As iPods fade out, Apple's iTunes turns up the volume
Apple's iPod business has shrunk to the point where the company no longer even mentions it among its main product list at quarterly earnings. And while unveiling this year's latest iPhones last month, Apple rolled out a new iPod color without little fanfare.Some way to treat a product that sold26.4 million units in the past 12 months and helped pave the way to the company's current riches. But as time goes by there's simply no arguing that the iPod has become a less important Apple product, especially because it generates less and less revenue for the company. On the flip side, Apple's iTunes business -- which includes the App Store, iBookstore, and sales of music, movies, and TV shows -- has evolved from the iPod's sidekick into the matriarch of Apple's offerings. It's become a major part of how Apple differentiates its gadgets from competitors. For its fiscal year, which ran through September and was fully reported on Monday, Apple sold 26.4 million iPods, down 35 percent from last year. That amounted to $4.4 billion in sales, or down 30 percent in revenue from the year before. By comparison, the iTunes Store and its surrounding businesses (which grew out of the iPod) brought in $15 billion in sales and grew by 22 percent. Related storiesThe iTunes Store turns 10: It's Apple's empire to loseli>Apple extends new 'Space Gray' color to iPods, tooApple's Q4 racks up $37.5B in salesApple iTunes Radio notches 20M listeners, 1 billion songsThat's a far cry from the massive strides the store made in the early days, which were fueled by an ever popular and growing iPod line. But that growth has continued amid the iPod's dwindling popularity.How iTunes stacks upiTunes and its related software and services have become a key to how Apple makes money. In the last year, the profitability of Apple's iTunes, software, and services business was second only to iPhone among all of the company's business units, even though it only represents 8.2 percent of the sales Apple generated in the just-ended fiscal year. However, iTunes has bumped up against some ceilings. Music-related products and services have grown in overall size, but they've been shrinking to a smaller slice of Apple's revenue every year as the company's hardware business has exploded. Rewind to 2008 and it was iTunes' heyday as the world's go-to place to legally acquire digital entertainment. And the App Store had only just begun. Today, the world has a surfeit of retailers willing to sell you digital music, movies, and shows. In many cases, Apple is delivering consumers to its competition. Mobile music listening is gravitating toward subscription services like Spotify or online radio services like Pandora. Apple, through its App Store, is what's bringing those services to device owners -- as it must. The revolutionary premise of the iPhone was that the apps turned the device into a digital Swiss Army knife. The iPod as a walled garden evolved into a more open device, despite Apple's desire to control every part of it. CNETEven when Apple jumps on the bandwagon with a service like iTunes Radio, there are signs that the competitor may not suffer as a result. Last week, Apple revealed that iTunes Radio hit 20 million users, streaming a billion songs in about five weeks. It's strong growth, but don't forget iTunes Radio was more than halfway toward that user milestone in only five days. From that data, B. Riley analyst Sameet Sinha crunched that iTunes Radio users spend 75 percent less time listening to the service than listeners of Pandora. Even with Apple's reach and even though initial users of iTunes Radio are largely early adopters and Apple fans, Pandora is sticky. A Canaccord survey of 860 consumers revealed that almost all of them who had tried iTunes Radio -- 92 percent -- said they still use Pandora. Two-thirds said they use Pandora at least as much as or more than iTunes Radio. One other metric to look at then is the App Store itself, which has fueled Apple's iTunes growth. Apple attributed as much in an earnings call with Wall Street analysts on Monday, saying that users have cumulatively downloaded 60 billion apps. Also, the company has paid out $13 billion to developers since the store launched in mid-2009. Apple doesn't go into as much detail on how its financials break down for that business unit. For instance, you won't get how much of that revenue was in music tracks, movies, TV shows, books, or apps. Getty ImagesFor the iPod, though, its decline is simply a side effect of Apple's success in other areas. Nearly all of its key functions (short of a low price) could be found in the iPhone, beginning with the first version in 2007. This cannibalization has been touted by the company, particularly CEO Tim Cook, who refers to the products that replace these as a "huge opportunity."The very same thing is happening right now with Apple's Mac sales, which have shrunk amid the growth of the iPad. "Our core philosophy is to never fear cannibalization. If we don't do it, someone else will," Cook told analysts back in January. "We know that the iPhone has cannibalized some of our iPod business. That doesn't worry us. We know that iPad will cannibalize some Macs. But that's not a concern."In other words, Apple values progress more than it treasures the iPod. It's been the same story with several other products, which faded into the sunset in the name of something newer and better -- from the original iPod Mini to plastic MacBooks. For the iPod, the iPhone fulfilled many of those same promises in 2007, making it an unlikely survivor, though one whose future now seems more uncertain than ever.
