iPhone To Silently Kill iPod Range?

Apple might not be openly supporting this idea but it is very likely that the iPhone will completely kill the iPod segment over the next few years, much to the joy of the Cupertino-based company.

A deeper analysis of the company's recently released quarterly earnings show that the iPhone generated more revenue than the iPod for the first time ever, only two years after it was first introduced.

This prompted Apple's CFO Peter Oppenheimer to say that "We expect traditional MP3 sales to continue to decline over time as we cannibalize ourselves with sales of the iPod Touch and iPhone".

Clearly therefore, classical "dumber" iPods are likely to disappear withing the next few years completely as the iPod Touch and the iPhone make them technological dinosaurs.

The next iteration of the iPod Touch due later this year will almost surely have a 64GB onboard storage while the model customers will be buying around the 2012 Olympic Games will have in excess of 160GB.

The fact that the iPod Touch is almost identical to the iPhone is the main reason why Apple almost always discloses sales figures of both devices aggregated together; it has already sold 40 million iPhones and iPod Touch and those users are definitely not going back to traditional iPods.

iPod sales, although on the decline (10.2 million this quarter compared to 11 million a year before), are still nearly twice as much as the iPhone.

A quick look at Amazon's best sellers list for MP3 shows that both iPod Touch occupy number 1 and 2 spots, pointing to the fact that tastes have shifted and size no longer matters (there are six MP3 players in Amazon's top 10 with less than 8GB storage).

The music portion of iTunes is currently under challenge not only from the likes of Amazon but also from newcomers like Spotify; Apps store on the other hand is still miles ahead of the competition.

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Our Comments

Philip Elmer-DeWitt, from Fortune, asks a pertinent question. Where in the world are the 18.6 million iPod Touch devices? iPod Touch and iPhone are more attractive than the iPod to Apple because they generate a much higher average revenue per user compared to the iPod.

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