The launch of the iPod digital portable music device in 2001 was a breakthrough for Apple and a revolutionary move for the consumer electronics market. The company had not had widespread success for some time, but the iPod paved the way for other innovative and extremely successful products, such as the iPhone, launched in 2007, and the iPad, released in 2010. The first version of the iPod had a 5 GB hard drive, which could be used for storing music, but could also serve as an external data storage device.
iPod sales were slow at first, due to the device’s need for a Macintosh computer and its iTunes software. However, the company continued to update the product, adding newer versions, such as the iPod Shuffle, iPod Nano and iPod Touch, with improved design, features and hard drive capacity. By its 2006 fiscal year, Apple iPod sales reached 40 million units worldwide. Sales peaked in Apple’s first financial quarter of 2009, when over 22 million iPods were sold worldwide. At that point, iPod sales accounted for over 28 percent of Apple's total revenue, but only five years later, this share had decreased to less than one percent.
This decline in iPod revenue is in part due to the launch of the iPhone and other smartphones, which made having a music player redundant, due to the integrated music-playing features of a new generation of mobile phones. In 2009, two years after the launch of the iPhone, the iPod was still the more successful of the two in regards to unit sales. Nevertheless, by the fourth quarter of 2014, iPhone sales had increased to almost 40 million units, while only 2.5 million iPods were sold. Starting the following fiscal year, Apple stopped reporting iPod sales as a separate segment in its financial reports.