Time for new iPods
What does Steve Jobs have up his sleeve for this Apple season?
MATT HARTLEY
From Tuesday's Globe and Mail
September 9, 2008 at 3:19 AM EDT
Autumn is in the air, so it must be time for new iPods.
In what is becoming a yearly event, Apple Inc. is making final preparations for an event today with the tagline "Let's Rock," complete with banners around San Francisco depicting the company's iconic iPod ads featuring brightly coloured silhouettes sporting distinctive white earphones.
Analysts agree that Apple chief executive officer Steve Jobs is readying a new slate of iPod devices for the holiday season, but it is the rumoured upgrades to the company's iTunes service which could have a more lasting impact on the future of its music players and touch screen iPhone.
Apple is reportedly considering a number of changes to iTunes, including an artist recommendation system similar to Amazon.com Inc.'s suggestion feature, the addition of a subscription service that would allow users to access the store's entire catalogue for a monthly fee, and broader iPod support for applications from the company's App Store.
However, analysts are divided over what exactly Mr. Jobs has up the sleeves of his black turtleneck.
"A new version of iTunes is speculated, one that will offer a better way to organize your playlists and offer artist suggestions regarding music you might like," said Rick Hanna, an equity analyst with Morningstar Inc.
"The other possibility could include a subscription-based plan for iTunes, but that is seen as less likely given Apple's current music agreements for per-track pricing."
Although Apple remains the No. 1 music retailer in the United States, accounting for about 70 per cent of all digital music sales, iTunes is finding itself increasingly under siege.
New online digital music stores from Amazon.com and News Corp.'s MySpace social networking site are threatening to take a bite out of Apple's lead, while some artists such as Kid Rock have refused to sell their music through iTunes because the service favours pushing single tracks rather than entire albums.
Major labels, many of which have complained about Apple's stranglehold over digital music, have been instrumental in backing iTunes competitors in order to create a viable No. 2 to counter Apple.
Adding a subscription service or a recommendation system could spark renewed interest in iTunes.
But the success of Apple's new App Store - an online marketplace where iPhone and iPod Touch users can download games and other software to customize their devices through iTunes - may prompt the Cupertino, Calif.-based company to increase the number of devices capable of running its applications in order to rejuvenate iTunes.
In its first month, more than 60 million applications were downloaded from the App Store, generating more than $30-million (U.S.) in new revenue for Apple.
Last week, the British music magazine Music Week reported that Apple and the alternative rock group Snow Patrol will team up to launch a new music application in the App Store. Although Apple has not commented on the rumour, it is believed that fans who purchase the album from iTunes will also get an application giving them access to lyrics, videos and other content.
In addition to iTunes upgrades, Apple is also expected to introduce a redesigned iPod Nano and a higher-capacity, lower-cost iPod Touch device.
So far in fiscal 2008, Apple has sold more than 43.7 million iPods, however unit growth in the iPod division has slowed substantially over the past three years. Although some analysts say the iPhone has cannibalized iPod sales, others believe the declining growth rate merely reflects a saturated marketplace.
Apple said it sold 11 million iPods in the quarter ended June 28 - a record for a non-holiday quarter. However, that represented just 12-per-cent growth over last year. In the same quarter of 2007, sales growth was 21 per cent, which was down significantly from 32 per cent in 2006 and 616 per cent in 2005.
"It's a mature market," said Josh Martin, a research analyst with Yankee Group in Boston.