The iPod Slowdown: Big Numbers, Slower Gains

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The iPod defines modern-day music listening, and its role within the digital music ecosystem is commanding.

But despite heavy sales volumes, unit and revenue gains are starting to slow.

During the most recent fiscal year at Apple, which ended September 27th, 2007, Apple sold an impressive 51.6 million devices.  That represents a 31 percent year-over-year gain, a slowdown from previous annual increases of 75 percent.

Sales totals remain impressive, though the revenue picture is less robust.  According to company filings, iPod-specific revenues topped $8.3 billion during the year, an 8 percent jump over previous-year totals.  That is far more subdued than year-ago gains of 69 percent, a shift that suggests lowered per-unit margins.  Meanwhile, the iPhone recently pushed past 4 million, though that sales story is just emerging.

Next week, Apple is preparing its fourth quarter fiscal review.  Quarterly iPod sales expectations are in the 25 million range, up from year-ago sales of 21.1 million.  That should push cumulative iPod sales past 150 million, and cement the dominance of the player.  But unit- and revenue-based percentage gains are becoming uncomfortably soft, a situation that could spell a plateau ahead.

The fiscal first quarter sales call is slated for January 22nd.