Dr. Dan

The Outlook for Apple's iPod Business

Good analysis overall, but there are a couple of points that I think were missed. First, the chart doesn't really show an S curve, it shows three of them - and each time the leveling off became pronounced, an innovation or upgrade shifted it back to the high-slope region for at least a quarter. The slope on the chart for most of '07 is virtually identical to that for most of early '06. This doesn't mean that saturation isn't a problem (each flattenning area is longer than the last one), but it means that accurate forward projections need to aim much higher. The bump in late '06 not only added 20% to the total, but also delayed the flat-to-declining section of the curve.

Finally, I have no interest whatsoever in an iPhone, both because AT&T is a company I happily abandoned some years back, and because I want a small, very portable phone with great battery life that won't be cannibalized by other uses. But, as soon as the Touch gets better PDA functions I'm racing to the store to get one, for everything it has in addition to the phone. I think there are many people like me - in love with the iPhone concept but not the phone part - and others who don't want to spend the extra money and pay monthly fees (which makes it a tough gift to present.) I think the phrase "the iPhone will cannibalize a sizable amount of iPod sales" is exactly backwards.