2snazzy

Apple Rules Teen Segment, but Will It Last?

Actually, I don't believe it is Apple that is going to suffer as much as it is the wireless cell phone carriers. The iPhone is the razor - cellular service is the blade. Apple has gotten ATT (and other carriers worldwide) to subsidize the iPhone so that Apple gets it's money (and profit) up front. Cell phone carriers are depending on iPhone users to run up large monthly bills. Even though a 2 year plan on ATT has a fixed cost, ATT expects that a certain percentage of users will exceed their monthly plan allowances and generate additional. Certainly some parents who are planning to purchase an iPhone for their kids will pull back. However, more pressure will be exerted by parents to get the kids to "dial down" their monthly usage of cell phones (including the iPhone).

As to the issue of declining iPod sales, remember that ultimately, an iPod is cheap enterainment. Songs cost 99 cents on iTunes. iPods are a social event and teens are not going to give them up. Each time a new hip artist releases a hit, you can count on millions of downloads by "hip" teens. Podcasts are a way of cheap information for literally millions of people including adults. As other forms of entertainment go up in cost (movies, etc), teens (and younger) will continue to "hang out", and when they do, they will have an iPod plugged into their ear and continue to purchase more songs. iPod sales may not grow at rates seen in earlier years, but until a "hipper" technology comes along to replace MP3 players, Apple will continue to sell iPods and make money.