3 Reasons Why Apple Desperately Needs a New Product
A common criticism leveled at Apple (NASDAQ:AAPL) is that the company has lost its innovative edge since the departure of legendary CEO Steve Jobs. During his tenure, Jobs oversaw the introduction some of Apple’s most successful products, including the iPod, the iPhone, and the iPad. Meanwhile, excluding the original iPad mini launch in 2012, the products released after Jobs have essentially been refreshes of previously existing products.
Although it may not be fair to criticize current CEO Tim Cook over a lack of innovation, since he has only helmed the company for a little over two years, many investors strongly believe that Apple needs at least one new product this year in order to keep its momentum going. Here are three reasons why Apple desperately needs to release a new product in 2014.
1. Apple’s iPod Is On the Way Out
It’s no secret that iPod sales have drastically declined over the past several years. Although the iPod was a revolutionary product when it was originally introduced in 2001, its digital music playing function has essentially been subsumed into the iPhone. According to a recent analysis done by Asymco’s Horace Dediu, the iPod continued its descent into obsolescence last quarter with -55 percent growth.
On the other hand, despite falling sales and the lack of an iPod refresh since 2012, Apple still maintains a dominant share of the overall digital music player market. According to data cited by NPD Group research analyst Benjamin Arnold via Apple Insider, Apple’s iPod accounted for 72 percent of the total market for standalone music players. In this sense, the company’s iPod business has almost become a low-maintenance “turnkey” operation for Apple. Without a need to invest time or money resources into this product line, Apple has a perfect opportunity to introduce a substitute revenue stream with another new product.