Selling In The iPod Channel
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It's that hip factor, that intangible tangible known as cool that the iPod confers.
Software makers and sellers want a piece of that marketing power. And they want some of their space back on store shelves that iPod has swiped from them.
Apple's iPods are flying off the shelves so fast that retailers are adding more as fast as they can and shoving not-so-hot-selling software lines out of the way in the process.
Spiffy, haughty iPods now own space on retailer's shelves where shrink-wrapped boxes of software once ruled.
And it's not just the store shelves either. Apple's iPods are flying off the virtual shelves as well, all the while helping to sell more digital music online with the billionth iTune it recently celebrated by showering a Michigan teen with Apple products.
Software retailers, especially the smaller players that make up the vast middle market of software, are facing up to the reality that folks just aren't buying software off the shelf as much these days. Unless you're a major software maker like Microsoft or McAfee, consumer electronics retailers are making room for the stuff that does sell. So if you're a maker of niche applications or smaller market software, what to do? Get your products near the hotter-than-hot consumer devices.
For those of you just in from Mars, that hot-selling device would be Apple's iPod. In the fourth quarter of 2005, Apple said it shipped 14 million new iPods, twice the number it sold last year. And the buzz is that more iPods and iPod accessories are planned.
When research firms such as NPD tally that 15 million digital music players were sold in 2005 in the offline retail sector alone, and Apple is saying it shipped 14 million iPods in one quarter, that's a lot of e-commerce sales not getting tallied. The same is true for software.
More and more of it is being sold online, just like Apple's iTunes is helping to sell more music online, as iPod after iPod seduces its new owner into forking over more for the tech object of lust.
Lately, it's the iPod video players at 30 gigs and 60 gigs that wear the crowns as king of the hipsters and are really getting software makers excited. When a sleek device like that offers more room than many folks' desktop PC's hard drive for storage, well, you can see how the gears are turning.
At a time when retail sales of software overall are flat, according to research firms such as NPD and software publishers such as Avanquest, software publishers are looking at riches in the accessory niches. And iPod is the place they want their products placed, online and off.
That's why we're seeing more accessory software to turn that iPod into a PDA, or to turn it into an output device to send movies to your 42-inch flat screen TV. Interested in software that turns your iPod into a PowerPoint presenter? How about software that really makes your Podcasts pop among all the ho-hum ones posted up on iTunes?
Mark Levitt, enterprise software analyst for IDC, isn't so sure about iPod software accessories, even though he sees the draw. "I think it's a niche market," he tells internetnews.com. Plus, the bigger question is whether accessory software products for iPods and other music/entertainment devices will be supported by enterprise IT staffs.
As free or low cost software for the iPod, some of it makes sense for smaller companies, he added. But overall, "I think this is more of a channel issue," he says of software makers' shifts.
Avanquest Publishing, perhaps best known as a developer and publisher of best-selling consumer and business software titles available online, is in the midst of shifting to accessories among its software lines.
Bob Lang, CEO of the company's USA division, says software sales in the North American markets are flat or even down in some sectors of the retail industry. So the focus now is on bigger hits for the software seller. And they want to sell it when the gadget is bought.
They also realize that they're losing sales to online purchases of software and missing sales of accessories for those digital devices too: Speakers, power adapters, FM transmitters, docking stations and car kits are just few of the accessories that accounted for the surge in sales, according to NPD. It said total U.S. retail sales for portable digital player accessories surged in the first nine months of 2005, with $412 million in sales. That's up by 370 percent from the same time period in 2004.
Avanquest is one example of a software publisher seeing the major shift in how software is sold, and the shift toward accessories as well, after closing out a record year in sales. The company's e-commerce performance notched a 300 percent increase in sales between 2004 and 2005.
In 2004, online sales of software accounted for about 4 percent of total software sales. Last year, it accounted for about 10 percent of total sales. Overall revenues for the France-based company were $70.6 Euro, up by 23 percent. But within that total, software sales alone were up by 32 percent.
Accessories are the new niche where publishers are looking for riches. And the iPod is one hot item to target.
That's why Avanquest is selling titles such as WebPodStudio. The software helps the user broadcast "radio" and "television" shows over the Internet. Plug in a microphone and a camera, and the software helps do the rest. It even has a built-in teleprompter like the pros use; the recordings can also be previewed and checked for quality before you publish them.
It's looking at enterprise niches too. The iPod Presenter, for example, is aimed at executives and sales professionals, as well as students and teachers. Produced by a little shop called thinkfree, and published by Avanquest, the software makes an iPod a PowerPoint outputter by turning the iPod into a portable PowerPoint graphics system. It lets you create new presentations or edit existing slides by plugging the iPod into any computer. You don't even have to have PowerPoint installed.
That's what ZappTek, also part of the Avanquest house of software, is offering with its iPDA. (One can only wonder about the hoops they no doubt had to jump through to be able to brand their product the iPDA. It's exclusively for the Mac right now, so that's probably one factor.) It lets the user synch up e-mails contacts, stickies, address books and iCals on their iPods; RTF documents, too.
Another iPod "PDA-Maker" is the iExtend program, produced by Memeo and published by Avanquest. The back-up service helps the user keep track of e-mail, appointments, music, videos, documents, presentations -- pretty much anything you've got stored on your PC -- and helps you make back-up copies of it all on your iPod.
The PodMediaCreator and DVD2POD programs are on the consumer-facing side of Avanquest's accessories strategy. (The DVD2POD program is aimed at users of the new Apple iPod Video 5G version).
The PodMediaCreator lets the user compose, edit and personalize home videos, combine photos, sound and text to create video slideshows, edit photos and combine and mix MP3 files with added sound effects.
There's more than the hip factor at work here, even as powerful a selling force as the hip factor is. Smart phones and PDAs are often memory challenged, as well as storage challenged. But they're also supported by IT staffs and their supremacy in the enterprise is more than secure.
It's the iPod's 30 gigs of data storage, or 60 even, in its sleek form factor that has software makers noodling ways to make that iPod more of a business tool than it was before. On the other side of the coin, they're seeing opportunities in general in the accessory market for iPods, to make that portable hard drive just that, a place to carry around what's on the desktop at home.
Now, if the brains at Apple can do something about the battery life of the iPod (the 30G iPod version I used could barely get through playing one hour of video before it needed a recharge), they'll really be on to something, and, like smaller software makers these days, thinking different indeed.
Erin Joyce is executive editor of internet.com's news channel.