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Apple share of MP3 player market to shrink... sort of
The Nano effect
Prepare yourself now for some triumphant headlines in the coming months from rivals of Apple's iPod - along the lines of 'Apple MP3 player market share drops'. And you know what? Apple half-expects them too. Why? Because its new iPod Nano is going to be so hugely successful, taking over as the world's most popular MP3 player from the iPod Mini, which it replaces.
You're saying, 'Huh? How can it go down and also be popular?' The trick is this: Apple's putative loss of market share is going to be in the market for MP3 players with hard drives. But after the triumphant launch of the Nano, which Steve Jobs pulled from his jeans' change pocket (a billionaire's change pocket, surely; I've not got any that deep) with the delight of a magician producing an elephant from a hat, the makers of players based on Flash memory have a mountain of miniaturisation to climb.
As David Card of Jupiter Research remarked: "Apple just re-set the MP3 player agenda. The $200 space now is Flash-based, with a color screen. And very small... 2GB and 4GB is plenty - as we said with the [iPod] Mini, most people still don't have more than 1000 songs in their collections. The Mini outsells the Shuffle and the White models, folks."
Apple is already pre-eminent in the Flash market. On 1 January, Apple had zero per cent share of the market for Flash-based players. By the end of June, according to the NPD Group, it had a 46.3 per cent share of the US Flash-player market. Only Sandisk came close, with 10.8 per cent - and even that was less than 1GB iPod Shuffle, which had 11.9 per cent of the market. You can see all the numbers here.
As the iPod Nano is entirely Flash-based, it's going to skew those numbers way, way up, and push the rest further into single digits - or past the decimal point. Creative has just 2.4 per cent of the US market, according to NPD's numbers.
Yet Danika Cleary, the Queen of iPod (OK, head of iPod marketing), admits: "The [iPod's] hard drive market share might appear to fall." Ye Gods! Hold the front page!
But wait, there's more. She adds: "You have to look at the overall numbers. The Shuffle pushed up our overall market share; we'll see how the Flash and hard drive markets balance."
Apple, and pretty much everyone else, expects that the Nano will do barnstorming business. It's tempting for those considering a Shuffle to spend that little bit extra to get the cool factor, plus the option to choose a song and see photos or album artwork, and add enormously useful functions like times from around the world - I got bored after adding 25; the Nano was ready for more - and a screen lock using a combination-lock appearance; for once brushed metal makes sense.
You don't have to be an analyst to know that the iPod Nano is going to sell by the truckload. You just have to see one, hold one. So overall, Apple's share of the MP3 player market will probably increase. Sorry, did you think the headline implied the opposite?