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Morgan Stanley: consumers buying more iPods than cell phones

post #1 of 36
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After polling consumers on their purchase plans this holiday shopping season, Morgan Stanley remains bullish on Apple and believes the company's growth-driven portfolio franchise will continue to accelerate in 2006.

The firm raised its earnings-per-share estimates on the iPod maker for the 2006 and 2007 calendar years by 28 and 50 cents to $2.07 and $2.57, respectively. However, near-term iPod expectations could prove aggressive due to a lack of supply, the firm said.

"We continue to believe demand outstrips supply for iPods and that Apple is doing the best it can to supply both its own and traditional retail stores," analyst Rebecca Runkle wrote in a research note released to clients on Friday. The analyst recently conducted a survey of 2,500 US consumers and found that they plan to buy more iPod and related products than any other electronics category.

"To hone in on this point, more people plan to buy an iPod this holiday season than a cell phone," the analyst said. "Also interesting, more people plan to buy iTunes gift cards this season than non-iPod branded MP3 players."

Of all the consumers planning to purchase an iPod this holiday season, only 4- percent said they would purchase another brand of MP3 player if a store was out of their desired model.

"We think this speaks wonders on iPod brand loyalty and ultimately ties consumers into an expanding portfolio of Apple products," Runkle said. The analyst notes that: "Of the current MP3 player owners planning to buy an iPod this holiday, 40-percent currently own a non-iPod MP3 player -- a sign of additional iPod market share traction."

The survey also revealed that consumers are showing a demand shift away from simple iPods like the shuffle and towards higher function players like video iPod. "We believe this provides evidence that management of digital content in the living room is important to consumers and could drive incremental demand this coming year," Runkle said.

Still, only 8% of US households own iPods and 5% own Macs. Morgan Stanley sees this sub-10% penetration as key to additional retail expansion opportunities for Apple within the US.

"Apple management agrees its US retail footprint isnt maxed out at the 135+ stores today," Runkle said. "While market demand, product execution and competitive dynamics will all impact the rate of growth and ultimate number of Apple retail stores, an analysis of similar retail chains suggests a number in the 300-400 store range is a fair target."

As further evidence that the iPod brand is drawing consumers to the Mac, the survey also revealed that iPod owners are three times as likely to seriously consider the purchase of a Mac as non-iPod owners.

Looking into Apple's product portfolio, Morgan Stanley said the company's supply chain is pointing to notebook shipments that could materially increase with the new Intel-based Macs that appear set to begin shipments in first quarter of 2006. The firm also sees the Mac mini and Front Row software moving into the living room, and an Apple-branded iPhone product sometime in the next 12 months.

"Apple hasnt confirmed its phone strategy (or even acknowledged that one exists), but at our recent meeting management did suggest a) handset makers will eventually get an MP3 offering right and b) Apples strategy is to be an innovation leader," Runkle wrote.

Morgan Stanley maintains an Overweight (or Buy) rating on Apple shares with a price target of $90, up from $70. The firm is "sticking with" its 10.2 million iPod estimate for the quarter ending December 31st.
post #2 of 36
To put it nicely, the title is a clever out-of-context quote of the article, I think that's pretty sad. Overall, there's no way that sales of iPods will beat those of cell phones, the article and survey apperently involves incredibly narrow and artificially constructed circumstances to claim otherwise.
post #3 of 36
I wish I had stock in Apple!
post #4 of 36
Yes, the headline doesn't seem right. It probably means that more people will be getting phones than iPods... but they're not PLANNING their phone purchases, whereas they have iPods on the brain. Or, they're getting phones for free and not "buying" them per se.

Still, all good news for Apple.

Nostalgia trip:
http://forums.macrumors.com/showthre...=&threadid=500
post #5 of 36
Quote:
Originally posted by nagromme Nostalgia trip:
http://forums.macrumors.com/showthre...=&threadid=500 [/B]

Quote:
This isn't revoltionary!
I still can't believe this! All this hype for something so ridiculous! Who cares about an MP3 player? I want something new! I want them to think differently!
Why oh why would they do this?! It's so wrong! It's so stupid!

