Even with Microsoft Zune looking to knock the iPod from its lofty perch, Apple’s portable music player is expected to remain at the top of the charts for MP3 players during the holiday shopping season. In fact, market-research firm NPD Group says the iPod will joins the ranks of plasma and LCD televisions, notebook computers, and digital cameras as the hot-selling items this December.
“It would take an unprecedented act of nature for the Zune to outsell the iPod this holiday season,” NPD director of analysis Ross Rubin said. “It will be a good learning experience for the Microsoft this year.”
Microsoft has predicted it will sell 1 million Zune devices in its first six months. By contrast, Apple will likely sell about 25 million iPods over the same period, according to financial analysts.
Pike & Fischer analyst Tim Deal expects the Zune to have “a negligible effect” on iPod sales during the holidays. “While the [Zune’s] wireless-sharing feature may differentiate the device from the iPod, there just isn’t enough of an established user base for people to really avail themselves of the feature,” he said. “It will take time for the Zune to catch on, but it faces an uphill battle against the deeply-entrenched and culturally-significant iPod.”
The Zune debuted in the No. 2 slot during its first week of sales in mid-November, according to NPD’s figures. But those numbers don’t necessarily come at the expense of the iPod, Rubin notes.
“The [iPod] product line is old enough at this point that we are seeing people upgrade or buying a second device,” Rubin added. “It will be a good holiday season for MP3 players—there is still quite a bit of headroom left in that market.”
Indeed, other analysts see plenty of growth opportunities for music players, with the iPod, as market-leader, standing to benefit. Michael Gartenberg, vice president and research director of JupiterResearch, points out that only about 25 percent of households have embraced MP3 players.
“Some people will be updating their iPods and lots will be buying for the first time,” Gartenberg said. “We still haven’t seen tremendous market saturation.”
The iPod stands to benefit from two other factors this holiday season, according to Rubin—the addition of multiple colors to the nano line and the smaller form factor of the second-generation iPod shuffle. Both products appeal to different demographics that will keep them among the top-sellers, Rubin says.
NPD’s research into holiday shopping trends also indicates that laptops will be among the top-sellers. That’s good news for Apple—its portable line has been a strong seller in recent years. The company’s transition to Intel-based chips has also helped in this regard; customers can more easily compare Apple’s portable offerings to notebooks from other computer makers.
“A lot of consumers are starting to get over the myth that if you buy a Mac it’s going to be more expensive or it’s not going to be compatible,” JupiterResearch’s Gartenberg said. “If you compare a MacBook with a similar PC, it’s no more expensive—in some cases it may even be cheaper.”
Apple’s promotion of its iLife suite and the included applications’ ability to handle everything from storing photos to building Web sites is also getting through to consumers, analysts say. “The integration appeals to consumers, and that’s where it can demand a price premium,” NPD’s Rubin said. “That’s why the MacBook is priced where it is.”
Rubin and Gartenberg agreed that PC companies could feel the pinch in notebook sales this year as consumers wait for the January launch of Windows Vista. While those people are probably not going to move to a Mac, those purchasing a Mac will not be waiting because of OS-related issues.
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