iPod: The saturation point

I have to admit that I found the numbers on iPod penetration from Piper Jaffray's teen survey kind of shocking. 92 percent of them had a digital music player of some sort, and 87 percent of that 92 percent (so, about 80 percent of the total group surveyed) have iPods. 87 percent! If it weren't for the fact that I assume that they were given a list of brands to chose from, I'd almost think that they were just using iPod generically, like people say they have a Xerox machine even if their copier is made by somebody else. That's Windows-level saturation, and as we've seen with Windows, the most common way to feed the ravenous beast that is investor demand for "growth" at that point is to segment the market into ever-smaller niches, force upgrades, and other user-unfriendly behavior. Things aren't quite so dire yet -- they keep making new teenagers, after all, and the older ones graduate into other demographics where iPod dominance isn't quite so total -- but it will be interesting to see how Apple behaves when it is not the scrappy underdog, but the de facto monopolists.

Apparently the company sees no need to slack off in the iPod production now, just as it doesn't with iPhones. The company has just put in a truly monstrous order for flash RAM -- but while most analysts assume this is for the new higher-capacity iPhone, Apple Insider thinks the chips being ordered are too low-density for that. Could this be a play for a still smaller (and cheaper) iPod? How small can they get before they stop being useful? Maybe that music-player-less 8 percent have the answer.

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