The new “Apple is dying” meme

” Out of a total market of 119.5 million pocketable MP3 players sold in 2005, Apple’s 22.5 million iPods have a share of 18.8%

Now first half of 2006. For every iPod sold, the phone makers sell six. Apple’s market share is 14% and dropping.”

Yes, you make it very clear: you are hit whoring. You know state clearly: Apple marketshare declined 18.8% to 14% (using your absurd product definition). Fine. Where’s the market share crash? That’s not a share crash? That’s sensationalist propaganda to hit whore because you can’t offer anything else. Once you make your argument rational and comprehensible, you aren’t saying anything new, the market dynamics haven’t changed, and every still disagrees with you but thinks you are saying nothing impressive.

I say “books” because you keep avoiding my question: who are your endorsers and how many books do you sell? Even the biggest publishers today allow some measure of self-publishing.

Whoa Goebbels.

You doubt my books credentials? My books are available in all countries all booksellers. They are not some pamphlets on the web. These are full hard-cover books. FOUR of them.

I have two publishers. The first is John Wiley & Sons. The largest publisher of engineering and techical books in the world, headquartered in Chichester England. They own dozens of printing brands, you probably know them best for the yellow-covered paperback books “for Dummies” series. And no, I have not written a book of telecoms for dummies.

Wiley publish me at their top line brand, under Wiley, an all hardcover books division. Every bookseller in the world knows Wiley, available absolutely everywhere. And I’d say one of the most reputable and respected traditional publishers in the world.

My second publisher is Futuretext, a niche publisher who focuses on future oriented books. Futuretext wanted me to join them not only as an author but also to help them build a family of authors, to help young writers get published. At the Open Gardens event in London February last year, Futuretext announced me as their mentor for new aspiring authors.

I write for both publishers, and have current titles under development with both. I expect my fifth book will be released in a few months.

So what of bestsellers?

Wiley approached me for a book, have so far relased three. My first, Services for UMTS, 380 pages, co-edited with Joe Barrett, was released by Wiley in March 2002, and was certified as a bestseller by Wiley in October 2002. It has since been translated into Chinese.

My second book was m-Profits, 360 pages, released by While in October 2002 and certified by Wiley as a bestseller in October 2003.

My third book was 3G Marketing, 333 pages, co-authored with Timo Kasper and Sara Melkko, was released in June 2004, certfied a bestseller by Wiley in October 2004, went into its second printing in December 2004, and Wiley publically stated at the book signing event, held at the biggest telecoms event in the world, 3GSM World Congress in Cannes in February 2005, that my book 3G Marketing, has become the fastest-selling telecoms book of all time. I guess that is justified as a bestseller?

My fourth book is Communties Dominate Brand, co-authored with Alan Moore, 280 pages, released by Futuretext, in April 2005. It went into its second printing in September 2005 when it was certified a bestseller by Futuretext. They even printed “global bestseller” on the revised front cover of the second edition.

I have no idea what are the actual publishing criteria for a book becoming a bestseller. It seems to me that among the books released by Wiley around telecoms, about 5% are bestsellers. There may be an industry standard, I don’t know. I have no control in that matter. I only report what they say.

BUT for a hardcover book to go into second printings, is usually a definite sign its selling remarkably well, better obviously than the publisher expected. Most hardcover books don’t sell their first print run.

As to my endorsers. I trust this level of companies and especially note the senior level of the executives and the global scope of the companies involved, will help you accept, perhaps this Tomi Ahonen publishes real books, not only in-quotes “books”

Telecom Italia Future Lab, Director, Roberto Saracco
Vodafone, Director Group R&D, Dr Stanley Chia
Ericsson, Sr Vice President Business Development, Jan-Anders Dalenstam
NTT DoCoMo, Executive Director, Voytek Siewierski
Intel, Director of Technology, Jeff Lawrence
O2, Vice President, Mike Short
Cap Gemini Ernst & Young, Global Head of Strategy Consulting Telecom Practise, Dr Didier Bonnet
Nomura International Bank, Deputy Head Global Corporate Finance, Assad Razzouk
France Telecom, UMTS Project Director, Sophie Ghnassia
Bell Canada, Director of Channel Development, Mark Weisleder
MobileOne Singapore, Director Internet Services, Steven SK Chan
PwC Consulting, Director Telecom Practice, Regina Nilsson
OgilvyOne, Vice Chairman, Rory Sutherland
Publicis Media Groupe, Chief Innovation Officer, Rishad Tobaccowala
Korg, Managing Director, Rob Castle
Mercer Management Consulting, Vice President, Joao Baptista
Red Bull (UK), Managing Director, Harry Dronec
Cybird, CEO, Kazutomo Robert Hori
TV2 Norway, Vice President, John Ranelagh