Oh, I love walks down memory lane.

Anyway, this is good news for Apple, but not really unexpected.
post #6 of 36
Quote:
Of all the consumers planning to purchase an iPod this holiday season, only 4- percent said they would purchase another brand of MP3 player if a store was out of their desired model.

I stand corrected. I thought Apple's supply problems had the potential to cut way more than 4% from their market share, but if that's a worst-case scenario Apple's doing pretty okay.
post #7 of 36
The most amazing part of the article to me is the idea that investment folks might think that Apple could realistically open 3 times as many stores in the US as they have. Some obviously see the 5% market share as an advantage.
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post #8 of 36
Quote:
Originally posted by zedrac
Oh, I love walks down memory lane.

Anyway, this is good news for Apple, but not really unexpected.

Quote:
I'd call it the Cube 2.0 as it wont sell, and be killed off in a short time...and it's not really functional.

Quote:
All that hype for an MP3 player? Break-thru digital device? The Reality Distiortion Field is starting to warp Steve's mind if he thinks for one second that this thing is gonna take off.

Couldn't be more wrong really
post #9 of 36
I too am not suprised but feel that Apple needs to pounce on a "Higher End" iPod once the x-mas season ends. We need additional functionality in this device to keep things flowing. A high end (next gen) iPod could fuel the demand until their iPhone is ready for market. To this add the "All New" hardware lineup just around the corner and expect very good growth for Apple all of next year and in 2007. Kick MS's ass!

Based on what may be coming this January, I'm expecting a stock-split announcement by the end of that month, especially if pricing is more competitive. I'd also hope for another split (or very near) again by the end of the 06 year if enough new and incredible products get released.

Get some stock cause WE ALL know Apple Computer is on the way up.
never say never!
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never say never!
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post #10 of 36
Quote:
Originally posted by nagromme


Nostalgia trip:
http://forums.macrumors.com/showthre...=&threadid=500

Oh, wow. that was fun!

Do what you will, but harm none.

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post #11 of 36
I was at a birthday party for a family member and there were a whole mess of kids there. Being so close to christmas, there was the classic adult question for the kids. " what did you ask Santa for christmas?" every kid over the age of eight asked for an iPod.

I was amazed because in previous years the answers were "yougi-oh" this and "nintendo" that. This year all the lil ones want iPods. I was even more taken back to find out that they were indeed going to get those iPods from santa. Lil kids age eight getting shuffles... 12 year olds getting Video iPods. and the parents picking up a nano for themselves while they are at the store. WOW!!

just when the analysts think the market is saturated, the iPod permeates a new generation. now all apple has to do is make an iPod with huge buttons and giants screens for elderly people, and next cristmas will be another great year for apple.
post #12 of 36
Quote:
Originally posted by MacGregor
The most amazing part of the article to me is the idea that investment folks might think that Apple could realistically open 3 times as many stores in the US as they have. Some obviously see the 5% market share as an advantage.

I agree with them. The Apple stores are doing extremely well. The soon to be ex flagship store in Soho NYC is so packed, that you can barely get around in it at times. They had to expand their four cash registers on the first floor to two more just for iPods and accessories in the iPod dept on the second floor, to several more on the other side of the second floor across from the iPod dept.

If you arrive anytime around the 5 to 7 PM period during the work week, there are people constantly on all of the lines. The weekend is about as bad.

They will have a new flagship store up shortly in the GM Plaza. I'm sure most have heard of it. It's the glass cube.

But the Apple managers of the Soho store have told me that they didn't think that it would impact their sales at all.

I'm not fond of the 5% marketshare. I'd be much happier with 10%, if it could happen. We are still losing developers, and websites are still not accommodating us as much as they should. It all depends upon marketshare.

