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Apple Says Buy Another iPod

Forbes.com technology reporter Rachel Rosmarin writes:

Ipod family Who needs more than one iPod? A tiny Shuffle, mid-size Nano and cavernous video iPod might look cool lined up in a row, but there's little practical reason to purchase multiple units.

Even so, Apple thinks once you’re in their retail stores, you’ll cave to the soft sell. In recent weeks, signs have gone up in Apple stores asking shoppers, “Why stop at just one?” Apple has not acknowledged the new marketing campaign, or responded to calls asking if it will spread to their Web site and other advertising, but sharp-eyed bloggers have snapped photos of them in stores.

All of this raises the question --does Apple think it has saturated the market and sold an iPod to everyone who can afford one? Or are would-be iPod customers holding out and saving up to buy an iPhone --which also plays music-- when it's released in June?

Analysts and investors have been asking these questions for months as they watched iPod sales slip. Just this week, the NPD Group released February sales data indicating that iPod shipments (along with other media player shipments) drooped between January and February —an unseasonal decline. Those numbers caused Piper Jaffray analyst Gene Munster to revise his quarterly iPod sales totals down from 11-12 million units to 10-11 million units.

Even those of us who can afford to buy a boxful of video iPods aren't spending big on the music players. American households in the top 25% income bracket spent far less on iPods in 2006 than 2005, according to Pam Danziger, president of luxury market research firm Unity Marketing --only 27% of those high-income households bought one in 2006, compared to 37% in 2005.

“Apple's strategy to sell multiple [iPods] may work,” says Danziger, “But my opinion is that nobody needs another one.” Instead, she says, Apple should be looking to pluck other low-hanging fruit --affluent adults over 40. In 2006, only 22% of consumers in that group had ever purchased an iPod. “Older folks could well be the big opportunity that Apple is ignoring," says Danziger.

Even though iPod sales may be softening, the company’s still on track to beat —by a long shot— the 8.53 million iPods it sold in the second quarter of last year. The average analyst estimate for how many iPods Apple will sell in the same quarter this year is 10.9 million.

And market research firm iSuppli says the personal media player market still has a lot of growth left in it. The company forecasts 216.9 million media player shipments in 2007, up from 178.1 million in 2006. By 2011, more than 268.6 million units should ship. Apple is also poised to maintain its 70% market share; the number two brand, Microsoft’s Zune, dropped from a 10.2% share in December 2006 to 8.7% in February, according to NPD.

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