In Defense of the iPod

The question that Eric and I are discussing, and the one raised recently in the The Wall Street Journal and Business Week, is whether cell phones with built-in music players will steal sales from the Apple iPod.

I don’t think they will; Eric disagrees with me. It’s one of those rare debate questions that will actually have an answer: iPod sales will either taper off as people who might have bought an iPod for their mobile audio needs turn to cell phones instead, or they’ll stay strong even in the face of new competition from the likes of Nokia and SonyEricsson.

Perhaps we should turn the question over to TR Innovation Futures, the magazine’s artificial predictive market for technology trends. It would be interesting to see which way our TRIF players, who collectively have much more information at their disposal than either one of us, lean on this issue.

(ED Note: Expect to see this market soon. Results to be blogged.)

Eric makes some persuasive points. Rather than rebut his rebuttal, I thought I would just touch on a couple of questions that I believe people think about (though perhaps not terribly deeply) when they’re deciding which gadgets to buy.

Is “good enough” good enough for me?

Eric argues that people are willing to trade quality for convenience, as evidenced by the success of camera phones, sales of which have far surpassed sales of dedicated digital cameras.

Fair enough.

For folks who were never interested in becoming digital photographers in the first place, but who get a kick out of taking snapshots of their friends at the mall and e-mailing the images to other friends, a camera phone probably is good enough.

But for others who may want to preserve the photos for history or make prints for the grandparents, the tradeoff probably is a deal-breaker: they’re going to buy a real camera. The same logic applies to music players. There will always be some people who go for quality over convenience.

How many gadgets am I willing to carry?

Many technologists I’ve talked with believe that in the long run, the answer will be two: one communications device and one entertainment device. They probably lean toward the two-device solution because, as technologists, they know how difficult it is to build a single device that’s good at sending and receiving data wirelessly and good at storing and displaying that data.

But I tend to think the answer is just one. (If more than one device is visible on your person, it’s like wearing a sandwich board that says “alpha geek.”) You might think that would rule out the iPod. But here’s the thing: I think people switch devices during the course of the day, depending on what activity they’re engaged in. They may carry a cell phone from 9 to 5, then stuff the phone in their purse or duffel bag and don an iPod for their trip to the gym after work.

So while people will only manually carry or wear one sophisticated PDA-sized device at a time, they’ll still own more than one.

In the end, I’m not sure the iPod versus cell phone debate is really an either/or situation; it’s more like a Venn diagram. There’s a certain circle of people who want a high-quality mobile music-listening experience. There’s another, larger circle of people who will buy a new cell phone within the next year or two.

My contention is that the iPod circle is not a subset of the cell-phone circle; rather, the two overlap. The zone of overlap may indeed equate to a chunk out of Apple’s potential iPod sales, as people who have a mild need to listen to music on a mobile device but who have a major need to keep in touch with others wherever they go gravitate toward cell phones.

But there’s still a portion of the iPod circle that’s outside the cell phone circle, and if that segment is as big as I think it is, Apple won’t see a major slowdown in sales.