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iPod: Entrepreneurial Catalyst?

December 20, 2004

The AP reports that iPods are flying off the shelves this holiday season. No surpise here:
“The iPod, introduced in October 2001 and the No. 1 selling portable digital music player, has grown to represent about a quarter of Apple’s revenues. Sales, which have reached a lifetime total of more than 5.7 million units in the last quarter results, have consistently exceeded expectations.”
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iPod, uPod, we allPod
We’ve been wondering if the iPod economy is creating opportunities for start-ups? Extraordinarily successful products like the iPod often act like cogs of the entrepreneurial wheel, attracting scores of start-ups which make up the spokes. We believe there are niche opportunities, but as for any genuine challenge to Apple’s dominance, that will have to come from a big dog like Sony or Dell (at least in hardware). iTunes could face challenges from Real or MSFT or a homegrown solution (witness the recent success of the FireFox browser), but we wouldn’t bet against Apple at this point.
Venturewire circles around the same question – and reaches a similar conclusion in today’s VentureWire Alert: “While venture capitalists have dabbled in the online music sector — especially early on – they have mostly left it to major record studios or large corporations like Apple. But with music subscription sales expected to grow from $113 million this year to $890 million in 2009, and digital downloads projected to reach $803 million in 2009, compared with $158 million this year, VC firms are taking a hard look at the sector.
Some say they see ways to profit from the digital music revolution, mostly in niches: wireless, of course, where venture-backed startups proliferate, business-to-business companies, music as part of a total entertainment package, and even peer-to-peer networking.”
Read: Apple’s IPod in Short Supply for Holidays [AP via Yahoo]
Read: VentureWire Alert

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