iPod competitors can't compete with Apple

Posted:
in iPod + iTunes + AppleTV edited January 2014
Apple Computer's massive iPod shipment volume is allowing it to produce digital music players at a cost far below its competitors, and thus will remain atop the digital music player market for years, says one analyst.



Gene Munster, an analyst at PiperJaffray, recently surveyed a broad number of digital music players to see if any competitors can compete with Apple's iPod based on price.



The study looked at 20GB and 30GB players from device makers: Creative, iRiver, Samsung, and Sony. "Apple's 30GB iPod provides the lowest cost per gigabyte at $10, followed by Creative's Zen Vision:M at $11," Munster wrote in a research note. "It should be noted though that the Zen Vision:M has a few more features (i.e., personal organizer, recorder, more song storage, more hours of video, and an FM tuner) than the iPod."



The analyst al.so noted that the only other video capable devices were from Samsung and iRiver, and cost between $15-$25 per gigabyte, while those without video capabilities cost at least $11 per gigabyte.



Looking closer at device maker Creative, Munster said he was impressed by the features of its new Zen Vision:M, a knock-off of Apple's 30GB video iPod. However, the analyst believes the key question was: "Will Creative be able to pack these features into a 30GB device and price it below an iPod?"



"The answer is no," Munster said, noting that the device is $329.99, $30 (10%) higher than the price of Apple's 30GB iPod. Although, the iPod's competitors often have similar, if not broader, feature sets than the iPod, none have proven they compete in the two key areas of user interface and "cool" factor," he said.



"We believe that non-iPod devices must compete on price to gain adoption, but Apple has such massive relative shipment volume with the iPod that other MP3 player manufacturers are not able to replicate the economies of scale achieved by Apple," Munster added. "We believe this reality will allow Apple to sell iPods at the lowest prices in the market, thus retaining the iPod's pole position for years."



PiperJaffray maintains an "Outperform" rating on Apple shares with a target price of $79.
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Comments

  • Reply 1 of 45
    HELLO?!?! the creative zen vision:m thing is twice the thickness of the iPod. I think that's kind of a major factor here.
  • Reply 2 of 45
    hmurchisonhmurchison Posts: 12,341member
    Creative ...the gluttons for punishment.
  • Reply 3 of 45
    early to market with a great product means economies of scale, and further dominance. The question is how to you continue to innovate? Do you design 30 different kinds of ipods, throw them at the market and see what "sticks" like sony does? Although this might be the way to make sure that "I thought of it first," ultimately i don't think this is how apple functions, nor should function. They offer a couple of options and thats it. stopping the ipod mini for the introduction of the nano was fascnating. (Of course they're reworking the mini... people loved that thing. And when it's back it will be better.)



    I do think, though, that you can't leave gaping approaches for your competitor, though. The playstation portable, with its superior screen size, is problematic. Would you rather watch "Lost" on an ipod or a PSP?



    How do you bring something like that to market and compete with the hardware subsidy sony recoups on game sales? Well, how about movie downloads, music, and other media integration.



    you could argue sony is building a similar empire with the psp, was merely my point. It didn't get much press behind the xbox 360 and the ipod, but I think that thing is going to be huge.
  • Reply 4 of 45
    eckingecking Posts: 1,588member
    All this article did was point out blatantly obvious business ethics of tons of companies, not just apple. This happens all the time and in every market place, not just mp3 players. This is just how companies make a successful product, I don't get why when apple does it's suddenly different or in creative's eyes "unfair." Any of the other companies that were mentioned in this article would have done the same thing if they were in apple's position it's just common sense. Hell, some of the ones listed do do just that, just in other markets.
  • Reply 5 of 45
    Quote:

    Originally posted by benny-boy

    you could argue sony is building a similar empire with the psp, was merely my point. It didn't get much press behind the xbox 360 and the ipod, but I think that thing is going to be huge.




    I hear that the Nintendo DS is doing very well, certainly far better than any of the iPod's competitors in its market. The reasons being a "coolness factor" like the columnist mentioned, coupled with - surprise - superior human interface! Games like Nintendogs and that Brain Trainer thing doing so well in Japan of late, keep the Nintendo portable a better platform for those who like games that aren't the Playstation 2's poor brother but actually have creativity and design to them.



    Nintendo and Apple have much in common in their respective niches (Windows pc vs. Mac) and portable leads (Game Boy, DS vs. iPod). They outperform their competition based on design more than anything else. Though of course volume pricing helps when you can get it. Not that I am a Nintendo player myself (I've bored of games overall) but the similarities between the two companies are quite strong and I expect they'll both do well in the years to come.
  • Reply 6 of 45
    As iPod users' individual libraries continue to get larger with more music, TV shows, etc., the more intractable iPod's market share is going to get for competitors.



    Unless there is some sort of change in DRM down the road whereby Apple is required or voluntarily opens up its DRM to competitor devices, competitors are going to have an almost impossible time getting existing iPod users to switch. That leaves only first-time MP3 buyers -- still a large market -- but the window is closing a little more each day.
  • Reply 7 of 45
    I don't put much faith in analysts, but I'd be quite happy if AAPL were to continue on it's path toward $80...$90...and beyond...



  • Reply 8 of 45
    He gets paid to tell us things we already know? Man, I gotta get me a job like this.
  • Reply 9 of 45
    the zen vision 30GB has 'more song storage' than the 30GB ipod? err HELLO?



    can someone at least read what they are pasting onto AppleInsider? or add some [incorrect marketing bullshit] comment
  • Reply 10 of 45
    Quote:

    Originally posted by starwxrwx

    the zen vision 30GB has 'more song storage' than the 30GB ipod? err HELLO?



    That's because they upload WMA files, which are usually smaller than their MP3/AAC counterparts.
  • Reply 11 of 45
    Quote:

    Originally posted by starwxrwx

    the zen vision 30GB has 'more song storage' than the 30GB ipod? err HELLO?



    can someone at least read what they are pasting onto AppleInsider? or add some [incorrect marketing bullshit] comment






    I believe that when stated on the product packaging, Creative notes that it uses 96kbps encoding versus the 128kbps encoding that Apple assumes. Sure, that's worse sound quality, but it means more storage and that is just another selling point to Creative!
  • Reply 12 of 45
    Actually, it's more like 64kbps WMA.



    Link
  • Reply 13 of 45
    chuckerchucker Posts: 5,089member
    Even 160 KBit/s WMA would barely be as good as 128 KBit/s AAC.



    I wonder when Apple will finally introduce AACplus...
  • Reply 14 of 45
    Quote:

    Originally posted by Chucker

    Even 160 KBit/s WMA would barely be as good as 128 KBit/s AAC.



    I wonder when Apple will finally introduce AACplus...




    That's just TOO funny! The Li-ION battery test is "tested" with 128kbps MP3 files (4 minute files, hope you boys are listening to dance music or any modern electronica) and the storage capacity is "measured" with 64kbps WMA. How much further can you confuse the average consumer?!
  • Reply 15 of 45
    Quote:

    Originally posted by Gene Clean

    Actually, it's more like 64kbps WMA.



    Link




    WMA @ 64kb/s sounds like its coming out of either my ass or the toilet.
  • Reply 16 of 45
    eaieai Posts: 417member
    So, how do I buy shares in AAPL?
  • Reply 17 of 45
    chuckerchucker Posts: 5,089member
    Quote:

    Originally posted by eAi

    So, how do I buy shares in APPL?



    You mean AAPL, and your bank, if it's any good, will probably let you setup stock purchases at a cheap rate.
  • Reply 18 of 45
    Quote:

    Originally posted by theapplegenius

    WMA @ 64kb/s sounds like its coming out of either my ass or the toilet.



    Yeah, it's pretty bad. Though I'm not sure how they plan to provide 64kbps WMA files, when two major Apple competitors (major is loosely used here) Napster and Real offer files at 192kbps.
  • Reply 19 of 45
    Obviously its all marketing hype as to 'storage' in terms of number of songs, and I know why they do it, but why does AppleInsider still publish it in their article ??
  • Reply 20 of 45
    Quote:

    Originally posted by Gene Clean

    Yeah, it's pretty bad. Though I'm not sure how they plan to provide 64kbps WMA files, when two major Apple competitors (major is loosely used here) Napster and Real offer files at 192kbps.



    It's like Sony with their supposed 30 hours of playback and 3x the storage that is calculated with 48KHZ ATRAC, while they offer 192k files on their music store.



    Remember the 13" Apple RGB Trinitron monitors? Apple was the only one considering the viewable-screen size instead of the picture tube size. Other monitors from the competition, of the same size as the 13" RGB. where advertised as 14" monitors. Eventually Apple renamed the same monitor 14" Apple RGB monitor, because they were disadvantaged.



    I don't think Apple will do the same for audio, they'll stick to their guns. Anyway while the situation is similar, it's not the same, competitors all use different numbers to cheat in their storage and battery specs.





    At the risk of going out of topic, I cannot resist commenting about Apple/Nintendo having similar philosophies, since I'm also fan of both companies. The best in all that is that they are complimentary. Apple doesn't make games and actually need more of them on their platform, Nintendo doesn't distribute music and movies and doesn't design OSes and interfaces.



    Don't expect Apple to get a partnership with Sony on the PS3, since Sony wants to use the machine (also) to sell music and movies, and are competing against Apple on that. Obviously, it won't happen with Microsoft on the 360 either.



    Nintendo needs a solid store front end and interface to sell NES, SNES and n64 games online on the Revolution, with a DRM system. Apple could provide all that and while they are at it, enable music and video downloads. The Nintendo Revolution doesn't support HDTV, but you don't need HD to watch 320x240 movies, or even an eventual 640x480 iTMS video format...



    Oh and if it doesn't makes sense to you, just look at the Apple Front-Row remote, then look at the Revolution controller...
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