I'd love to see more hi end business apps, networking apps, etc, but it won't happen without the marketshare. I'm hoping that Apple is changing the way they deal with these big corporations so that this will happen.
post #13 of 36
Quote:
Originally posted by melgross
I'm not fond of the 5% marketshare. I'd be much happier with 10%, if it could happen.

...

I'd love to see more hi end business apps, networking apps, etc, but it won't happen without the marketshare. I'm hoping that Apple is changing the way they deal with these big corporations so that this will happen.

I agree with all of this. I'm hoping to be able to afford an inexpensive CAD program (er, relatively so), hopefully with machining capabilities next year.
post #14 of 36
>>Of all the consumers planning to purchase an iPod this holiday season, only 4- percent said they would purchase another brand of MP3 player if a store was out of their desired model.

"We think this speaks wonders on iPod brand loyalty and ultimately ties consumers into an expanding portfolio of Apple products," Runkle said.<<


You just gotta love these "analysts". Any putz would say the same... ROTFLMAO!

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post #15 of 36
Quote:
Originally posted by JeffDM
I agree with all of this. I'm hoping to be able to afford an inexpensive CAD program (er, relatively so), hopefully with machining capabilities next year.

Interesting... are you creating a CNC milling machine controlled by Mac? I hear there's a lot of new activity in this area, what with custom fabrication set-ups accelarating.

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post #16 of 36
Quote:
Originally posted by Sekio
I wish I had stock in Apple!

Not wishing, but wishing I had more.

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post #17 of 36
Quote:
Originally posted by SpamSandwich
>>Of all the consumers planning to purchase an iPod this holiday season, only 4- percent said they would purchase another brand of MP3 player if a store was out of their desired model.

"We think this speaks wonders on iPod brand loyalty and ultimately ties consumers into an expanding portfolio of Apple products," Runkle said.<<


You just gotta love these "analysts". Any putz would say the same... ROTFLMAO!

Except that "any putz" wouldn't have any idea of what they are talking about. These people actually do the survery.
post #18 of 36
Quote:
Originally posted by SpamSandwich
Interesting... are you creating a CNC milling machine controlled by Mac? I hear there's a lot of new activity in this area, what with custom fabrication set-ups accelarating.

While I don't know if he does, I would love to have my machines controlled by one of my Macs instead of the PC.

Most Mac software in this area is just dreadful, not easily obtainable, and almost always very expensive.
post #19 of 36
Quote:
Originally posted by melgross
While I don't know if he does, I would love to have my machines controlled by one of my Macs instead of the PC.

Most Mac software in this area is just dreadful, not easily obtainable, and almost always very expensive.


I agree. Frankly, as far as CAD goes, I used to have a nice little app called "DrawingBoard" for OS9 (which no longer works in OSX). Then, OSX rolls around, now it's called "Graphite" and it's loaded with additional junk I don't need and it certainly does not seem as stable as DrawingBoard used to be.

CAD could be radically slimmed down to give snappy, OS9-like performance by Ashlar-Vellum or any competitor out there. Most CAD sucks.

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post #20 of 36
Quote:
Originally posted by nagromme
Nostalgia trip:
http://forums.macrumors.com/showthre...=&threadid=500 [/B]

My, oooooh my. That entire thread should be required reading before participating in any rumor site.

I'd forgotten how doom-and-gloom so many Mac users were about the iPod when it came out. I recall people saying that Apple was going to abandon making Macs too. I should dig up the Slashdot thread. I remember that being filled with ridicule and naysaying about the iPod as well.
post #21 of 36
Quote:
Originally posted by sillycybin
12 year olds getting Video iPods

Why do 12-year olds want video iPods in the first place, and are the parents really buying them?
post #22 of 36
Quote:
Originally posted by melgross
We are still losing developers

You've made this comment before. What proof do you have to back this statement? Hasn't WWDC attendance risen dramatically? Are not programs that were once not on the Mac now being ported? Has not third party development from small companies and guys in their living rooms given us great new applications?
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post #23 of 36
Quote:
Originally posted by melgross
We are still losing developers

I, too, would like to see where you are getting that impression from. To whom are we losing developers?