I trust Goebbels that you recognize a few of those companies, although some may be a bit obscure for American readers – like Vodafone, the world’s largest mobile operator group. NTT DoCoMo the world’s first cellphone carrier who also was the world’s first 3G carrier and whose internet arm iMode earns more on its mobile phone based internet services than Google, eBay, Yahoo, AOL and Amazon – COMBINED. Ericsson is the world’s largest supplier of mobile telecoms networking equipment. Cybird is Japan’s biggest independent internet portal. Publicis is the worlds’ second largest media group. And so forth. Real rinky-dinky small companies nobody has heard of and probably Finnish pals of the author, right?

The endorsements are printed in the books – there are about twice as many as the above. I didn’t bother to write the actual sentences what they said here which are like “I earnestly recommend you read this book – and then tell everybody else to read it too”, you can read all of course at my website, or blogsite, or the publishers’ websites, etc. Satisfied?

I lecture at Oxford University. I represent the industry at the most prestigious events. My customers are the who’s who of telecoms, and many of the other leading Fortune 500 companies attempting to get into the new mobile internet space.

The references are fully openly available. I have my bio published at dozens of locations and at LinkedIn.

I resent your claim that my book publishing credentials are somehow tainted.

I’d expect a direct acknowledgement Goebbels

Tomi Ahonen

Oops, sorry, didn’t mean iMode was bigger than eBay, Google, Yahoo, AOL and Amazon “combined” – where was my mind. I meant larger than any ONE of them. The world’s biggest internet company by revenues is the Japanese ISP arm of NTT DoCoMo, which they call iMode.

Sorry about that. I know this site gets a lot of readers. I don’t want that mistake to go out ha-ha.

Now for some replies. I won’t address all here, this is Robert’s blog ha-ha. But a few I’d like to mention

Tony – about one-trick ponies ie analogue camcorders and modems. Well, isn’t it dangerously close that iPods are one-trick ponies. For most users? And that functionality is dangerously easy to integrate into a phone? I hear you about 40 years of IT bringing scepticism. Me too though a few years less ha-ha.

Mike Johnson – you give a lot of reasons why technically the iPod is a superior music experience. In my original blog I’ve already given you this argument. It is irrelevant. Being best does not give you the market. Ferraris and Rolls Royces may be the best cars technically, but the best-selling cars are Toyotas and Chevrolets and Fiats and other very average cars. Technical superiority is a sure-fire guarantee to lose the mass market. Concorde was the superior airplane technically but Boeing 747 Jumbo Jets won the war. Betamax was superior technically – at every generation to the VHS recorders, yet VHS won. Macs have always been superior to DOS and Windows PCs, yet Macs are what 5% of the market? Same will happen with iPods. They had 80% of the global market in 2004. 19% last year. 14% now and will have less than 10% by year-end.

sam – market shares are always reported by period. Current. So either this month or this quarter or this year. So 14% market share this quarter is the right measure. Its not an accumulated penetration rate, perhaps what you are thinking of.

Karim. Very funny, really. But seriously. The end-customers have validated my rationale. End-customers all around the world don’t see a difference. They buy both phones and iPods for music. They use them both for music and they PURCHSE music to both. I have given you all the stats. So your wonderful argument into absurdity, while entertaining, is not really relevant. I wouldn’t attempt to classify desktop PCs as rivals for portable, personal, pocketable music players.

