NPD Group Blog » Apple Hits The Bits

Apple Hits The Bits

Monday, September 14th, 2009
By Ross Rubin, Executive Director, Industry Analysis

With such relatively minor updates as new color options for the button-less iPod shuffle, and stronger 3D performance for the iPod touch, Apple may have simply tuned the transmission of the iPod hardware lineup at its annual music update last week, but it was pedal to the metal when it came to greasing the wheels of digital commerce for media and applications. The changes included:

· announcement of new applications, in particular games, for the iPod touch and iPhone

· the rollout of the Genius recommendation system for apps

· a means to organize iPhone applications using the iTunes software, facilitating access to them

· a redesigned iTunes store designed for richer information display and easier navigation

· the inclusion of FM radio in the iPod nano complete with, of course, song tagging

· iTunes LP, an attempt to bring the packaging of vinyl albums into the 21st Century

The iTunes LP (an initialism that some in this generation may believe was invented by Eminem), represents a particular departure for Apple. The company had been blamed by some in the music industry as a scourge responsible for the death of the album since iTunes allowed consumers to cherry-pick singles. Indeed, even in the iTunes 9 music store, one still cannot sample all the tracks on an album the way one can do on Amazon.com even for compact discs. (Apple says consumers haven’t asked for this feature.)

But iTunes 9 has embraced the album by bringing together features such as lyrics and artwork by the artist, even if cannot yet be experienced on an iPod. The result is an incentive to download a bigger ticket item than an individual song.

There were also some enhancements aimed more at enabling consumers to get more out of their existing music library, including Genius mixes and the handy but constrained Home Sharing feature that lets you grab songs from another PC on a home network. But even the latter feature requires that consumers be logged in to their Apple accounts from an authorized computer, which can expedite purchases from the iTunes store.

Why is Apple making such an exceptionally strong digital offensive now? As NPD data (such as the 2009 household penetration report shows), traditional iPod sales are slowing as saturation takes its toll. Whereas saturation is a liability for hardware, it is an asset for content and software. Moving forward, we can expect Apple to work even harder to expose you to music and apps you want to buy, and remove inhibitors to completing those transactions.

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