iPods reaching the saturation point? Not so fast

iPods reaching the saturation point? Not so fast

Summary: Piper Jaffray's just completed its 17th bi-annual teen survey and the results show that iPod sales are reaching a plateau with teens and that the market may be saturated.A whopping 92 percent of students said they currently own a digital media player which is up from 87 percent a year ago.

TOPICS: Mobility, Apple, Hardware

http://upload.wikimedia.org/wikipedia/commons/thumb/0/0d/Ipodsales_2008Q3_3d.svg/629px-Ipodsales_2008Q3_3d.svg.pngPiper Jaffray's just completed its 17th bi-annual teen survey and the results show that iPod sales are reaching a plateau with teens and that the market may be saturated.

A whopping 92 percent of students said they currently own a digital media player which is up from 87 percent a year ago. However:

...when asked about their interest in buying a new digital media player in the next 12 months, only 19 percent said they planned to do so, representing a "dramatic" decline from 28 percent a year ago, and suggesting the market is near saturated.

The problem with the Piper survey is its small sample size, only 600 students with an average age of 16, were polled. Lots of media outlets are running with the "saturation" headline and predicting that sales of the venerable media player will continue to slow. Piper's Gene Munster said that consumers change in habits will force Apple to focus more attention on what he called "secondary iPods" like the entry-level shuffle and the high-end touch.

One thing that the survey discounts are the impact of upgrades. 92 percent of the teens surveyed already had an iPod, but that doesn't mean that they aren't going to buy another one. Although there was a 9-point decline in teens' interest in buying a new media player in the next 12 months (from 28 percent to 19 percent) that's knowing what they know now.

Apple is masterful at creating excitement and demand for new products (especially iPods) and could easily tempt many current iPod owners into buying a model with more capacity or new features like they did with VoiceOver or the App Store.

Many of the respondents who said they wouldn't buy another iPod in the next year could quickly change their tune if Apple announced some new fancy whiz-bang feature. What if Apple released a 4GB iPod touch for $99? It's a long shot ($150 is more like it) but you can't tell me that many of the surveyed teens wouldn't be all over that.

When people upgrade their iPod, one of three things usually happens to the previous model:

  1. It gets handed down (or gasp! sold) to a silbling, cousin or other relative.
  2. It goes into speaker dock, car's glove box, or even a drawer to be used as an "extra." I'd like to see a survey on how many iPods are in the average home. We have five if you count two iPhones -- and that's with zero kid iPods.
  3. As a last resort a used iPod will end up on eBay, where the devices retain much of their value and can sometimes fetch close to the original price when bundled with various accessories. There are over 10,000 iPods are for sale on eBay currently.

So while teens already have a lot of iPods, that doesn't mean they're not looking at another one. There's a huge market for iPod upgrades, provided that Apple provides a compelling feature set at the right price.

Chart: Wikimedia Commons

Topics: Mobility, Apple, Hardware

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  • I could have sworn this prediction was made a

    couple years ago. So everything old is new again?

    Pagan jim
    James Quinn
  • RE: iPods reaching the saturation point? Not so fast

    I think Jason needs a vacation. Of course, AFTER he STEALS Apple software for his prized Netbook. Thief he is, yes, Thief!!!
    No More Microsoft Software Ever!
  • 3 iPods, a Zune and a Sansa Fuze

    The iPods and Sansa are used often. The Zune was less easy to use, but it was still easy despite the less than friendly software from MS.

    I will likley buy another media player this year and it will be a Sansa.
    • What model iPod?

      I owned two previous iPods to my current iPod Touch and I love that one.
      I liked the other two but the touch is MUCH more than a music player.

      Pagan jim
      James Quinn
    • Why?

      Why would one need more than 1 media player, let alone 5?
      • It's not about NEED!

        Apple has a way of making people WANT something they don't need. (They are almost as good at it as Disney.)

        Whether it is their first iPod or someone else's LESS EXPENSIVE media player or their second (or fifth) iPod. Apple is selling 'sexy' products.

        This survey targets young (hormone-driven) teenagers. Enough said!
        M Wagner
  • There will always be new customers

    Unless people stop making new people.
    In which case we have bigger problems then ipod
    saturation. What is the age that kids start using
    them? I guess I was in junior high school when I
    started collection albums.

    • My sone is nine ...

      ... and he is on his THIRD iPod. I'm on my second. Sooner or later, my wife is going to get tired of hand-me-downs and we will get our sixth iPod.
      M Wagner
  • RE: iPods reaching the saturation point? Not so fast

    We have six in our household, and none of them belong to
    the children. And just the other day, I was thinking I need
    another one.

    I agree with you.
    Katrina Stonoff
  • I'm completely saturated

    I'm completely saturated with portables that require special software to work.
    • I would think that in all cases a portable device

      will require "special" software to function. After all not all devices do the
      same things. Not all devices even is the features are shared will do the
      same things in the same way. Even if you used the most generic of
      software it would require some level of customization and there for I
      would consider it "special"

      Pagan jim
      James Quinn
    • what special software?

      are you talking about iTunes?

      I don't use iTunes. I use my media player (Winamp) to sync my Ipod Classic 120 GB. It also automatically converts my FLAC files in to whatever I format I want to get it on the ipod (currently 320 KB AAC), without storing the extra on my computer.

      Unfortunately, Winamp doesn't handle files well when their filepaths are at the max for Windows. Although, that just gave me incentive to finally clean up my 6000+ songs that were strewn about by iTunes in the first place.

      It also seems like it has a harder time choosing which .jpg to use for album art if there are several, but that's ok because I don't need all the extra ones that come with the music anyway so I just stopped downloading the extraneous ones.
    • If the 'special software' is free ...

      ... runs on your computer, and can load ALL you music to your device in a portable format, who cares?
      M Wagner
  • RE: iPods reaching the saturation point? Not so fast

    I think it is fair to say the market was already satiated a few years
    back when reports showed ( 2007) many consumers had multiple
    iPods or other players in their homes. That year GPS overtook
    DAPs as the number one Christmas gift. Many who owned iPods
    and other players were yes passing it down to their siblings
    instead of buying them a new one.

    Apple is now in a great possition with the iPod Touch as it offers
    something much more than just listening to music (under the same
    iPod brand).
  • RE: iPods reaching the saturation point? Not so fast

    Nor does the survey consider that we are in the midst of a recession.

    A 16-year-old who is told by his parents that times are tough might think twice about wanting a new iPod TODAY but the stock market is a leading economic indicator and it looks like it has bottomed out and is on the road to recovery.

    Six months or a year form now, it seems likely that the next new iPod will be out and the economy might be starting to come back.

    Don't count Apple out just yet.
    M Wagner
    • Don't think anyone were counting them off

      Take a look at the iPod Touch/ Apple just started counting down to a billion
      App downloaded from the app store
  • Where did they survey?

    Not around here for sure. When I go into the city the people are wearing something that keeps the soot and noise from their inner ears. Around here most peole, teens included, can hear you if you talk to them.

    If 92% of the market has a single product doesn't that constitute a monopoly?
  • Regardless....

    ...if Apple makes it, I don't want it. Period. End of story.
  • Losing Interest

    I drive a school bus, with students from K-12. I see less and less use of iPods on the bus. It is now a rare occasion when a student uses an iPod on my bus. I drive in the Chicago area and nearby suburbs.