Herb – “does anyone really think Apple is going to get caught flat-footed this time around?” THEY DID. That is EXACTLY my point. I know from personal contacts with several handset makers, that there were serious discussions with Apple with many. Apple could have owned this market. Rather than report declining iPod sales from 8.5 million to 8.1 million units, if they played their cards right – and every phone maker wanted the iPod cool to their phones last year – Apple could have reported iPod sales growing from 40 million to 50 million THIS QUARTER. Think about that for a moment. At the start of last year they had 80% of the market. Now they have 14%. They could have made their move. They didn’t. They did exactly like you mentioned – get caught flat-footed. EXACTLY my point. Alas. I honestly am a big Apple fan and had hoped and hoped and hoped they’d make their move. They STILL haven’t.

Cybereer. “utter misrepresentation” in Oppenheimer quote. I am assuming you have it now verbatim correct (won’t try to go cut and paste from somewhere) so from your posting: “we don’t think that the phones that are available today make the best music players, we think the iPod is, but over time that is likely to change. We’re not sitting around doing nothing.”

So what is misrepresentation? When I say Oppenheimer accepts musicphones as serious rivals to iPods already? “I don’t think music phones make the best music players.” He did not say “phones are not music players.” He fully admitted they are music players, only that in his opinion iPods are still currently the best music players.

Where am I misrepresenting? And to “we are not sitting around doing nothing” – haha I think they currently seem to be doing nothing for the past 18 months – but yes, you can nitpick from that but the implication is that Apple is preparing an iPhone, without committing to it.

People call me a moron – yes, some Mac fanatics have called me a moron last two days. You’ll be amazed how many Mac fanatics are also accepting that my posting had a lot of merit, so the moron may have been a hasty generalization. But your accusation that I’m an outright liar too, that is too much. You do need to point to me where I lied. And if I make a mistake (like the iMode comment above) I own up to them and do try to correct them. I believe in the ability of the blogosphere to decypher truth, and that with permalinks, liars are very rapidly exposed.

So where do you find me not being truthful?

Koreen Madden – I never said Apple was dying. And I even never said iPod was totally being finished. I’ve blogged since October last year about this, that iPod is rapidly losing market share and is being forced to being a niche player – like the Macintosh PC. I didn’t say iPods die out.

Goebbels (again) – on the 18% to 14% point. Good point, not that huge a drop. But that was in only 6 months. But note when I say crashed – I do take it from end of 2004, when iPod global market share was at its peak of 80%. I would challenge you Goebbels to find any other company any time in history, to have owned an a market with 80% market share at the end of one year, and then find itself with 14% of that market in a year and a half – and then see what was the review of that company? Would be a case study for MBA courses in how to dismantle a success. How to snatch defeat from the jaws of history. And I also am starting to believe this may be a world record for destroying a market-leading position. Not good. Not good at all.

Greetings to all. Thanks for such a lively discussion here about that blog.

Tomi Ahonen

Tomi,

I don’t think that most MP3 players are one-trick ponies any more than cell phones are. It is just that much care has been taken with the iPod UI for the many things it can do whereas cell phones never really got beyond the UI of conventional phones.

Cell phone design seems based around a device that is of similar 2-D dimensions of a business card. The main attempt to improve the UI seems to be with either flip phones or slider phones. But all are constrained by useless keyboards, dire software, too many interface sockets, and too small displays. Almost nothing is intuitive.

The iPod is all about intuitive use and has proved remarkably adaptable – cover art, video, great software, minimal interfaces. So why has it taken so long for a phone designer to emulate an iPod when clearly touch-screens would advance the UI in big way?

Hi Tony

Now I don’t understand you? You say modems and stand-alone (analog) videocameras (when video recorders were separate units connected by cable; before their integration into camcorders) were “one trick ponies” but the iPod (and other stand-alone MP3 players) is not?

Why not? I would argue by far the most of iPod users use their iPods only for listening. Like a portable radio, or portable CD player but with a larger catalogue of content. Why is this not a one-trick pony? What other tricks do iPods offer (that are used today)

Then on the intuitive user interface. This is Apple’s core competence and they lead in this area by a long mile. I am quite confident Apple will maintain an UI lead with iPods like they did with Macs all since their launch in 1984. Brilliant at it.

