The iPod Plateau: Why Paid Downloads Could Soon Suffer

Apple sold 10.6 million iPods during the recent quarter, a one percent increase by volume and an eight percent jump by revenue.

That is a tally most consumer electronics manufacturers would die for, though the days of breakneck iPod sales increases appear over.

In total, Apple has now sold more than 150 million iPods, of all shapes and sizes.  That may represent the beginning of a saturation point, at least in the absence of a game-changing device introduction.

Actually, the iPhone represents the next evolutionary step for the iPod, though Apple has more modest expectations on its mobile invention.  For the period, the company shifted 1.7 million iPhones, for a cumulative total of more than 5 million.  That makes a year-end goal of 10 million appear realistic, and part of a more tempered growth curve.

For Apple, that shifts the emphasis towards a fast-growing Mac portfolio, the beneficiary of a longer-term, iPod halo effect.  During the quarter, Mac sales shot upward 51 percent to 2.29 million units, part of a growing consumer conversion threat.

But the iPod also has a powerful effect on paid downloads, one that could start dimming.  By now, executives are accustomed to a late-year paid download surge, buoyed by unwrapped iPods and newfound iTunes Store converts.  The sales spurt generally spills into January, and actually raises per-week download sale levels for the year.

But in the absence of aggressive iPod sales increases, that spillover effect could start flattening.  For major labels, eager to soften iTunes Store dominance, smaller sales could be regarded as a mixed blessing.  But according to some estimates, Apple controls more than 80 percent of paid download volumes, and that makes any downturn at iTunes a serious downturn for the broader download sector.

Paul Resnikoff, Publisher.