Of all the things that investors need to be worried about heading into Apple's
"No kidding, Rick," you spit back at your monitor -- but that mindset apparently isn't universal.
Fortune's Philip Elmer-DeWitt appeared to be in worrywart mode on Friday, compiling all of the major analyst projections in his usually insightful "Apple 2.0" column.
Gathering 43 analysts' unit-sale estimates, he finds that the consensus points to an average 7.2% year-over-year decline in the number of iPods sold this past quarter.
This would be problematic if this was, say, 2004, but it's immaterial now. For those still unconvinced of the triviality of this particular metric, let's go over a few of the reasons this doesn't matter.
1. It's all about the iOS, baby
Elmer-DeWitt points out that iPod sales peaked when Apple sold 22.7 million iPods during the 2008 holiday quarter. Have you noticed sluggish financial performance at Apple over the past three years? Of course not. The iPod's slow fade has been more than offset by the rapid ascent of the iPhone and iPad.
Isn't an iPhone an iPod touch that makes calls? Isn't an iPad a super-sized iPod touch? All three devices run on Apple's proprietary iOS, and this is the only growth that matters. In fact, it should be fairly obvious that selling pricier iPads and contract-tethered iPhones is more important than the lowly iPod. This is like worrying that McDonald's is selling fewer cups of coffee now that it's moving more lucrative lattes, cappuccinos, and iced mochas.
Apple revealed last month that there were 200 million iOS devices out in the wild, a figure that's doubled over the past year. It's the growth that matters in the App Store world we live in these days.
2. Smartphones are Swiss army knvies
It's not just handheld media players that the iPhone in particular and smartphones in general are replacing. Why do you think Cisco
Handsets from Apple and those fueled by Google's Android have been on fire since around the time that iPod sales peaked. Yet even so, the iPod remains the undisputed champ among portable media players. It's holding up better than its competition.
The second leading maker is SanDisk
3. See you on the bottom line
Even if the iPod were still relevant, and not the transitory technology that it's become, Apple's earnings growth would be the ultimate vindicator.
Analysts see Apple's profitability growing 65% to $5.80 a share in its latest quarter, a figure that, I should add, continues to inch higher with every passing week. It also bears pointing out that Apple has routinely smashed through Wall Street's income targets with ease over the past few years.
These are the same analysts who, on average, see iPod unit sales taking another hit this quarter. They're baking these metrics into modeling Apple's profitability, and they still see a company that's growing considerably faster than its cheap earnings multiple in the teens.
In short, don't fret the iPod's decline. Celebrate it!
Disagree with Rick? Do you think the iPod is still a needle mover for Apple? Share your thoughts in the comments box below.