Quote:
Originally posted by Gon
Why do 12-year olds want video iPods in the first place, and are the parents really buying them?

Why do 12-year olds want cellphones with built-in cameras in the first place, and are the parents really buying them?

Unfortunately, yes, the parents are stupid enough to buy them and the children are influenced by marketing and peer pressure enough to want them. There's no rational, logical, practical reasons. They're just desirable items.
post #24 of 36
Quote:
Originally posted by JeffDM
To put it nicely, the title is a clever out-of-context quote of the article, I think that's pretty sad. Overall, there's no way that sales of iPods will beat those of cell phones, the article and survey apperently involves incredibly narrow and artificially constructed circumstances to claim otherwise.

For christmas presents, I could see it. Everyone has a cell phone now. Its not exactly a must-have gift anymore. The ipod, on the other hand, still only holds a small segment of the entire populace.
post #25 of 36
response to wrong post.

I'll do it again.
post #26 of 36
Quote:
Originally posted by Chucker
I, too, would like to see where you are getting that impression from. To whom are we losing developers?



Why do 12-year olds want cellphones with built-in cameras in the first place, and are the parents really buying them?

Unfortunately, yes, the parents are stupid enough to buy them and the children are influenced by marketing and peer pressure enough to want them. There's no rational, logical, practical reasons. They're just desirable items.

Check my answer to fahlman.

Again, I've provided links before.
post #27 of 36
Quote:
Originally posted by fahlman
You've made this comment before. What proof do you have to back this statement? Hasn't WWDC attendance risen dramatically? Are not programs that were once not on the Mac now being ported? Has not third party development from small companies and guys in their living rooms given us great new applications?


The last time this was discussed, I gave links. You can go to Macintouch and see for yourself.

We see announcements about this all of the time. Sometimes they are on Maccentral, sometimes other places. This isn't a controversal statement.

Here, this is all I'm going to look for right now, but believe me, there is far more. It's both web sites on this thread and software. They had an older thread as well somewhere. This just starts at the middle of April 2005. It continues to the present, but it doesn't show that at the top of the page. When you get to the latter pages, the more recent stuff will show up.

http://www.macintouch.com/marginal10.html#apr15
post #28 of 36
Quote:

What does MacInTouch have to do with developers?
post #29 of 36
Quote:
Originally posted by Chucker
What does MacInTouch have to do with developers?

Did you bother to read 10 or so pages from the link?

If you did bother, you would see the problems we have as Mac users.

These are reports from people about web pages that don't work. Government systems that don't allow Mac users to take part. Software that has been discontinued for the Mac, etc.

Just pick pages at randon, and read the posts. You will see what I mean.
post #30 of 36
Quote:
Originally posted by fahlman
You've made this comment before. What proof do you have to back this statement? Hasn't WWDC attendance risen dramatically? Are not programs that were once not on the Mac now being ported? Has not third party development from small companies and guys in their living rooms given us great new applications?

What WWDC attendance? The number of people going to the WWDC. Or the number of vendors appearing at it. BEcause the last WWDC SF, IIRC, was smaller then the past, not taking up a whole convention area. And how many who do come to show off wares are developers, and how many are showing off their next big iPod accessory?

Oh, and I guess I wouldn't feel like there was a drop in developers if there were anything like competition in many of the software categories. As it is, you're lucky to find two apps that cover a particular area.
post #31 of 36
Quote:
Originally posted by melgross
Did you bother to read 10 or so pages from the link?

If you did bother, you would see the problems we have as Mac users.

These are reports from people about web pages that don't work. Government systems that don't allow Mac users to take part. Software that has been discontinued for the Mac, etc.

That's nothing new, but it's a far cry from your original claim.
post #32 of 36
Quote:
Originally posted by inkswamp
My, oooooh my. That entire thread should be required reading before participating in any rumor site.

