An ode to Apple's fading iPod: It begat the iPhone

The iPod has been relegated to the non-material "other" revenue bucket for Apple starting next quarter. But its DNA lives on in the iPhone, iOS and App Store.

Starting with its first quarter, Apple will relegate the iPod to the "other" revenue category, an area that signals that the music player just isn't material to the company anymore.

Simply put, Apple has signaled that the iPod has the same rank as the accessories it sells for its other products. Apple will put the iPod in a category with Apple TV, headphones, peripherals and accessories. In addition, Apple will start a new category for iTunes, software and services that'll cover content, apps, licensing, cloud services and Apple Pay.

What's interesting about the demise of the iPod's standing is that the device has touched every product that made Apple a juggernaut. The iPod served as the base for Apple's turnaround. 

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In 2001, Apple launched iTunes and the iPod. Entering the music player category wasn't an original idea, but Apple did it better than everyone else. In 2002, the iPod became compatible with Windows and went from 600,000 units to 10 million by the end of 2004. Through Sept. 1, 2010 Apple sold 275 million iPods.

More importantly, the iPod got Apple into mobility and created an iTunes ecosystem that ultimately gave birth to the App Store. The software inside the iPod was a starter set for iOS. When the iPhone was launched in 2007 one of the biggest selling points was that it was a phone that could play your music library. Sure, there were apps in the beginning, but the real sell was that the iPhone was like your iPod except it could text and make calls.

When then CEO Steve Jobs launched the iPhone, he paid homage to the iPod and said the smartphone was just like your iPod but better. Check out the slides from Jobs keynote:

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You can go chart almost every product Apple has after the Mac and see the connecting tissue to the iPod. Perhaps the iPod is fading fast with fourth quarter sales falling 28 percent to a mere $410 million, but the device lineage lives on.

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