The problem is that for the average user, this will soon become a secondary issue. With the early market, it matters, when very selective, “intelligent” customers consider. But later, in the mass market it is only “adequate” performance combined with optimal price. And here on both counts phones win totally hands-down. They can mimick 80% – 90% perhaps even 95% of iPods overall proposition with relative ease. A true iPod user will always see the difference, but the average housemom who just wants a music player when she takes the dog for a walk – makes no difference how many cazillion songs can be stored, or how easy it is to make playlists etc.

If the MP3 player comes “for free” as part of the upgrade to the next cellphone anyway – everybody HAS to have a cellphone, nobody has to have an MP3 player – and if that price (differential) to get the musicphones rather than the more traditional phone, this is the clinching argument. Too easy to pick the musicphone and live with that. Yes, in an ideal world she’d want an iPod. And yes, she may “ask for one from Santa Claus” ie her techie husband might get one for her maybe, but no, the musicphone is good enough.

For almost all serious about music, the iPod is the only option. Or even if a serious music fan finds a good musicphone, odds are the person ALSO has an iPod. Uses the iPod mostly, the musicphone occasionally.

Just remember, when I talk about mass market, I am not talking about you or me or Robert Scoble or anyone who knows of the Scobleizer blogsite (we’re all techies). We will know and understand the value of an iPod and can appreciate its excellence. The mass market is not that clever. The mass market has already voted with its dollars, and already last year bought 4 musicphones for every iPod. This summer its 6 to 1, it will be more than 10 to 1 by year-end.

Oh, by the way, you asked also “why” phone makers don’t emulate iPod fully? Its because the phone design game is viciously nastily difficult. Ever opened up a smartphone? Tiny tiny electronics, every nook and cranny. The typical smartphone design is now 80% software and 20% hardware. The software is 9 million lines of code. The design takes 18 months and the basic design is frozen 9 months before release. They have a huge headache in incorporating all “sufficiently” into the phone.

And remember, an iPod does not need to be compatible with anything else except its connecting points. A cellphone has to actively connect, via radio, to ALL cellular networks of that given standard family. On GSM there are over 700 separate cellular networks in 210 countries and regions.

It is a series of compromises. While we now may see that music is a huge factor for the phone industry, when these latest phones were originally designed (about January 2005) – the big promising features were so-called “MMS” multimedia messages ie picture sharing. Internet browsing was shifting from the failed first release of WAP to its improved update and various faster “2.5G” and 3G technologies. The management at most phone makers would have emphasized totally other things back then than music.

I know iPods are critical to Apple and have revitalized the company and its brand. But keep in mind, when Apple sold some 8 million iPods in 2004, that is TRIVIAL to a mobile phone industry, literally one percent of the amount of phones shipping annually – this year they expect to reach one billion phones sold per year.

So the phone makers COULD NOT put much effort into doing a good musicphone. They had to do a quick job at it, with compromises.

Tomi Ahonen

Tomi says: “The problem is that for the average user, this will soon become a secondary issue. With the early market, it matters, when very selective, “intelligent” customers consider. But later, in the mass market it is only “adequate” performance combined with optimal price. And here on both counts phones win totally hands-down. They can mimick 80% – 90% perhaps even 95% of iPods overall proposition with relative ease. A true iPod user will always see the difference, but the average housemom who just wants a music player when she takes the dog for a walk – makes no difference how many cazillion songs can be stored, or how easy it is to make playlists etc.”

Are you saying that currently there are few ‘average housemoms” who have bought iPods? Mmmm…and the iPod/iTunes/iTunes Music Store proposition is that it ‘just works’ – no manual required – so just explain how the likes of Nokia/Motorola/Sony Ericsson, etc. are achieving the ‘just works’ status?

And iPods do audiobooks, videos, calendars, to do lists, file storage (akin to flash memory drives) and other things apart from music as well as having a simple interface to power/PCs/other audio devices/etc. And all this with the same easy UI.

Tomi says: “So the phone makers COULD NOT put much effort into doing a good musicphone. They had to do a quick job at it, with compromises.”

And there was I thinking that competition led to better design. Are you telling me that the combined efforts of Nokia/Motorola/Sony Ericsson/etc. between them haven’t been able to come up with one viable solution in 4 years? Don’t make me laugh! So why are they going to now – or did I miss this bit?

Hi Tony

If you look at iPod’s total penetration – its what 14% of Americans – that is the geeky early adopter part and JUST last year started to penetrate the early majority. Yes, a “few” moms here and there. Mostly its us geeks.

