Is the iPod Going Out of Style?

ByABC News
September 12, 2006, 1:56 PM

Sept. 12, 2006 — -- Everything Apple touches turns to gold -- or a bright shade of white, or, in some cases, iridescent greens and pinks.

So what's this? Sales of the iPod, that icon of cool, have actually dropped?

Seems so -- even while the company was introducing new versions today that could download entire movies, play video games, and run for 24 hours nonstop on improved batteries.

Since the Christmas quarter, when 14 million iPods were sold, sales dropped to 8.5 million in the next quarter, and 8.1 million after that.

Sales of any popular product can rise and fall, but iPods haven't fallen until now.

Perhaps more telling is a report from the Zandl Group, a New York-based trend-forecasting firm that regularly seeks opinions from a panel of 3,000 young consumers, age 25 to 35.

"For the first time since the iPod's debut, we are detecting the beginnings of an iPod backlash," wrote Zandl's analysts.

"Our panelists are talking friends out of buying iPods, citing specifically that iTunes is 'unlawful' and overpriced. Others complain that the iPod batteries are not replaceable and always seem to run out right after their warranties expire -- meaning they have to pay to replace the entire player, which is expensive and wasteful."

"While it could just be a blip, the big story here is tech fatigue," wrote Carla Avruch, a creative director at Zandl, in an e-mail to ABC News.

"After 10 years of making tech the spending priority, it's no longer as exciting. Gimmicky updates like video iPods are not enough to retain consumers' attention and convince them to upgrade -- they want true innovation. The iPod may not have run its course -- late adopter consumers will come on board as prices fall, but the bloom is off the rose."

The marketplace, as always, is changing.

Microsoft is working furtively on a product called Zune, frequently billed as an "iPod killer."

More and more cell phones come with built-in mp3 players, making an iPod redundant.

Combination devices -- such as cell phone cameras -- have dramatically changed people's willingness to stuff multiple gadgets into their bags or pockets.