Apple iPod News Information

Reliability and durability

iPods have been criticized for their short life-span and fragile hard drives. A 2005 survey conducted on the MacInTouch website found that the iPod line had an average failure rate of 13.7% (although they note that comments from respondants indicate that "the true iPod failure rate may be lower than it appears"). It concluded that some models were more durable than others. In particular, failure rates for iPods employing hard drives was usually above 20% while those with flash memory had a failure rate below 10%, indicating poor hard drive durability. In late 2005, many users complained that the surface of the first generation iPod Nano can become scratched easily, rendering the screen unusable. A class action lawsuit was also filed. Apple initially considered the issue a minor defect, but later began shipping these iPods with protective sleeves.

Allegations of worker exploitation

On June 11, 2006, the British newspaper Mail on Sunday reported that iPods are mainly manufactured by workers who earn no more than US$50 per month and work 15-hour shifts. Apple investigated the case with independent auditors and found that, while some of the plant's labour practices met Apple's Code of Conduct, others did not: Employees worked over 60 hours a week for 35% of the time, and worked more than six consecutive days for 25% of the time.

Foxconn, Apple's manufacturer, initially denied the abuses,[60] but when an auditing team from Apple found that workers had been working longer hours than were allowed under Chinese law, they promised to prevent workers working more hours than the Code allowed. Apple hired a workplace standards auditing company, Verité, and joined the Electronic Industry Code of Conduct Implementation Group to oversee the measures. On December 31, 2006, workers at the Longhua, Shenzhen factory (owned by Foxconn) formed a union. The union is affiliated with the Chinese government-controlled All-China Federation of Trade Unions.

Patent disputes

In 2005, Apple faced two lawsuits claiming patent infringement by the iPod line and its associated technologies: Advanced Audio Devices claimed the iPod line breached its patent on a "music jukebox", while a Hong Kong-based IP portfolio company called Pat-rights filed a suit claiming that Apple's FairPlay technology breached a patent issued to inventor Ho Keung Tse. The latter case also includes the online music stores of Sony, RealNetworks, Napster, and Musicmatch as defendants.

Apple's application to the United States Patent and Trademark Office for a patent on "rotational user inputs", as used on the iPod interface, received a third "non-final rejection" (NFR) in August 2005. Also in August 2005, Creative Technology, one of Apple's main rivals in the MP3 player market, announced that it held a patent on part of the music selection interface used by the iPod line, which Creative dubbed the "Zen Patent", granted on August 9, 2005. On May 15, 2006, Creative filed another suit against Apple with the United States District Court for the Northern District of California. Creative also asked the United States International Trade Commission to investigate whether Apple was breaching U.S. trade laws by importing iPods into the United States.

On August 24, 2006, Apple and Creative announced a broad settlement to end their legal disputes. Apple will pay Creative US$100 million for a paid-up license, to use Creative's awarded patent in all Apple products. As part of the agreement, Apple will recoup part of its payment, if Creative is successful in licensing the patent. Creative then announced its intention to produce iPod accessories by joining the Made for iPod program.

Sales

Since October 2004, the iPod line has dominated digital music player sales in the United States, with over 90% of the market for hard drive-based players and over 70% of the market for all types of players. During the year from January 2004 to January 2005, the high rate of sales caused its U.S. market share to increase from 31% to 65% and in July 2005, this market share was measured at 74%. In January 2007 the iPod market share reached 72.7% according to Bloomberg Online.

The release of the iPod Mini helped to ensure this success at a time when competing flash-based music players were once dominant. On January 8, 2004, Hewlett-Packard (HP) announced that they would sell HP-branded iPods under a license agreement from Apple. Several new retail channels were used—including Wal-Mart—and these iPods eventually made up 5% of all iPod sales. In July 2005, HP stopped selling iPods due to unfavorable terms and conditions imposed by Apple.

In January 2007, Apple reported record quarterly revenue of US$7.1 billion, of which 48% was made from iPod sales.

On April 9, 2007, it was announced that Apple had sold its one-hundred millionth iPod, making it the biggest selling digital music player of all time. In April 2007, Apple reported second quarter revenue of US$5.2 billion, of which 32% was made from iPod sales. Apple and several industry analysts suggest that iPod users are likely to purchase other Apple products such as Mac computers.

On September 5, 2007, during their "The Beat Goes On" event, Apple announced that the iPod line had surpassed 110 million units sold.

On October 22, 2007, Apple reported quarterly revenue of US$6.22 billion, of which 30.69% came from Apple notebook sales, 19.22% from desktop sales and 26% from iPod sales. Apple's 2007 year revenue increased to US$24.01 billion with US$3.5 billion in profits. Apple ended the fiscal year 2007 with US$15.4 billion in cash and no debt.

On January 22, 2008, Apple reported the best quarter revenue and earnings in Apple's history so far. Apple posted record revenue of $9.6 billion and record net quarterly profit of $1.58 billion. 42% of Apple's revenue for the First fiscal quarter of 2008 came from iPod sales, followed by 21% from notebook sales and 16% from desktop sales. Apple has sold over 140M iPods to date (see chart). It also posted record Mac and iPod sales to date.

Industry impact

iPods have won several awards ranging from engineering excellence, to most innovative audio product, to fourth best computer product of 2006. iPods often receive favorable reviews; scoring on looks, clean design, and ease of use. PC World says that iPod line has "altered the landscape for portable audio players". Several industries are modifying their products to work better with both the iPod line and the AAC audio format. Examples include CD copy-protection schemes, and mobile phones, such as phones from Sony Ericsson and Nokia, which play AAC files rather than WMA. Microsoft's Zune device also supports AAC and it has adopted a similar closed DRM model used by iPods and the iTunes Store, despite Microsoft previously marketing the benefits of choice with their PlaysForSure initiative. Podcasts and download charts have also had mainstream adoption.

In addition to its reputation as a respected entertainment device, iPods have also become accepted as business devices. Government departments, major institutions and international organisations have turned to the iPod line as a delivery mechanism for business communication and training, such as the Royal and Western Infirmaries in Glasgow, Scotland where iPods are used to train new staff.

iPods have also gained popularity for use in education. Apple offers more information on educational uses for iPods on their website, including a collection of lesson plans. There has also been academic research done in this area in nursing education and more general K-16 education. Duke University provided iPods to all incoming freshmen in the fall of 2004, and the iPod program continues today with modifications.