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Apple sold 10.6 million iPods in the first quarter of 2008 and has a 73 percent share of music player market in USA and a growing share abroad. O.K. I have to admit that we should all have this kind of problem. I mean who would mind selling 10.6 million units of a product. But the real problem lies in the fact that the number of iPods sold in the quarter grew only 1 percent from the same quarter a year ago. And sales of the low-end iPod Shuffle have been falling sharply.Now the question arises, what’s next for Apple? Are they ready for this? Yes of course as they responded by lowering the price of the 1-gigabyte shuffle from $79 to $49, helping to staunch the decline. Plus they have a mature market and the last six years, they nurtured enough new business lines through iPod that it will be able to with stand any change in MP3 player market.
Apple executives speaking on a conference call Wednesday afternoon gave few details, as is their custom.

Those IPods that have already been sold have a continuing revenue stream because of the iTunes Store. Apple sold $881 million worth of music and accessories in the last quarter. This is 35 percent higher from a year ago which is a good sign. And the NPD Group now counts Apple as the largest seller of music in the country, ahead of Wal-Mart. Apple, in fact, is on track to have greater revenue from selling music (and accessories) this year than the entire revenue estimated for the Warner Music Group.

Apple has created product upgrades that are so different that they may well appeal to a significant number of iPod users. Like for instance take iPhone, which is a product bundle that –- if you want it — is completely different from a standalone iPod.

They are also now putting a lot of emphasis as well on the iPod Touch, which is being touted as much as a platform for pocket Internet access and mobile computing as it is for playing music and videos. IPod touch has helped Apple in increasing revenue from iPods to $1.8 billion in the quarter which is an 8 percent increase. In comparison 1 percent increase was noticed in unit sales.

Another most important factor which shows Apple is well prepared is that the entire adventure with the iPod is helping it sell computers, although the magnitude is impossible to calculate. Apple sold 2.3 million Macs in the quarter for $3.5 billion. That is an increase of 51 percent by units and 54 percent by dollars. Not so bad when the economy is more than a little shaky.

Generally Apple’s computer sales grow 2 to 3 times as fast as the overall market. But this quarter the company says it grew 3.5 times faster than the PC market overall which the analysts call the “halo effect” from the iPod as it is clearly helping to sell Macs too. Although some people say that it’s because Microsoft has fumbled the launch of Windows Vista.

Apple’s past record shows that it has always stand out as one company that has been able to flip its business forward during slumps. So it is in a great position to thrive, even if its iPod problems become more than little.