iPod Dominates, But for How Long?

Although the digital music arena is getting more crowded, Apple is distinguishing itself in a number of important ways, say analysts. Not only is the company continually innovating, but also it is applying marketing muscle to every new effort.

Ready for Battle

The coming year should prove to be an interesting one for consumers, and a potentially tough one for Apple. Already, it recently slashed the price of its top-selling iPod by nearly 25 percent in an effort to preserve its lead.

Coming up quickly in the race for market share is Sony (NYSE: SNE) and Digital Networks, which makes the Rio player. Both companies plan to introduce new devices in the coming months.

So far, Apple has fended off their advances. Demand for the iPod tripled to 860,000 units in the company's fiscal third quarter, boosting sales by 30 percent over the previous year.

At this point, iPod is the best-selling digital music player in the U.S., accounting for 39 percent of the market. The Rio is second, with a 15 percent share.

No Competition, For Now

IDC analyst Roger Kay told MacNewsWorld that one of the reasons Apple has found such popularity with the iPod while other technology companies work to get noticed is that Apple has a range of price and performance models available.

"Apple is stretched out on a wide curve of price," he said. "That's tied to performance, but the range draws more consumers."

He also noted that Apple does not compare itself to other MP3 makers, preferring instead to be thought of as a boutique developer, said Kay.

It is possible that in the future, as the MP3 market heats up, Apple will have to work more strenuously toward keeping itself distinguished from others.

"The market has become a lot more competitive," Kay said. "And it's going to get even more so. Apple may not always have dominance, but for now, it's offering what users want."

Music to Their Ears

Despite its recent price announcements, Apple believes that it will continue to dominate for many reasons. A major one is the company's pairing of a device with a music service. The one-two punch of iPod and iTunes has proven tough to beat.

Chris Bell, director of product marketing for iTunes, told MacNewsWorld that the iPod and iTunes have always been considered in tandem, rather than as separate entities evolving in different directions.

"When we released the iPod, we knew that iTunes would be a companion to it," he said. "But we wanted to wait before releasing it." The company had seen other attempts at online music subscription services crash and burn, and delayed iTunes' release until it felt confident that it would survive.

Bell is realistic about the growth of digital music, and the number of competitors coming into the arena, but he feels confident that Apple can keep its position as a market leader.

"We're in a unique situation," he said. "A key part of our strategy is driving the sales of iPod, and we see that as being in tandem with the music store."

Market Driven

The consumer market is a fickle one, and many companies have seen consumer tastes run from hot to cold in the span of just a few months.

But Dr. Michael Bull, a lecturer in Media and Cultural Studies at the University of Sussex in the UK, told MacNewsWorld that the iPod is quickly becoming a cultural icon, and that is not a title that fades easily.

Nicknamed "Professor iPod" for his research into the digital music player, Bull said that survey respondents have told him about "rediscovering a zest for music" through the device.

Although this is also possible with other players, Bull noted that the iPod's ease of use and stripped-down simplicity have attracted users in a large age range.

The result, he said, is that people are consuming music differently, and in greater quantities. "Having this cultural shift toward music will definitely affect the market," he said. "And the iPod is right there, at the front of it all."