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Apple Watch: On iPods and the iPhone 5c

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How does Apple handle a dead product? It usually just gets deleted with little fanfare. Some fans complain, but pretty soon it's just history and everyone moves on. One has to think the iPod is getting near this point, after the release of Apple's latest figures. But the difference is, if Apple deletes iPod, it deletes an entire product category Apple virtually invented.

Yes, I know there were other MP3 players, but they were rubbish. Although some models by other manufacturers were, feature for feature, demonstrably 'better' than iPods, they simply failed to impact the market in any meaningful way. iPods almost immediately grabbed the cool factor, and only relinquished it to iPhone (or, to smartphones). But iPod was hugely significant to Apple - it was the start of Apple becoming a household brand, and the start of Apple making a portable device loads of people wanted.

I guess there are three possible scenarios for the demise of iPod: Apple simply sells off existing iPods and doesn't make any more. Or, Apple keeps a couple of iPod lines going. Finally, Apple might innovate iPod to the point it's worth having again, alongside its other lines.

This third seems more likely to me. I think that's why Apple has been exploring and acquiring GPS and sensor technologies and I think that's where rumours of an Apple watch (or, at least, a wearable device) have been persistent. I honestly have no inside information to back this up, but Apple has been a pioneer in miniaturisation. Macs and iPads keep losing weight while adding features. I reckon (as I've said before) something may emerge in this space that plays your music, sure, and lets you interact with your iPhone, but that also works in the fitness space with GPS and monitoring and all that, except in a really easy-to-use manner that doesn't require hours of fiddling around. And I think it will just be a new type of iPod, rather than a new device category per se.

But I've played around with a couple of devices like this and they've been pigs to use. Hardly a representative cross section, and I'm sure (I hope, anyway) there are some good ones, but Apple excels at usability. As a device that acts as a remote for the iPhone, since that's going to be in your pocket or bag anyway, and that's wearable and which has various sensors built in, this scenario makes the most sense to me. Apple has already been messing with wearable tech anyway, with various iPod shuffles having clips and whatnot.

Apple's results show it sold just over 6 million iPods during the holiday quarter. That's a decrease of 55 per cent year over year for revenue, and represents a 52 per cent decrease in units compared to the 12.7 million it sold in the first quarter of 2013. That represents the biggest year-over-year drop ever for the iPod. Apple sold 15.4 million iPods in the first quarter of 2012 and 12.7 million units in the first quarter of 2013 before being cut in half this year.

Tim Cook, in the earnings conference, noted that Apple has known for some time that iPod is a declining business.

It's not the first time Apple hasn't mentioned iPod sales. It actually hasn't done so since the year ago quarter when it announced 12.7 million iPods sold in the first quarter of 2013. Either way, the numbers will have analysts questioning the future of Apple's iPod line. Apple announced back in May that it had sold 100 million iPod touch units (which is pretty much an iPhone without the phone part) since the iPod version launched in 2007, but Apple has been selling less and less iPods each year.

Meanwhile, the rest of Apple's business looks solid - even Macs increased sales compared to the last quarter. Apple sold 51 million iPhones (a new quarterly record) and 26 million iPads (another record). Apple shipped a record 153.4 million mobile phones worldwide in 2013. That's up from 135.8 million in 2012. However, Apple's growth rate moderated from 46 percent in 2012 to just 13 percent during 2013.

Mac sales went up too: 19 per cent over the year before, or 4.8 million units sold. The quarter before, Apple sold 4.6 million Macs, which was down 300,000 on the same year-ago quarter. The introduction of the Haswell CPU has brought Mac sales back up, seemingly.

Meanwhile, what's Apple actually doing with the iPhone 5c? As that's another little cloud on Apple's horizon. The iPhone 5c looks increasingly like a failed experiment. From the start, I wondered what the point was - more to the point, why it was being sold at all when you could still buy the iPhone 4s. It looks as if it was intended to help capture a larger segment of the low-end smartphone market, although Apple never actually said so.

Overall, whatever Apple's actual intention, the iPhone 5c hasn't helped capture the market for which it was intended. Even with the heavy marketing push that accompanied its launch, it didn't drive enough iPhone sales this quarter to reach Apple's own estimates. I have to admit, when I first saw it, I was impressed at the amount of careful design that had gone into it, but I simply failed to see why it was kept alongside the 4s. To me it seems a miss-step to have three iPhone models concurrently - and as for the clamouring for a bigger iPhone, I'd be very interested to see how many people would actually buy one. I'd be willing to bet it's not a very significant number.

I sure as hell wouldn't. The iPhone 5 I still (very happily) have fits in my pocket. Nothing bigger would. Surely, if you want to walk around with an iPad mini-sized iPhone, I'm sure there's an app for that.

But I guess we'll know one day - Apple keeps its market research close to its chest.
And you have to wonder what research led to the iPhone 5c.

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