Friday, August 04, 2006

Forrester Research: Apple’s Deal With Detroit Locks Up Yet More Earshare

Ted Schadler at Forrester Research posts at the Devices, Media, And The Future Of Everything blog about Apple (AAPL) extending it's lead in the portable media player market. He states that "to sell 60 million iPods in three years, create a legitimate market for digital media, displace the king of portable audio, and reinvent the business model for consumer electronics takes more than a pretty product. It takes brilliant market execution. And that, folks, is what Apple continues to do."

He notes Apple's recent deal with "Ford, GM, and Mazda to put iPod docking stations in 70 percent of 2007-model US automobiles makes iPod the slam dunk winner in the car market. And with 56% of consumers saying that they listen to music most frequently in their cars, it also gives Apple even more consumer earshare."

Schadler lists out what he thinks this means:

  • To accessory makers, it means that they had better be working on car components to supply Detroit with iPod docking stations. Belkin,, who are making hay with iPod FM transmitter accessories, can’t be happy . . . unless they’ve got a deal with Mazda in the works.
  • To Microsoft Zune, it means that they’ve lost the car channel before they even launch. The longer Microsoft stays out of the market, the more entrenched Apple will become. Unless Zune is 10 times better than iPod (or competes in a completely different market), consumers will stick with the player that they’ve fully accessorized and loaded with at least some Apple-protected content.
  • To Ford, GM, Mazda, BMW, and other car manufacturers, it means they should be thinking about video integration next. Streaming video from an iPod to the backseat is a cheap and easy way to amuse the kids on the drive to grandma’s.
  • To Apple, it means that they now need to focus on the next big lockup opportunity -- making iPod a platform for independent applications. Though it is not in Apple’s DNA to open up the software to independent developers, it should be doing exactly that. As iPod adoption begins to flatten out (as Forrester expect it will in 2007), Apple will need to entice consumers to need more iPods to run specialty applications. They should pause and create a stable and open set of APIs for developers to match the standard 30-pin docking connector that they haven’t changed since 2003.
  • To XM and SIRIUS, it means that they’ve got a new competitor to worry about in their best market. A consumer could get a Sirius experience -- and more given the rise of celebrity podcasts -- with their iPod and a broadband connection. It’s competition like this that will help limit satellite radio adoption to 30 million US households by 2010.