Nutsie brings iTunes to Android via the cloud_0
Nutsie brings iTunes to Android via the cloud
As I watched Melodeo engineering Vice President Bob Wise demonstrate the new Nutsie on a Motorola Droid at the company's Seattle office on Monday, I had to wonder why Google doesn't have its own Nutsie-like app. The basic idea behind the current version of Nutsie is simple: you have a bunch of songs stored in iTunes on your computer that you'd like on your phone, but you don't want to buy an Apple iPhone (perhaps because of AT&T). For $19.95, you can download the Nutsie app for phones running Google's Android, Research In Motion's BlackBerry, Microsoft's Windows Mobile, and various other mobile platforms, then grab the Nutsie uploader for your computer, and it will automatically sync your iTunes library to your mobile phone. You never need to plug your phone into your computer, and any changes to iTunes are automatically synced to the cloud and then to your phone. Nutsie also recommends other songs based on the contents of your library, then integrates those songs into your iTunes playlists. (This function forms the basis of Effin Genius, an iPhone app that creates playlists based on your library; Melodeo basically stripped the Serendipity feature out of Nutsie and made it into an iPhone app.)There has been one big drawback to Nutsie: it required you to use playlists, and you couldn't navigate to single songs, as you could do with iTunes on an iPhone. It was more like Internet radio than a true iTunes clone. This all changes with the new version of Nutsie, which is slated to come out for Android phones this quarter. Whereas past versions uploaded only data about songs, then streamed copies of those songs from Nutsie's servers, the forthcoming version is more like a digital storage locker: it will let users upload their entire iTunes library to Nutsie's servers, then access that content from their Android phone. The playback experience will be almost exactly the same as if they were using an iPhone. Nutsie will also cache songs to the device, so once users have played a particular song, they won't need to have an active Internet connection to play it again. So why hasn't Google made something like Nutsie an Android standard? Android's music sync is one of its worst features--users have to mount the device as a hard drive before they can transfer files to it--and the onboard storage for the Nexus One is a paltry 4GB (expandable, but still).If any company has embraced the cloud, it's Google. So why not make local storage obsolete? Untether users' music libraries from their PCs and stream them from the cloud instead. It would make sense for users and would provide a treasure trove of information about users--their musical tastes--to help Google target advertisements even more effectively.The more I think about it, the more it makes sense. After all, Google has already added playable music streams to its search results, and Apple reportedly bought Lala in part to keep it out of Google's hands. If it agrees, the question is, will Google build it or buy it?Correction, 4:48 p.m. PST: This post mischaracterized how the upcoming version of Nutsie will function. It will upload songs directly from users' computer-based iTunes libraries to Nutsie's servers, then allow users to access those songs from their phones.
As I watched Melodeo engineering Vice President Bob Wise demonstrate the new Nutsie on a Motorola Droid at the company's Seattle office on Monday, I had to wonder why Google doesn't have its own Nutsie-like app. The basic idea behind the current version of Nutsie is simple: you have a bunch of songs stored in iTunes on your computer that you'd like on your phone, but you don't want to buy an Apple iPhone (perhaps because of AT&T). For $19.95, you can download the Nutsie app for phones running Google's Android, Research In Motion's BlackBerry, Microsoft's Windows Mobile, and various other mobile platforms, then grab the Nutsie uploader for your computer, and it will automatically sync your iTunes library to your mobile phone. You never need to plug your phone into your computer, and any changes to iTunes are automatically synced to the cloud and then to your phone. Nutsie also recommends other songs based on the contents of your library, then integrates those songs into your iTunes playlists. (This function forms the basis of Effin Genius, an iPhone app that creates playlists based on your library; Melodeo basically stripped the Serendipity feature out of Nutsie and made it into an iPhone app.)There has been one big drawback to Nutsie: it required you to use playlists, and you couldn't navigate to single songs, as you could do with iTunes on an iPhone. It was more like Internet radio than a true iTunes clone. This all changes with the new version of Nutsie, which is slated to come out for Android phones this quarter. Whereas past versions uploaded only data about songs, then streamed copies of those songs from Nutsie's servers, the forthcoming version is more like a digital storage locker: it will let users upload their entire iTunes library to Nutsie's servers, then access that content from their Android phone. The playback experience will be almost exactly the same as if they were using an iPhone. Nutsie will also cache songs to the device, so once users have played a particular song, they won't need to have an active Internet connection to play it again. So why hasn't Google made something like Nutsie an Android standard? Android's music sync is one of its worst features--users have to mount the device as a hard drive before they can transfer files to it--and the onboard storage for the Nexus One is a paltry 4GB (expandable, but still).If any company has embraced the cloud, it's Google. So why not make local storage obsolete? Untether users' music libraries from their PCs and stream them from the cloud instead. It would make sense for users and would provide a treasure trove of information about users--their musical tastes--to help Google target advertisements even more effectively.The more I think about it, the more it makes sense. After all, Google has already added playable music streams to its search results, and Apple reportedly bought Lala in part to keep it out of Google's hands. If it agrees, the question is, will Google build it or buy it?Correction, 4:48 p.m. PST: This post mischaracterized how the upcoming version of Nutsie will function. It will upload songs directly from users' computer-based iTunes libraries to Nutsie's servers, then allow users to access those songs from their phones.
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