For some companies, a mature market and downward pressure on prices could lead to a nasty death spiral. But Apple has used its amazing six-year run with the iPod to nurture enough new business lines
that it will be able to withstand a collapse in the MP3-player market as well as can be imagined.
First, it has a continuing revenue stream from the iPods that have already been sold
because of the iTunes Store. Apple sold $881 million worth of music and accessories in the last quarter--up 35% from a year ago. Second, Apple has created product upgrades that are so different that
they may well appeal to a significant number of iPod users. Apple is now putting a lot of emphasis on the iPod Touch, which is being touted as much as a platform for mobile Internet access as it is
for playing music and videos.
Third, and perhaps most significantly, Apple's entire adventure with the iPod is helping it sell computers, although the magnitude is impossible to
calculate. Apple sold 2.3 million Macs in the last quarter for $3.5 billion. That is an increase of 51% by units and 54% percent by dollars.
Read the whole story at The New York Times »