iPod Sales Slowing. Is the Market Saturated?

Yesterday, Apple released its Q2 earnings, significantly topping all of Wall Street's estimates by reporting a Q2 profit of $1.05 billion, 36% increase from the same quarter last year. Even with the decreased consumer spending due to the economy's current state, its not that surprising to see Apple performing well in such conditions. However, what is surprising is that Apple produced these numbers with virtually no growth in their iPod sales from the same quarter last year.

What does that mean?

According to a New York Times article, iPod sales grew only 1% from the same quarter last year. Apple iPod sales were dangerously close to not growing at all this quarter, making this an interesting situation for Apple. Mac sales, and not iPod sales drove the increases in profit and revenues for this past quarter.

These numbers beg the question, "is the market saturated with iPods?" This is a distinct possibility, and something people have quietly been whispering about for some time. Maybe a different situation is worth pondering.

Is this the beginning of the end for the Mp3 player? Is this the first sign that phones and all-in-one devices are becoming the popular choice over mp3 players and mp3/video devices?

Consumers seem to finally be coming around to the fact that it might be more convenient to have your mp3/video player, camera, phone, personal organizer, and everything else all in one device. With the popularity of devices like the iPhone, iPod Touch, Blackberry, and Windows Mobile devices, the functionality of an ordianry iPod classic seems to have become bare bones. They try to spruce the functionality of the iPod classic up with new visual interfaces, but its just the same product with some different make up on.

Apple has made improvements to its iPod line over the past year with the addition of the iPod touch and the lower prices on the shuffle. All of these things help perpetuate the iPod brand and keep it relevant, however I would be interested to see the break down of sales between all the iPod family members and see who is coming out on top. I have a suspicion that the iPod classic model is not cleaning up in sales like it has in the past. However, Apple does not release data on the specific iPods it sells, so this suspicion cannot be proven.

The relevance of the one trick pony that is the iPod classic maybe dwindling in the eyes of consumers, but the iPod family seems like it will continue to be around for a while.