Must-haves for a Steve Jobs Macworld keynote: Black turtleneck, new products, and stats. Today, Jobs boasted that Apple has sold 4 billion songs via iTunes and that it has sold 4 million iPhones since last June. But no mention of iPod sales.
Why not? One reason: iPod sales growth is slowing. Year-over-year sales growth has declined for the past three consecutive quarters: From 50% in the Dec. ’06 quarter to 17% in the Sept. ’07 quarter. If Apple hits the Wall Street consensus when it delivers Q1 results on Jan. 22, it will sell a record 24.7 million iPods. But that means y/y sales growth will be just 17% again. A year ago, Apple reported that Q1 iPod unit sales increased 50% y/y; in the Dec. 2005 quarter, y/y growth was 207%. (See chart below.)
This isn’t terrible news per se. This year, Apple will sell its 150-millionth iPod, an impressive accomplishment. Many thought the market was tapped out years ago, when seemingly everyone who wanted an iPod had already purchased one. Then Steve Jobs managed to get people to buy second and third iPods without blinking an eye.
And while we assume the average selling price of an iPod has fallen over the years (as the mini, nano and shuffle were added to the line), we also assume that Apple has been able to increase its margins on the gadgets, thanks to economies of scale and refinements in iPod design and engineering.
But it’s clear that sales of Apple’s superstar product are growing much slower than they used to. Which is exactly why the company is investing a ton in the iPhone, which nets a fistful of service revenue each month, and its Mac laptop line, where RBC Capital Markets expects Apple to report 61% year-over-year Dec. quarter unit sales growth.
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