The death of the iPod

Now we will draw a line under our discussion of the iPod. Symbolically, we will skip over the following years and the iPods that were introduced, which merely built on the success of previous models, and look at the moment when the iPod died.

In October 2005, one of the most renowned telecommunications analysts, Tomy Ahonen, published an article entitled 2006: The Year the iPod Dies. In it, he says exactly what the headline promises: that 2006 will be the last good year for the iPod. The reason is simple. Until then, journalists had been swept away by Apple’s figures on how successfully the iPod was growing and its share of the MP3 player market was increasing. However, this market did not include figures for MP3 players integrated into mobile phones. When these were included, Apple’s share fell sharply below 20%. And it was the advent of mobile phones equipped with cameras and music players that could radically change the market. Just as digital cameras pushed Polaroid out of the market in 2001, the same now threatened digital camera manufacturers and, more recently, music player manufacturers. Mobile phones met people’s expectations: they were always with them, they were small enough, and the increasing capacity of digital memory allowed them to store more and more music. It was only a matter of time before the control capabilities and memory capacity would be sufficient for users to consider mobile phones a substitute for separate MP3 players. What’s more, in this case, it was just a matter of finding a favorable price for a memory large enough so that the price of a phone with a built-in MP3 player would not increase disproportionately compared to the phone itself. Digital cameras could still play on the string of better optics and exclusive customization for some time, but with digital music, there was nothing to improve in a separate device.

Ahonen predicted that in 2006, the volume of mobile phones with MP3 players sold in the hundreds of millions would surpass iPod sales and that the iPod would eventually become a rare device for audiophiles. The future proved him right. While Apple sold a total of 46 million iPods in 2006, Ovum estimates that over 300 million phones equipped with MP3 players were sold in the same year, accounting for over 30% of the billion mobile phones sold. This year saw the launch of music model series such as the Nokia N-series and Sony Ericsson Walkman, with Sony attempting to capitalize on its long-standing Walkman brand, once associated with music in a way that is practically unknown to today’s generation.

The objections at the time were based on the fact that not every phone equipped with an MP3 player has to be used as a player, but numerous surveys indicated that most users use it as a player at least occasionally.

The question was whether Apple could somehow turn the situation around and restore the iPod’s dominance in music. The logical answer was to enter the mobile phone market, but most people in the industry considered this impossible. The cards had been dealt too convincingly at the time, and while former major telecommunications brands were fighting for survival against cheap Asian brands, it seemed unlikely that Apple could succeed in the mobile phone market.

Looking back, we can now say that Ahonen was wrong by a year—2006 ended up being a record sales year for the iPod, and it wasn’t until a year later that sales began to decline. What’s more, it’s likely that the stagnation in iPod sales was caused by “internal cannibalization,” i.e., the arrival of the iPhone, which also worked well as a music player.

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The death of the iPod

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