Media, Business & Politics

iPod profits may have dropped 20% from the same quarter last year, but if you look back a few more years, you’ll see Apple is still making more on the iPod than it was just 6 years ago, a time when the iPod was considered a runaway success for the company. What’s astonishing is that in 2005, the iPod accounted for a little over 30% of Apple’s profits; and now, while still bringing in about the same amount of revenue (slightly more), it only accounts for 5% of Apple’s total revenue. This, of course, is due mostly to the iPhone, with a little help from the iPad and the halo effect around them.

So just to put this into perspective, imagine this:
It’s 2005. The iPod is on fire, bringing in more revenue than any of Apple’s other segments (desktops, laptops, music, or ‘other’). Apple stock has been on an absolute rampage, up over 400% over the past 2 years to a whopping $55/share. Someone who looks like an older version of yourself but with shaggier hair, jeans that are too tight, and neon 80s shoes, walks up and tells you to withdraw your life savings and put it all into Apple stock immediately. Of course that’s crazy, and you tell him not even the iPod can keep selling like this forever. But he says no, it’s not because of the iPod, although in 6 years, it will still be bringing in more revenue than it is in 2005; but by 2011 it will only account for 5% of Apple’s total revenue. It doesn’t even even make sense. The iPod is Apple’s saving grace, and everybody knows it. There’s no way they can top that; And it’s not like everybody’s going to go out and switch to Macs just because the iPod was a hit. Then he explains that it’s all because Apple releases a phone; and shortly after that, a giant version of that phone, called an iPad. Do you think you’d follow his advice? If you did, it would be worth a 600% increase over 6 years.

The numbers really are something. But I’m not writing Apple off yet. In another 6 years, maybe I’ll be writing the same thing about how the iPhone was dwarfed by… the iPad? Or even something else. Only time will tell. If only I had a time machine.

Disclosure: I own Apple (AAPL) shares and I do not plan on initiating any new positions within the next 72 hours.

Tags: 20%, Apple, earnings, iPhone, iPod, q3, q3 2011, q311, revenue

This entry was posted on Tuesday, July 19th, 2011 at 11:03 pm and is filed under Big Business, Big Media, Communications, Financial Industry, Internet Service, Movie Industry, Music Industry, Video-TV/Cable/Online. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.