Now, is the iPod SUPERIOR in its integration and iTunes proposition and user interface. YES YES YES. Always has been – AND ALWAYS WILL BE. Just like the Macintosh. Superior, but a niche market. The mass market does not need the best, else we’d all drive Porsches and Maybachs…

Of the phone makers. They have NOT tried for four years. They ACTIVELY IGNORED the puny MP3 player market for Apple’s first two years. They started to monitor it – without showing any interest – in 2004. Only in 2005 did they START to get into it.

NOW in 2006 we see the first serious entries by musicphone makers. The SonyEricsson Walkmans. The Nokia N91 first true musicphone by Nokia with its 4 GB of storage etc. The LG Chocolate, Europe’s bestselling phone of all time (quite an achievement by a Korean manufacturer in the back yard of Ericsson (SonyEricsson), Nokia, Alcatel, Siemens (BenQ) etc.

The phone makers got into it only last year. They are now dead-serious. Still now, music is not the ONLY thing phone makers want into their phones. They’re now preparing for 3.5G, they are adding full digital TV set-top boxes (yes, digital broadcast TV to phones) etc, not to mention such technical gimmicks and tricks like SIP and IMS. So even now, the music ability is one of several – and need compromise.

Tony – answer me this. If the only neutral party in this – the music industry, which WANTS to maximize THEIR revenues and profits – is all singing in unison the beauty of mobile phones, then is that not the ultimate judge-and-jury for this?

Tomi

Tomi says: “If the only neutral party in this – the music industry, which WANTS to maximize THEIR revenues and profits – is all singing in unison the beauty of mobile phones, then is that not the ultimate judge-and-jury for this?”

The ultimate judge and jury is of course the consumer. The recording industry isn’t neutral at all. But of course as I stroll the streets of my town what I see isn’t geeks but ordinary people using iPods or other MP3 players. What you don’t see are people listening to music on cell phones. This year I’ve spotted just one.

The problem with all the phones you quote are that they are high-end models that geeks like Scoble tend to buy. In the UK which is dominated by ‘pay as you go’ tariff users these people just do not buy high-end phones in any quantity. In other countries the mix may be different but judging from earlier comments I guess it similarly applies in the US.

If and when 3G phone services become a mass-market in the UK and US then I might see changes but until then or unless something like WiMax comes of age then Apple and other iPod wannabes do not have much to worry about. MS cannot be worried if it is launching Zune?

“Goebbels (again) – on the 18% to 14% point. Good point, not that huge a drop. But that was in only 6 months. But note when I say crashed – I do take it from end of 2004, when iPod global market share was at its peak of 80%.”

Not a good point, THE point. If we accept your product definition, you could have stated the same last year (when you predicted it would occur this summer) since the drop from 80% to 18% had already occurred. Ultimately, your winding diatribe is simply sensational fluff.

“I would challenge you Goebbels to find any other company any time in history, to have owned an a market with 80% market share at the end of one year, and then find itself with 14% of that market in a year and a half – and then see what was the review of that company?”

Why would I bother when I can’t find a single analyst that agrees with you about Apple? You are sensationalizing again. Apple didn’t have huge penetration for 2001-2002. So now we are left with a small insignificant blip on the radar: slight dominance for about 6 quarters according to you.

“Would be a case study for MBA courses in how to dismantle a success. How to snatch defeat from the jaws of history. And I also am starting to believe this may be a world record for destroying a market-leading position. Not good. Not good at all.”

Again, using your own numbers, you can’t possibly agree with yourself: a “crash” does not take a year and a half. The “crash” occurred in the first half of ’05. Dominance for 6 quarters is not a market leading position especially when going from 0-14%.

As far as I see it, you have 3 “salient” aspects to your argument. 1. Based on your product definitions, Apple already had less than 20% marketshare half way through 2005 because you count all phones whether they are used, nevermind if they are used as primary device or not. 2. You claim that Apple saw a huge drop off (that is not attributal to seasonal change, despite everyone disagreeing with you) and a subsequent drop (small) following the next quarter. 3. Survey data indicating mobile usage patterns and downloads.

