this article, or to bookmark it for future reading, click here.

iPod Domination

from: David Smith

iPod Is Dominating the Market, and There Is More to Come

iPod contributes 12-14% of total company revenues, a number
industry experts believe will continue to increase. With this
increase comes pressure on gross margins, as the blended iPod
gross margin of 20% compares unfavorably with Apple's corporate
average of 27-28%. The iPod helped augment Apple's growth by
expanding its addressable market from the core computer market,
which continues to grow, but at slower rates. To increase
penetration of the rapidly growing MP3 player market, Apple
launched the iPod Mini internationally in July 2004, and HP's
iPod launch is scheduled for later in summer.

Apple's entry into the digital music player market (MP3 market)
with its popular iPod expanded the company's addressable market
and signaled a turn in Apple's strategy. The iPod is a cultural
phenomenon that is capitalizing on the convergence of digital
consumer electronics and the computer, and Apple's position as
an early mover enabled it to achieve the number-one position in
the marketplace. iPod adoption continues to accelerate, with
little indication of a slowdown. It took Apple approximately 18
months to sell its first million iPods, but its second million
came in six months and its third million came in four. In fact,
it appears that only its suppliers can slow it down, in
particular the hard-drive vendors, which are having a difficult
time meeting demand. Industry experts believe that iPod's growth
will remain strong in the foreseeable future and do not expect
any significant customer fallout stemming from Apple's inability
to meet demand.

An analysis of the launch of the Sony Walkman in 1979 indicates
the market opportunity for a revolutionary portable music player
will remain strong for several years to come and Apple is
expected to maintain a strong share for the next few years
(unlike Sony's experience with the Walkman).

While iPod and iTunes generate significant awareness of the
Apple product, they have done little to grow Apple's core Mac
business. Experts attribute this mainly to Apple's aboveaverage
pricing, along with continued ignorance on the part of consumers
regarding the compatibility of Windows and Mac. With regard to
pricing, the average consumer desktop PC retails for $1,019,
which is $280 below Apple's low-end price point on Apple's now,
discontinued flat-panel iMac. Furthermore, the industry ASP is
falling as most of the growth in the market is taking place in
the sub-$1,000 market.

With regard to the compatibility of Windows and Mac OS X, even
though Apple made a concerted effort to educate consumers about
the ease with which these two products work together, it has
fallen on deaf ears for the most part. Apple made some progress
through its retail stores, where it estimates half of Mac
purchases are from first-time buyers, but for Apple's stock to
work over the long term, the company needs to maintain share
against Windows, at a minimum. Understandably, Apple wants to
avoid selling PCs at a loss, but unfortunately the growth
prospects for $1,000-plus PCs are limited. This presents a
conundrum for Apple longer term, but for now it maintains its
current strategy. Incidentally, Apple's revenue share has held
much better, and while this is not an often-discussed topic,
revenue share is probably more important than unit share.

About the author:

Ipod Forum Talk all about iPods and Apple's New products! Visit
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