Thanks to the iPod, Apple has seen its highest fourth-quarter revenue in nine years. But despite its selling more than 2 million iPods this quarter, industry experts are concerned that Apple is too on selling iPods to an unknown market.
Bear Stearns analyst Andy Neff expressed concerns about Apple's reliance on the iPod. In a note to clients he wrote: "The ultimate size of the music player market is unknown along with increasing competition from multiple vendors."
Forbes Arik Hesseldahl wrote. "Take the iPod business away from Apple, and what's left? A company that sold 3.3 million computers in its fiscal 2004. That's less than 2 per cent of the 176.5 million computers that market research firm IDC forecasts will be sold this calendar year."
The Forbes article suggests that Apple's share of the music player-market as a whole should be considered. It states that according to the Consumer Electronics Association, consumers bought more than 23 million portable headset audio devices in 2003 (these include portable tape players, personal CD players and radios). Sales for these older personal audio devices are significantly more than the unit sales of MP3 players.
"That gives you a fair idea of how far the iPod and similar devices have to go before they become the consumer force that many already assume they are," wrote Hessaldahl.
However, Prudential Equity Group analyst Steven Fortuna is positive about the future of the iPod. He told USA Today: "We believe that the iPod story has legs, and having reached critical mass, is capable of moving both the revenue and earnings needles materially."