1. The first category I think is entirely spurious and you seemingly agree.

2. You will be proven wrong in the next quarter where Apple has a new product refresh (with significant availability during the quarte) and/or the holiday buying season.

(Will you change your tune if iPod sales increase again? I doubt it.)

3. This is the area where you could be most convincing, but because of the speciousness of most of your arguments, I doubt most of them. (For example, in Asia where most music is pirated by mp3 CDs and other means, how can I assume that half of all Koreans prefer a mobile to an mp3 player just because half of music is purchased by download? You point to a limited survey that says people listen to music on their phones, but I do not know if this is their primary listening device or if they also have an mp3 player, etc…)

As far as I can tell, the true purpose of your rants is to claim that convergence has been achieved and is accepted by the consumer. I see no real evidence of that: I simply see a mobile industry that quickly outmodes previous technology and releases new devices with new functions that may or may not be used… moreover, in key regions, these devices may not even “possess” the capabilities you claim because carriers act as gatekeepers and lock-out much of the functionality.

If you want to make any headway with your theory, you most provide better data for the adoption of this functionality. Not only that the functionality is adopted (I know most of my friends would say they’ve played music on their phone or use the camera to a poll, but they do not do so in any meaningful way) but that it achieves dominance over other modes of consumption.

Further, your attacks on Apple (they are attacks — you conveniently skipped the “Management Denials” portion of my comment) are unfounded, prejudicial, and harmful to any fruitful discourse. Much of your argument (going beyond your completely specious product categorization) is predicated on weaker iPod sales… Any strength in iPod sales would invalidate your theory even if we accepted your absurd marketshare numbers.

Otherwise, many of your arguments are simply wrong (only geeks buy iPods), anecdotal at best, logical fallacies, or circular rhetoric with no logic.

Goebbels

(You sound very much like the Goebbels/Tim we have also commenting a lot at our blogsite, if so, thank you for the double-debating, here and there)

We find common ground, like I’ve already indicated at my blogsite on the same points. Yes, you are correct, that it Apple manages to recover from the decline in sales, and for the third quarter 2006 reports iPod sales of more than 8.1 million units – THEN you have some claim to a recovery, about seasonality and yes, I will definitely report that.

I say “some” because for Apple to completely dismiss the Spring of 2006 as seasonal, they would have to grow sales to above 14.1 million units (the level of last quarter 2006 – for any chance of resuming an overall growth in sales and prove the two quarters of decline in sales of 46% were not a terminal downturn in sales and declining demand for stand-alone MP3 players, but a real growth. So yes, if there is ANY growth in sales over 8.1 million units for iPods for the third quarter, I will report it. But I won’t stop saying the iPod is losing the battle, unless they recover strong enough to catch up to the previous 17 quarters of continuous growth – ie the third quarter sales of over 14.1 million units.

But I will report it. Separately, as we’ve agreed at my blogsite, we will wait for the IDC/Informa report for the year 2006. If IDC/Informa count iPods as a separate market, then I will report that. If IDC/Informa reports 2006 as a single market – then I will also report the iPod numbers at the end of the year – and those will be much MUCH worse than 14% worldwide. Apple will be happy to capture 10% of the musicplayer market for this full year, by the opposite trends reported so far. Apple reports two quarters of declining sales of iPods while four out of the five big phone makers all report record sales or unmet demand for their musicphones. The last of the big five musicphone makers (Samsung) did not mention musicphone demand at this latest quarterly results, but they have the most powerful musicphones as they more or less invented this category, and I trust Samsung is more interested in pushing the next battle, digital TV broadcasts for the phone, that are now exploding in demand in South Korea.

Tomi Ahonen

POSTSCRIPT

I made one final posting on the topic, to collect the various discussions together. I of course mentioned this blog and the 63 comments here – with a link.

If you want to see the commentary – and I’ve tried to make it balances and representative from calling it excellent to calling it the worst writing ever, see this link

http://communities-dominate.blogs.com/brands/2006/07/electronioc_ech.html

Thank you all!

Tomi Ahonen

Gosh, Tomi. You were real spot-on with that prediction. So, how does it feel to see the iPod absolutely murdering the competition this holiday season?

Leave the prognostication to people with common sense, duder.