Apple's iPod: is the end nigh? By Dave Lee

Technology reporter, BBC News Published duration 29 January 2014

image copyright Getty Images image caption Analysts do not expect there to be significant improvements made to the iPod range

Few pieces of technology can genuinely claim to be iconic. But Apple's iPod, first launched in 2001, arguably fits the bill.

With its distinctive click-wheel design, and those ubiquitous white bud headphones, the iPod brought good looks to portable audio technology - with a "cool" factor not seen since Sony's Walkman over a decade earlier.

And for the record industry, a sigh of relief - the iPod's accompanying music store iTunes paved the way for legal digital music downloading to hit the mainstream, tempting at least some music fans away from the free-for-all of piracy.

But 12 years, and 26 devices later, the generation-defining iPod range looks like it's about to fade into history without so much as a whimper.

"I think all of us have known for some time that iPod is a declining business," said Apple boss Tim Cook earlier this week, speaking during a conference call discussing the company's latest earnings report.

He announced massive profits - as ever - but noted that iPod sales had dipped: 52% down on this time last year, with further drops expected.

That's not bad, or even surprising, news for the company. The people who would have previously bought iPods are now more likely to buy iPhones or iPads.

But it's bad news for the humble iPod - a tiny-but-mighty device that many say was the catalyst that propelled Apple into its boom era of iPhones and iPads.

Cannibalising sales

The iPod has been nervously looking over its shoulder for some time.

When the iPhone was launched in 2007, Steve Jobs joked that it was "the best iPod we've ever made".

And he was right - with its apps and other smartness, the iPhone meant there was no longer any need to own an iPod as a separate device, so long as you could afford it.

image copyright Getty Images image caption The first iPod, launched in 2001

image copyright Getty Images image caption By 2004, it had shrunk a little for the iPod Mini range

image copyright Getty Images image caption 2005 saw the main product gain added video capabilities

image copyright Getty Images image caption An approach not everyone thought would work - 2005's screenless iPod Shuffle

image copyright Getty Images image caption Within a year, the Shuffle had become even smaller

image copyright Getty Images image caption The first iPod Nano was out in 2005. This red limited charity edition is from 2006

image copyright Getty Images image caption The iPhone-like iPod Touch was released in 2007

image copyright Getty Images image caption The last major upgrade of the iPod Touch range was in 2012

"One of the things that's very striking is that Apple was doing very, very well with the iPod back in 2006, yet it still chose to create a smartphone which on day one had iPod capability," says Ian Fogg, a mobile analyst from IHS.

"It wasn't afraid to create a product that would disrupt a successful existing business. It thought: 'If we don't do something, someone else will'."

Younger users

As it happened, the iPod held its position as the biggest selling dedicated MP3 player on the market. It still is.

Despite the iPhone - and other smartphones - offering far more in terms of features and computing power, the iPod was holding its own.

In fact, according to IHS, sales of the iPod reached peak levels after the iPhone launch, with more than 22 million of the devices shifted in the fourth quarter of 2008.

image copyright Other image caption The iPod has even inspired ambitious fancy dress

And even today, despite that dramatic 52% fall, the iPod range still generates big revenues - $973m (£587m) in the last quarter.

Analysts say it has remained popular for a multitude of reasons that go beyond simply price. The iPod Touch, for instance, is seen as the iPhone-that's-not-a-phone, so to speak - offering everything an iPhone does but without cellular capability.

"The iPod touch today is a great way of appealing to younger consumers that are maybe too young to have an iPhone," suggests Mr Fogg.

"It's getting them on board with Apple, getting them downloading apps from the App Store."

New products needed

But $973m out of Apple's total revenues this quarter - $57.6bn (£34.7bn) - is just a minor sideline or, as technology news site The Verge put it , "a hobby".

Which leads most people in-the-know to predict that while Apple may not discontinue the iPod in the very near future, we're unlikely to see any kind of significant update of the devices.

"As long as the iPod can stay a quality product and not have them lose money, I really don't see any reason for them to kill it," argues Alex Heath, a writer for Cult of Mac

But Mr Heath and others stress that since the iPod can no longer be seen as a major Apple product line, Tim Cook needs to introduce an entirely new product if he is to keep investors - and fans - on his side.

image copyright APple image caption Apple has patented what looks like smart watch technology

"They're going to need to branch into new categories," says Eric Slivka, editor in chief of MacRumors.com.

"An Apple TV has been on the radar for a long time, and now it seems rumours like the iWatch and other wearables are starting to take over."

Mr Heath adds: "It's looking like, unless there some production issues, Apple is on track to release some kind of wearable, by late 2014.

"It will either send Apple's stock soaring, or crash it. 2014 is going to be a very interesting year."