iPhone vs iPod: It’s called up-sell, not cannibalization, idiots.

I apologize for yet another iPhone related post, but I still have something I need to get off my chest. For months now, various stock analysts have been attracting press coverage and garnering free publicity for their firms by publicly worrying that iPhone sales would “cannibalize” sales of the iPod, that people would buy iPhones instead of upgrading their iPods.

I’m sure that dynamic has played out in a number of cases, but if you take a step back and think about Apple as a whole, it is clear that this isn’t cannibalization, its up-sell. The most expensive iPod goes for $349. The cheapest iPhone is $499, while retaining nice healthy margins.

In other words, if someone forgoes an iPod for an iPhone, Apple is getting even more money! This is not something to worry about.

It might have made sense to worry that iPod sales would slow while people waited for the chance to by an iPhone, but apparently this was not the case. iPod sales grew faster than expected in the last quarter.

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