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Is the iPod dying - and does Apple care?

Digital audioThe vastly popular iPod MP3 music player has been a huge part of Apple's success since the first one launched in 2001, but iPod sales revenues are being eclipsed by revenues for Macs and iPhones. Is the iPod heading the way of the steam locomotive?

That might be pushing it, but its importance at Apple could be shifting, according to a blog post by CNNMoney.com about a new market analysis conducted by stock-market trader Andy Zaky.

According to the study, iPod sales revenues have dropped from their longtime number-one spot in the company to number three, behind Macintosh computers and iPhones. iPod revenue share fell to 18 percent in the last quarter, compared to almost 56 percent back in 2006.

Zaky said that's a good thing for Apple because it shows that it can still be successful even as its core products change revenue share and jostle for position.

"Many Apple critics have argued that Apple would essentially fall off the earth because at some point in time the iPod's growth would collapse," Zaky told CNNMoney.com. "The second part is true. The iPod growth rate has fallen off a cliff as Apple posted its first yearly drop in iPod sales ever in Q3. However, Apple is still firing on all cylinders thanks to the explosive growth of the iPhone."

The future of the iPod

The question is, what does this mean for iPod-loving consumers who every few years line up outside stores to buy the latest generation of iPods with all their new features and innovations?

Well, for years I have thought that the iPod would always be on the top of the MP3 player heap, and I don't see that changing, even as its revenue rankings within Apple change.

Yes, we've seen improvements in MP3 players from competitors like Microsoft's upcoming Zune HD, which is moving to a new, brighter and thinner OLED display with a 16:9 aspect ratio and is getting a new built-in HD radio receiver - features that are not yet included in iPods. The playing field for portable music players is definitely changing.

But I wouldn't count the iPod out just yet.

For one thing, iPod lovers are iPod lovers for far deeper reasons than just the devices themselves. It goes to the core of the iPod, its grace, its simplicity, its deep features and its stellar performance. People have been buying them despite their relatively steep price tags, despite their short warranties and despite their often short-lived batteries (which are not easily replaceable by consumers).

None of the competition has yet fully matched the inherent beauty and performance of iPods. Consumers have been trained to believe that if you want the best, you should buy the best. That's how Mercedes-Benz and Jaguar sell their cars. That's how Apple has sold its products. Apple doesn't lower prices to bring in sales - its quality products and reputation does that for it.

There's also the almost insane devotion from buyers. Microsoft and other competitors don't have the same easy-to-use and feature-packed online music stores, and won't anytime soon be able to earn the incredibly important 'cool factor' that envelopes the iPod and its user base.

What's even more important, Apple is usually the leader in introducing the next cool features and innovations found in portable music players. And that's perhaps the biggest part of its iPod success that I don't believe will be soon be eclipsed by its competitors.

See also:

Apple iPod shuffle review

Apple iPod touch (2nd generation) review

Apple iPhone 3GS review

8GB second-generation Microsoft Zune review

All desktop Mac reviews

Todd R Weiss is a freelance technology journalist who blogs for PC World. Follow him on Twitter

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