I think we could argue the fine details endlessly. But I think you've stumbled onto something here. Calling the iPod dominant is like calling the Sony Walkman dominant. I don't know if that is the case - and I've looked for numbers, and they're hard to come by in this segment. Anecdotal evidence and critical reason indicates this is a misconception, though.
I talked about your response to a friend. He works out a lot. He pointed out that if he goes into the gym, there may be 10 people with music players. 4 of them may have iPods or iPhones. The remaining 6 have competitive devices to play back their music. He says this is a consistent observation at every gym he goes to. My experience is similar. I know the people who own iPods in my office. They come to me when they need a sync cable or a charge, and I go to them. I hardly notice everyone else, because there is little reason for me to care - but when I think about it, the "everyone else" is a much larger group than those of us who own iPods.
This goes a long way toward illustrating my point. In the war of attrition for portable music players - iPod probably isn't dominant. Everything ELSE is. iPod as a single music player may have the comfortable majority of the market segment - but when you look at the entire market, everything ELSE is the *majority* of the market.
He pointed out that on car stereos a non-iPod aux-in jack will often be labeled "iPod" now - but that isn't really the case. It is a standard aux-in jack. Like calling any portable cassette player a "Walkman", even if it was a Panasonic - iPod has become a generic term to a certain extent. Which is a certain sign of the success of iPod - that it has sometimes crossed into being a generic term for a portable music player. But it doesn't imply absolute market dominance.
He also pointed out that this is going to a typical "gym" - my YMCA example above. Head to an exclusive Country Club, and your observations may be different.
But the reasoning behind this all remains the same. It all remains constant. When you've got dozens of manufacturers putting out music players that are all very similar, they compete mostly on price and being "open". Apple doesn't compete on this. I'm sure the other personal media players all operate on smaller margins than Apple does, and I'm sure the iTunes music store has the most sales. But....
Like any other consumer, I'm not going to pay $9.99 for an album on iTunes if Amazon or Google are selling it for half that price - and that happens, a lot. If it happens a lot for me, a lot of other people are catching on to this, too - and more will too. Beyond that, Amazon and Google don't require me to have an iPod. They don't care if I *do* have an iPod, but they also don't care if I have an Android, or a dumb-phone, or any OTHER device. iTunes can be used in this manner, but it is more difficult by degrees. For the majority of AVERAGE consumers, I think they're looking at a number of things:
What is the most convenient.
What is the cheapest.
What is the most flexible.
What is the most competitive.
And I think MOST people are saying that Apple is pretty darned convenient, if you're willing to give up the other 3 points, and they're deciding to use alternative devices as their media players. Companies like Archos and Coby wouldn't remain viable in competing in this market if that weren't the case. Cheap 8GB iPod Nano MP3 player knockoffs are another example at the *very* low end, where consumers go, "this looks just like the Apple and is only $19.99" and basically it does the exact same thing I could be spending $149 for. It plays my digital *music*.
The whole argument that media players are a dying segment exists because many users have replaced PMP devices with their smart-phones. We already know the majority of those are Android devices and a scattering of other brands, taking more than 50% of the market. Everything left over in that segment is iPhone. http://9to5mac.com/2012/02/02/comscore-iphone-now-at-30-us-smartphone-marketshare-12-ios-marketshare/
So, if these two facts are true (PMPs are dying because of phones, and iPhone only has 30% of the total share) - then iPod isn't actually the dominant force you paint it out to be. Apple LOST that market - through attrition, to the same market forces I describe in the article above.
Imagine a world where only Victorola record players were available, and you had to buy your records at a Victorola store. Imagine a world where only RCA television sets were made, and you could only watch content from an RCA store. Imagine a world where only Ford made cars, and you had to buy your gas from a Ford store and drive on a Ford road.
This model is unsustainable. The erosion into more open platforms is inevitable. As fast as this market segment is evolving, it will come sooner rather than later. It is already happening all around us, and we just don't see it for what it is. Your iPod dominance example doesn't HURT my case. It supports it.
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