iPod: Apple’s quiet monopoly

Remember the good old days when iPod was Apple’s most thrilling product?

Damn those iPhones and iPads, stealing iPod’s thunder like that.

Sure, iPods still get their buzz every September with the new holiday line. The crowds still show up. But clearly today’s iPod lives in the shadow of its more glamorous siblings.

Relatively speaking, iPod goes about its business quietly — if it’s possible to be quiet when your business is maintaining a massive, competition-crushing stranglehold on your category.

Shortly after its birth, iPod grabbed over 80% of the music player market. It was simple, elegant, and the combination of iPod/iTunes just couldn’t be matched.

But nothing’s forever, right? Every intelligent observer assumed that at some point, competitors would appear to bring iPod’s market share back down to earth.

That never happened. Later this year, iPod will celebrate its tenth anniversary — and its tenth year of dominance.

In technology terms, that makes iPod a senior citizen. Yet it still performs like a newborn.

I honestly can’t remember any one product line that’s held such a lopsided advantage for so long. The most recent numbers I can find (July 2010) show iPod owning 76% of the category. Holy hell.

Not that others haven’t tried. Zune was probably the most credible challenger, but could only sputter.

I once had an inside look at the iPod-killing business. I was invited to work with an agency making a pitch for a new Sony music player. Some assignments seem silly only in retrospect, but this one seemed silly even at the time. Our mission: “Bring down the iPod.”

It was an incredible delusion on Sony’s part. Not only was this particular music player a faint echo of an iPod, Sony was willing to invest only $15 million in the marketing effort — while Apple was pouring over $100 million into iPod. To light the fire under the agency, Sony also demanded to see “demonstrable results” in three months.

As long as companies are driven more by delusion and hope, iPod’s 75%+ market share is probably safe.

In fact, at this point one could reasonably argue that iPod will spend its entire life unthreatened by real competition. If anything, the category will simply fade as smartphones make standalone devices less necessary.

I suspect it will be a long, long time before another product dominates like iPod has.

(Yeah, I know. iPad now has 90% market share. But let’s meet back in a year on that one.)

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This entry was posted on Thursday, March 24th, 2011 at 10:37 am and is filed under apple, iPad, iPhone, iPod, itunes, observatory. You can follow any comments to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.

  • Paul

    Hi Ken,
    For a recent physical product, you’re probably right, especially a technological device.

    But you don’t have to look so far to find a product line with a 90%+ market share for a very long time: Microsoft Windows.

    Paul

  • Synth

    Great article. As long as the telcos require ridiculous subscription plans, the iPod touch will have a big market and as long as the big game companies produce iPod touch games, the touch will have a big market. The iPod will continue to live a long and lucrative life, but more as a general purpose computing device and not as a music player.
    If Apple comes out with a contract-free iPhone, say, iPhoneGS level tech, for around $200 – $300, the iPod market might shrink rapidly. Maybe. There are just too many situations where the telco connection makes no sense, no matter how cheap it is.

  • Bmcfadden

    Just as “iPod” became the generic term for music player, I predict “iPad” will become the generic term for tablet. It might take a couple of years for all the Android noise and “iPad-killer” bravado to fade, but it will happen. Yes Ken, let’s meet in a year or so on this.

  • Steve

    I’m not exactly sure how 70+% market share constitutes as a monopoly.

    That said, looking back, it’s not hard to see how Apple established its dominance. For starters, nobody else can offer what Apple does in terms of both hardware and software. Those who can come close are only good at copying and not innovating. That is, there are other good hardware devices that have followed Apple. Microsoft even came close with the Zune software. The problem is, the competition failed to innovate. They’ve spent their effort skating to where the puck has been instead of skating to where the puck is going.

    Those who ignorantly figured they’d solve the problem through marketing deserved to fail. Those who somehow believe Apple succeed by marketing alone simply display ignorance. Apple’s success is all about strategic planning in vertical markets.

  • yetanothersteve

    Stand alone media players are now a mature market… which means weaker competitors will go away and the iPod’s share will likely RISE.

    Now about that iPad… the biggest issue is going to be defining what IS the market. Is it really a PC? Is the Kindle with apps a tablet?

    My gut tells me that Apple like simplicity and complete ecosystem is as much a part of the “tablet” appeal as is the form factor itself. That the market is really mobile computing… and that the serious alternatives are notebook computers and smartphones, not a tablet running a more complicated OS in a less polished ecosystem.

  • Steve

    @yetanothersteve:

    Yes, the media player market is mature. Of course, I remember hearing that when Apple entered the phone market, just before they turned it upside down. There is always room for competition, provided they’re able to change the game through real innovation. Producing another also-ran product is doomed to failure. To that point, the ZuneHD was actually a pretty strong competitor. The problem is, to unseat the leader, you can’t be “almost as good”, you need to be significant better. Apple sets the bar high enough in their products such that nobody can make that claim.

    As for the iPad, I don’t think it matters how the product is classified. Microsoft wants to count tablets as “PCs” so that they can be called the leader and to make consumers think they should be purchasing Microsoft based PC “slates”. Analysts seem to refuse to call tablets PCs for some reason. Apple seems quite content referring to tablets as “post-PC devices”. That sort of signals that change is upon us, embrace the new standard. Either way, that’s just a marketing message.

    The best analogy I’ve heard about the iPad like tablets is that they are like microwave ovens. At first, nobody knows what to make of them. Some claim they can replace the conventional ovens entirely. In the end, we end up using both conventional and microwave ovens. Could you imagine not having a microwave oven these days? That’s sort of how I see the iPad. I didn’t know I needed it until I started using it. That doesn’t mean it will completely replace my need for a PC, but it’s very easy to see how everyone will have one someday.

    Finally, yes, Apple’s ecosystem is clearly their strength right now. Many competitors look good on paper, but in practice, they just pale in comparison due largely to this ecosystem they’ve built.

  • http://bit.ly/samirsshah Samir Shah

    Nokia X1-00. At right place at the right time. Beware, Apple.

  • nikster

    @ Paul – yes Windows is a great example of a product that has an insane market share for in technological terms, forever.

    Apple was beaten badly by Windows. Steve Jobs once said “We didn’t even know we were in a platform war; which is probably the reason we lost it”.

    These days, Apple understands the platform game better than most. With the iPod, they built the iTunes/iPod platform – it’s hard to beat. With the iPhone, they built an even more powerful platform with iOS – look how meticulously they nurse their platform; comparatively, Android is a mess.

    Phones are a completely different situation to the iPod though as Apple didn’t invent that market in the first place, and it’s so big that it’s hard to imagine any one company dominating it. Nokia was the biggest player for a very long time with a seemingly incredible 35% – which in the handset market translated in 400 million or so devices. Crazy!

    The tablet market, however, is still in its infancy, and Apple invented it, and it’s based on the iOS platform – so in tablets, Apple actually has a pretty good shot at repeating the iPod story. If they can pull it off they’ll be the biggest company on the planet for a while to come.

    PS: I don’t think iPod sales are threatened by smartphones anymore at this point. Smartphones that can play music well are already out there, from all manufacturers; I have an iPhone, my wife also has one, and we have 2 iPods as well, one for the car, and one for playing music at home. It’s much more convenient, and iPods are pretty cheap.

  • http://nitinshahi.wordpress.com Cheap Ipod Touch

    The tablet market, however, is still in its infancy, and Apple invented it, and it’s based on the iOS platform – so in tablets, Apple actually has a pretty good shot at repeating the iPod story. If they can pull it off they’ll be the biggest company on the planet for a while to come.