iPod being cannibalized?

Apple has said it forecasted its decrease in iPod classic, nano, and shuffle Q3 sales and attributes the decline to cannibalization caused by iPod touch and iPhone sales. The company posted its Q3 results yesterday, with positive results relative to the current recession. The results showed 10.2 million in iPod sales -- down from 11 million at this time last year. Apple additionally attributes these declines to a channel inventory reduction of over 400,000 units, and a four percent decrease of sell-through year-over-year.

On a conference call relating to the Q3 results, CFO Peter Oppenheimer said Apple has three categories of "pocket products," the first of which being "traditional MP3 players" consisting of the iPod classic, Nano, and Shuffle. The decline in traditional MP3 player sales was met with positive news that 50 percent of purchasers were buying their first iPod in important markets including the U.S., Canada, the U.K., Japan, and Australia.

The second category of pocket products, the iPod touch, saw a considerable sales growth of 130 percent since last year and holds a 70 percent market share according to MPD data. The device additionally was the top selling MP3 player, gaining market share in nearly every country it was tracked in, says GFK data. This could be an indicator that the touch is heavily contributing to the cannibalization of traditional MP3 player sales. Apple believes this shift was caused by the draw of the App Store, which saw its 1.5 billionth download last week.

Apple's iPhone, the last in the companies three categories of pocket products, also contributed to iPod cannibalization selling 5.2 million units in the June quarter -- a significant increase from 717,000 last year. One million iPhone 3G S' were sold within three days of the update's release on June 19th and Apple's supply cannot keep up with demand. The company also said it will be expanding 3G S sales into another 80 countries.

by MacNN Staff