updated 12:30 pm EDT, Wed April 8, 2009
Teen iPod market saturated
Potential growth in the teen iPod market is dwindling rapidly, at least in the US, writes Piper Jaffray analyst Gene Munster. The firm recently conducted its annual survey of American high schools, polling 600 students on their ownership of media players and the way they acquire digital music. Of the 92 percent of teens who said they owned a media player, 86 percent said they owned an iPod; the closest competition came from Microsoft's Zune player, which amounted to only 4 percent of ownership.
The key worry for Apple is thought to be future purchases, as the number of teens planning to buy a new media player within a year has shrunk to just 19 percent, as compared to 28 percent in 2008. The reduced consumption is being blamed not on the economic recession but on market saturation, with the suggestion that Apple may have to focus on "secondary" iPods such as the Shuffle, or else its most expensive model, the Touch. Munster notes though that all of the respondents planning to get a new media player said they want an iPod.
Only 6 percent of those in the survey indicated they had an iPhone, with 16 percent claiming plans to buy one during the next six months. The figures represent a drop from 8 percent ownership and 22 percent interest in the fall, which Munster blames on AT&T's subscription costs. "We believe AT&T rate plans are adversely causing the discrepancy in teen's [sic] interest in the phone, and actual market share gains; as much as teens want the phone, parents may be reluctant to add expensive monthly data plans to their teen's phone bill," says the analyst. "We expect Apple to address this issue in the coming months, with a family of iPhone models including a high-end model with current plan pricing and possibly a low-end model with fewer features and lower-cost monthly data plans."
The iTunes Store is meanwhile said to control 97 percent of legal music downloads by teens, a jump from 93 percent six months prior; interest in rival services such as Amazon and Rhapsody is believed to be diminishing. Legal downloads only represent 40 percent of online activity however, with the remaining 60 percent occurring through peer-to-peer sharing. 82 percent of people surveyed said they downloaded music via the Internet.