I'd forgotten how doom-and-gloom so many Mac users were about the iPod when it came out. I recall people saying that Apple was going to abandon making Macs too.

Don't get too hysterical at the thought of Apple getting out of the hardware business. Now that Apple is switching to the prevalent processor in the PC world, they're a lot closer then ever before to being able to drop hardware without risking too much (no one made PPC computers before - now everyone makes a Mac compatible, even if its not blessed at this point in time). Esp. since Apple is so restricted to lame offerings (want a Mac, you can choose from FIVE whole models! Wow!)

Being such a small player, Apple can't afford to produce models that fit people's needs. They decide just to fit the needs they want to fit. So if you're one of those people who thinks built-in monitors is stupid, you're stuck buying an underperforming mini or an overly expensive tower. And if you want two monitors? Well, its a tower. (Or, you could try hacking your iMac to support spanning, assuming it doesn't cause havoc to your computer, but you're still left with a built-in screen).

And you're telling me users wouldn't want to be able to choose from a boatload of laptop options, rather than Apple's "consumer white" or "Professional silver" models? How about a laptop with two (yes, TWO!) battery compartments (or one that lets you swap out the CD drive for a second battery). Or one that lets you swap out a hard drive without having to risk breaking your warranty, your computer, or both. Or how about a tablet-mac? Won't get one from Apple, but Gateway makes a tablet. Put OS X on it, get Ink up and running, and there you go.

And not everyone goes gaga over the "style-over-substance" Macs. And despite the arguments that no one upgrades their computer hardware, they just buy new stuff, well, this might be true because its that's the way it is, or because (a) Macs can't be upgraded (thanks apple!), and (b) PCs are so cheap, its not worth the effort.
post #33 of 36
Quote:
Originally posted by Chucker
That's nothing new, but it's a far cry from your original claim.

Nothing new? Far cry from my original claim?

This what I said:

" We are still losing developers, and websites are still not accommodating us as much as they should."

It supports my "claim" 100%
post #34 of 36
Actually it doesn't support the claim at all as they do nothing to cover the numbers that have converted. Web page issues are nothing new, particularly from large agencies that have built around proprietary IE controls. If that's the case they have also abandoned around 10% of the windows user base too who use Firefox. If the site supports Firefox then there is no abandonment of the mac platform.

Increasing attendance at a developer conference is a quantifiable and provable statistic. Unless you have run a web crawler to catch companies that have switched either way and done a count your "claim" is unfounded and most likely spurious.
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post #35 of 36
Quote:
Originally posted by Telomar
Increasing attendance at a developer conference is a quantifiable and provable statistic. Unless you have run a web crawler to catch companies that have switched either way and done a count your "claim" is unfounded and most likely spurious.

Doesn't that all depend on who's attending the developer's conference. I mean, if its large developers, great. But if its just a bunch of shareware authors putting together small but useful apps, it doesn't help those looking for alternatives to the apps out there.

BTW, did you hear that the mac has lost one of the few tax apps. Taxcut no longer has a Mac version. Now its turbotax or a web-based version, apparently. Of course, neither TurboTax nor Taxcut offered the choices they offered windows users, but that's a different story too, I'm assuming.
post #36 of 36
Quote:
Originally posted by Telomar
Actually it doesn't support the claim at all as they do nothing to cover the numbers that have converted. Web page issues are nothing new, particularly from large agencies that have built around proprietary IE controls. If that's the case they have also abandoned around 10% of the windows user base too who use Firefox. If the site supports Firefox then there is no abandonment of the mac platform.

Increasing attendance at a developer conference is a quantifiable and provable statistic. Unless you have run a web crawler to catch companies that have switched either way and done a count your "claim" is unfounded and most likely spurious.

If you read enough of it, you will see that it does. The pages are a mixed bag. They show plenty of apps that are being discontinued. As Louzer shows, another one has bit the dust.
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