Is the iPhone cannibalizing iPod sales?
We believe that there is some degree of iPod cannibalization due to the iPhone, but the impact is difficult to measure. In general, it is clear that iPod growth is slowing, but we believe that Apple will counteract the maturity in the iPod market with innovative new touchscreen iPods at lower price points. Additionally, Apple is well positioned to upsell its users from lower priced iPods to more expensive iPhones, in which case the cannibalization of iPod sales is a net positive to the company. What did Apple management mean when it referred to the iPod as a “Wi-Fi mobile platform”? History has shown that iPod growth is largely tied to: 1) the holiday shopping season and 2) innovative iPods. During the Dec-07 conference call, management referred to the iPod touch as the beginning of a “mainstream Wi-Fi mobile platform.” We believe that the iPod touch is the first of several Internet-connected iPods that Apple is currently developing. Internet connectivity enables applications like emai
