Apple seen introducing cheaper, more innovative Wi-Fi iPods

Posted:
in iPod + iTunes + AppleTV edited January 2014
With market data clearly showing a deceleration in growth of the standalone MP3 player market, Apple Inc. will reportedly strive to maintain growth in its iPod business by introducing a range of cheaper, more innovative models that incorporate touch-screens and multi-touch technology.



That's the informed speculation on the part of Gene Munster, an analyst covering Apple for investment bank Piper Jaffray. In his latest report to clients, released early Monday morning, he emphasized that the company's December quarter iPod sales represented the lowest year-over-year growth rate in history of the players.



At the same time, however, the analyst noted that the slowdown is indicative of the broader market, where figures from market research firm NPD show yearly spending in the MP3 player segment to have shriveled from 131 percent in 2005 to just 17 percent in 2007.



That said, Munster remains bullish on Apple's prospects in the market and is currently modeling for iPod growth rates to stabilize at approximately 15 percent through the 2009 calendar year.



"In order to achieve this level of year-over-year iPod growth, we are expecting Apple to introduce cheaper, innovative iPods with Wi-Fi and multi-touch technology," he wrote.



Despite the slowdown in sales, the Piper Jaffray analyst noted that Apple over the last three years has maintained a steady but dominate 70 percent share of the MP3 player market. However, during that time it also managed to grow its dollar share of the segment from 71 percent (2004) to 84 percent (2007). That dollar share swelled even further to 90 percent during the first full month of iPod touch sales, thanks largely to the touch-screen players' high average selling prices (ASPs).



"We believe these numbers imply that, despite a slowdown in growth in the MP3 market, Apple's vision of the iPod lineup becoming a mainstream Wi-Fi mobile platform will have two results," Munster advised clients. "First, it will spur growth in the portable media player market, particularly from the replacement cycle. Second, if Apple is able to lower prices on Wi-Fi connected and possibly touchscreen iPods, it will be able to maintain or grow its leading market share position."



The analyst is therefore confident in the Apple's ability to steer its iPod business towards "mobile computing and Internet-connected portable devices. As such, he believes the iPod touch is just the first of several Internet-connected iPods that will inevitably emerge from the company's Cupertino-based design labs.



"Whereas the iPod classic simply enables users to listen to audio and watch video (with some remedial calendar and contacts applications), we believe that Internet connectivity opens the iPod to an entirely new set of possibilities," he wrote. "For starters, as we have seen with the iPod touch and the iPhone, email, full-featured web browsing, a mobile iTunes Store, YouTube, and Google Maps are all possible on an iPod."







Expanding his notion somewhat, Munster in his note to clients went on to speculate that an Internet-connected iPod could even stream content from users libraries hosted remotely, which would eliminate the capacity issues surrounding locally stored media. It could also leverage wireless e-commerce to upset the status quo.



"If for example you are on your way to Starbucks, you could wirelessly order your drink from your iPod, pay for it using your iTunes account or the attached credit card, and pick it up without ever standing in line or waiting at a cash register," he hypothesized. "These features (and possible features) make the iPod touch more of a mobile computing device than a simple iPod."



"We believe Apple is developing such solutions that will enable the company to deliver lower cost, Wi-Fi connected iPods in the near future," the analyst added. "In turn, this new iPod platform should generate continued growth for the iPod segment of Apple's business."



Munster maintained his Buy rating and extremely bullish $250 price target on shares of the electronics company.
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Comments

  • Reply 1 of 41
    lafelafe Posts: 252member
    Quote:
    Originally Posted by AppleInsider View Post


    "If for example you are on your way to Starbucks, you could wirelessly order your drink from your iPod, pay for it using your iTunes account or the attached credit card, and pick it up without ever standing in line or waiting at a cash register," he hypothesized.



    Love the Starbucks example. If it was me trying that, though, I'd crash the car while

    fiddling with the multi-touch display, or arrive at the Starbucks seven minutes after

    my coffee order had gone stone-cold.
  • Reply 2 of 41
    boogabooga Posts: 1,079member
    Yeah, the Starbucks example is pretty contrived. But once you have a Touch you find it useful in many unexpected circumstances. Having something that can quickly browse the web from almost anywhere comes in really handy-- airports to track flight status, sitting in front of the TV to access IMDB, at a coffee shop to settle factual arguments... then when traveling, you can Handbrake your favorite DVDs and watch them on the plane and in the hotel. Plus it even plays music!



    Maybe Apple needs to create a "loaner" program where they lend Touches out for a week (or have a no-questions-asked return policy for 2 weeks or something). Get the folks addicted then try to take it away from them.
  • Reply 3 of 41
    g3prog3pro Posts: 669member
    I can't wait to buy a $5 cup of coffee with a $400 device. It makes me feel like the rich and famous.



