According to data courtesy of NPD, sales of Apple’s trademark iPod were down 17% in April. Before you assume the world is ending and dash to sell your stocks, consider this word:
Cannibalism.
The actual definition may not be pleasant but in Apple’s case, it is. To understand why, we have to think about where the loss in sales went. Are people buying extremely generic and boring Sony MP3 players instead of an iPod? Absolutely not.
It’s safe to assume that in today’s market, music devices don’t simply just play music, but include billions of other features. So instead of buying a relatively cheap iPod, people are considering the iPhone and iPad for a marginal extra cost. If consumers pay more for these “luxury” products, Apple is laughing all the way to the bank.
“Given the [average selling price] (4x) and margin profile of the iPad, we see this as a net positive for Apple’s business,” wrote Gene Munster.
Similarly, with the introduction of the iPad there had been initial concerns about them cannibalizing Macbooks. However, Apple has successfully made these two products distinctive enough that they do not cannibalize each others sales. In fact, Mac sales have increased an estimated 39% in April.