At 100 Million Sold, Has the iPod Peaked?

Eight days after saying its iTunes Store will sell some songs free of digital rights management (DRM) copy protection, Apple (Nasdaq: AAPL) announced the sale of its 100 millionth iPod.

Apple is rightfully proud of the iPod's success . It notes the portable digital device -- having reached the 100 million mark in under six years -- is the fastest selling music player in history.

The big questions now: What about the future? Will iPod sales continue at the same fervid pace? Will people someday substitute "iPods" for "hot cakes" when describing a fast-selling product?

Tear Down the Wall

If anything were to slow the iPod's growth, it would be public annoyance about DRM restrictions on songs sold through iTunes, said mobile technology analyst Alan Chapell.

Such restrictions fly in the face of what made the iPod popular: simplicity.

"The hallmark of the iPod has been that it's easy to use," Chapell told MacNewsWorld. "But the mechanisms that don't allow you to transfer songs downloaded from iTunes to any user device make for a very horrible user experience."

Chapell was intrigued by Apple's April 2 announcement that it will soon sell DRM-free songs from the EMI catalog on iTunes. Apple said the US$1.29 songs will be of higher audio quality than other 99-cent, DRM-encoded songs being sold through the store.

Apple Happy

Unencumbered by copy protection, the songs will be playable on any MP3 device; however, some analysts, including Chapell, do not see that as bad news for the iPod's future.

"Removing the DRM from iTunes makes for a much better consumer experience," he reasoned. Since it was elegant ease of use -- in other words, a good consumer experience -- that made iPods so popular, smoothing the DRM wrinkle with iTunes is likely to increase the public respect for Apple and digital music players.

"This will go a long way to determining if iPod has hit its peak or whether it's going to continue to be the No. 1 portable music device," said Chapell. "I think that, from a consumer perspective, the most important thing is that they can obtain the music they want in a way that's easy. iTunes, for the most part, enabled that.

"The one exception, a huge 800-pound gorilla exception, was that almost all the music available on iTunes was encumbered with DRM. At least, by beginning to tear down those walls, Apple is moving toward that goal of providing a true, easy online music consumption experience for consumers, and I think that's an extremely positive thing," he added.

The Filler Killer

The first iPod was sold in November 2001. Apple has continually changed and upgraded the lineup, introducing over ten new models over the years. Apple CEO Steve Jobs said the iPod "helped millions of people around the world rekindle their passion for music."

It might have also played a big part in changing the way music is sold, as some customers shunned buying CDs packed with "filler" tracks and opted instead for online purchase of individual songs, said Chapell.

However, he noted, many people still buy CDs because the songs are not locked up in DRM coding, meaning they can be copied and played on multiple different devices.

"If you can go to the store and just purchase CDs which have no such encumbrances, than that, by far, is the best consumption experience, from a user standpoint," said Chapell. "But removing DRM from iTunes makes it a much better consumer experience. Now we can get into the neighborhood of 'Maybe I don't want the whole album. Maybe I just want one or two songs.' ... So, as an artist, are you really going to be in the process of releasing albums anymore?"