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iPod market for American teens nearly saturated?

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.




by MacNN Staff

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Comments

  1. vasic

    Joined: Dec 1969

    +5

    Most remarkable!

    Not even during the worst Apple years (late 90's) did MS have such stranglehold on a market segment as the iPod has on media players! And what's even more impressive is that Apple didn't need to use any predatory methods or exclusive agreements -- just a level competitive field where the innovator apparently won fair and square.

    Apple and iPod are clearly THE most coveted brands here. Regardless of the market saturation, this cannot be bad news. Apple's only task now is how to refresh the ownership of these iPods as often as possible.

  1. b9robot

    Joined: Dec 1969

    +3

    They said this before

    NO, the market is not saturated and the sales prove that many times over. Not only that but people who have iPods get newer models as there iPods age so they cycle through.
    Most people who already own an iPod won't ever go back to anything else so the buying continues. With the iPod Touch, you essentially get better and better features with the software updates for a mere $10. Try that with a Zune. This headline has been repeated a few times, and the sales figures always give the headline the finger. This time won't be any different.

  1. Eldernorm

    Joined: Dec 1969

    +2

    dumb analysist period

    Can Apple saturate the iPod mp3 player market?? Yes of course its possible.

    But, with the touch selling more and more, if it becomes the major player of choice,...... then iPod Apps become the next big driver.

    Sell them iPods, then sell them things to put in the iPod.

    Anal--sists. Always looking in the rear view mirror. Never to where the puck will be.....

    Just a thought.
    en

  1. climacs

    Joined: Dec 1969

    0

    anal cysts

    there's a lot of good news in that report.


    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.


    heh indeed.

    Also this:

    Munster notes though that all of the respondents planning to get a new media player said they want an iPod.

    I am thinking that this is more about the down economy rather than market saturation. The teens just don't feel like they have as much money to spend, just like the rest of us adults.

    True, there are a lot fewer people than there used to be who would like an iPod but don't own one, but there is plenty of room for growth with people who have not updated their iPod recently or would like to get a better one. I have a 5th gen video iPod which works great but is now 3 1/2 years old and the 30GB storage now seems absolutely puny, especially since I also tend to use it as a portable backup drive for photos.

    I'm waiting for the next lineup refresh to get a ginormous capacity iPod classic.

  1. vasic

    Joined: Dec 1969

    +2

    dond't wait too long

    Climacs:

    Don't wait too long; the classic may be on its final iteration. If the touch receives the nominal doubling in capacity next September, I have no doubt that Apple will knife the classic. 64GB is quite reasonable even for the 5% minority that has actual use for anything over 16GB. Of course, you'll still have plenty of refurbished classic at apple.com, with a seriously steep discount.

  1. Constable Odo

    Joined: Dec 1969

    -4

    Even though teens love

    the Apple iPod in such a high percentage, at what point do they decide they're going to start buying Windows PCs? I would have figured the teens might have some brand loyalty, but I guess that doesn't hold up in the face of higher costs. It's a shame Apple can't hold them to Apple products as they grow up. Most teens must turn into Lauren or Giampaolo when they reach a certain age.

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