Six Years On, Apple’s iPhone Still Shines as iPod Slowly Fades

Source: from SEC data compiled by CNBC

Six years ago today, Steve Jobs unveiled the revolutionary iPhone at the Macworld convention in San Francisco on January 9, 2007. “Every once in a while, a revolutionary product comes along that changes everything,” stated Jobs according to CNBC. “Apple’s (NASDAQ:AAPL) been very fortunate — it’s been able to introduce a few of these into the world.”

The touchscreen-enabled iPhone was an unprecedented success and forever changed the mobile phone industry. However, as noted by CNBC, the rise of the iPhone matched a corresponding decline in Apple’s iPod sales. According to data from SEC filings compiled by CNBC, Apple’s iPod sales have slipped almost 49 percent since fiscal year 2007.

Meanwhile, sales of the iPhone have jumped from 1.4 million units in fiscal 2007 to approximately 150.3 million units in fiscal 2013. According to Apple’s fourth-quarter earnings report, the California-based company sold 33.8 million iPhones in the September quarter, setting a new record for fiscal fourth quarter iPhone sales.

Although other market factors likely contributed to the iPod’s falling sales, the iPhone may have fueled the portable media player’s decline by cannibalizing its sales.  This is because the iPod’s digital music playing function was subsumed into the iPhone.

As recently noted by NPD Group research analyst Benjamin Arnold via Apple Insider, this trend has also contributed to the overall decline in the portable media player market. However, it should also be noted that Apple still dominates this shrinking market. According to data cited by the NPD Group analyst, Apple’s iPod accounted for 72 percent of the total market for standalone music players.

Although iPhones and other smartphones are continuing to erode the portable media player market, Arnold also believes that Apple’s iPod may have a resurgence in popularity due to a recent “high-quality audio trend” among consumers. Since high-quality digital sound files require approximately four times as much storage space as typical sound files, the analyst believes that consumers may once again turn to portable digital music players to store their music files. As noted by Arnold via Apple Insider, the iPod classic’s 160 GB capacity is still far more than what is available on the 64 GB iPhone 5S.

Here’s how Apple has traded over the past five sessions.


Follow Nathanael on Twitter (@ArnoldEtan_WSCS)

More From Wall St. Cheat Sheet: