iPod Sales Hot, but

By Matt Hines  |  Posted 2005-11-04 Print this article Print

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According to the sites reports from one retailer, the nano is still outselling both of the new iPods.

The one new handheld product related to Apple that appears to be underwhelming the market is Motorola Inc.s iTunes-ready ROKR mobile phone, which most sources say was "overshadowed" by the simultaneous release of the nano.

Neither Motorola nor Apple have released sales results for the Rokr devices, but at least one market watcher said that demand for such music-capable phones remains "in its infancy" at the moment.

Industry analysts said that all the iPod sales results should be considered preliminary, and pointed out that demand for such devices would almost always be strongest shortly after the machines were introduced.

Most also cautioned that Apples video download sales dont necessarily mean that the company is selling huge amounts of the new iPods, pointing out that the results only prove that the service is being used a lot by people who already bought the new model.

Click here to read about AOL buying MusicNow.

"It looks like iPod video is doing really well comparatively, which is a little surprising, because the nano is such a slick small device, while the video is still a lot larger in size," said Sam Bhavnani, analyst with Sterling, Va.-based Current Analysis.

"Apple was really smart, because video iPod came out at the same price as its predecessor, with a larger hard drive and the video capabilities for the same price. So, if anyone was looking at buying one before, thats pretty attractive."

Bhavnani said that while it is too early to estimate how many people are using the video download features, he believes that Apple will be able to convince many of its existing iTunes users to begin adopting the content as they get their hands on newer devices that support it.

He said that Apple may also use promotions such as the one it offered for free iTunes music download to Pepsi drinkers in 2003 to get people to try out the service.

Bhavnani said that part of the key to Apples success in expanding the video capabilities will be in finding more sources of content for the download service, but he doesnt see that as a major obstacle.

"Theyve been able to convince music studios that they could profitably sell music online and made it very popular with 200 million downloads" the analyst said.

"The video studios are scared to death of illegal applications for stealing video, and now Apple is saying skip all that and let people pay for it, which is a pretty strong message."

Steve Baker, analyst with NPD Group, Port Washington, N.Y., cautioned that it is too early to consider either the new iPod or the nano a "massive success," but said that the early signs are surely positive.

In particular, he said that the addition of video would inspire many existing iPod users to replace their machines. Baker believes it will then be easier to measure how much impact the feature has on generating sales after the initial wave of adoption.

P2P company launches legal music service. Click here to read more.

"The people who are going to run out and buy the video iPod first are the kind of people who want to use the service right away. They will be the ones who can tolerate the download characteristics, or need video for some reason, so its tough to make long term judgments," said Baker.

"Clearly everybody who buys one of the new iPods is buying it for the video, as its hard to imagine there were many people who were waiting to buy one before who rushed out over video. But there will be a lot of people trading up and looking to upgrade."

Despite the large number of iTunes video sales, Baker said there was "no way" that the opportunity to offer such multimedia content outweighs current demand for music downloads, and he does not believe that the addition of video to iPod and other manufacturers products will inspire as many device sales as the mobile audio market is generating.

"Will video be as big as music, I dont think so," said Baker. "At least, not anytime soon."

Check out eWEEK.coms for the latest news, reviews and analysis on Apple in the enterprise.


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