    Munster is incredibly unreasonable with his $250 target. Maybe it's a 5 year price target...
  • Reply 4 of 41
    paxmanpaxman Posts: 4,614member
    After 15 minutes fiddling with my iPod trying to order a coffee I suddenly realize it takes me exactly 5 minutes to pick one up from my favorite coffee shop (NOT SB - theirs is truly awful). Very analogue, I know, but ordering my double strength latte digitally strikes me as even more lame geek than writing this comment.
  • Reply 5 of 41
    Most wi-fi networks I run across in NYC and LI are locked. It's rare when I find a free and open network to hop on. I do most of my browsing vie Edge when I'm on the go.
  • Reply 6 of 41
    Well, if Apple pulls off a decent SDK in February, this new "mobile wi-fi platform" is going to get really, really interesting. Look what people are making for the iPhone/iPod Touch already in the hacking community. It's going to be great!
  • Reply 7 of 41
    Paxman that was great



    $250 shares? They're at $130 now, what is he thinking?
  • Reply 8 of 41
    jasenj1jasenj1 Posts: 916member
    Don't think of the Starbucks example in the context of a suburban car-based commuter, but of a big-city mass transit commuter, e.g. New York. Riding the subway you place your order just before reaching your stop, walk out of the station, into the Starbucks next to the entrance to your building, pick it up, and on your way.



    If this product map has any truth, it would follow Apple's pattern - introduce a "feature poor", "over priced" product with a well thought out UI and ecosystem; then slowly add features in future versions. Maybe it's time for wi-fi on iPods. I hope Apple does introduce some "killer-app" that will make mobile wi-fi really useful. Leveraging iTunes as a general transaction processing environment might be it.



    - Jasen.
  • Reply 9 of 41
    phizzphizz Posts: 142member
    Quick, somebody patent "the ordering and payment of a hot beverage from a popular coffee shop chain using an internet-enabled application and registration based accounting system on a portable MP3 player with a touch-screen interface" and get ready to take Apple to Texas...
  • Reply 10 of 41
    eckingecking Posts: 1,588member
    I'm not a fan of that starbucks example, that shafts everyone that does stand in line or intends to buy with physical money, makes the whole process impersonal and your gonna end up waiting anyways when they make your order wrong or not on time given the amount of orders they could be wirelessly recieving.



    Not to mention how much more work it becomes for those kids behind the counter.
  • Reply 11 of 41
    Quote:
    Originally Posted by jasenj1 View Post


    Don't think of the Starbucks example in the context of a suburban car-based commuter, but of a big-city mass transit commuter, e.g. New York. Riding the subway you place your order just before reaching your stop, walk out of the station, into the Starbucks next to the entrance to your building, pick it up, and on your way.



    Forget having to order the coffee your self, how about the iPod (or iPhone) has some clever program ( which based on GPS, traffic reports, coffee shop reports, whether you're walking or driving, etc) which will order the coffee for you at the right time so that when you arrive at said coffee shop, it has just been made.
  • Reply 12 of 41
    Quote:
    Originally Posted by AppleInsider View Post


    "If for example you are on your way to Starbucks, you could wirelessly order your drink from your iPod, pay for it using your iTunes account or the attached credit card, and pick it up without ever standing in line or waiting at a cash register," he hypothesized.



    Better yet... my ipod alarm knows it is time to wake me up but instead it sends an email to my office computer which completes all my work for the day and it cancels my coffee order so I can sleep in... better yet, why ever get up at all?
  • Reply 13 of 41
    jupiteronejupiterone Posts: 1,564member
    Quote:
    Originally Posted by AppleInsider View Post


    "If for example you are on your way to Starbucks, you could wirelessly order your drink from your iPod, pay for it using your iTunes account or the attached credit card, and pick it up without ever standing in line or waiting at a cash register," he hypothesized.



    And how exactly do you just "pick it up without ever standing in line..."?



    How do you know you're picking up the right drink? By prying off the lids and trying to figure out what's underneath all that foam? Will no one question you if you just walk in and pick up a drink from the bar and walk right back out?
  • Reply 14 of 41
    Quote:
    Originally Posted by blingem View Post


    Paxman that was great



    $250 shares? They're at $130 now, what is he thinking?



    They were less than $50 in June '06.



    See how it works?
  • Reply 15 of 41
    Quote:
    Originally Posted by JupiterOne View Post


    And how exactly do you just "pick it up without ever standing in line..."?



    How do you know you're picking up the right drink? By prying off the lids and trying to figure out what's underneath all that foam? Will no one question you if you just walk in and pick up a drink from the bar and walk right back out?



    Wait what?



    My local coffee shop has managed to solve these extraordinarily complex issues. Here's how: they have a separate area for online-order pickup, and they use a tried and tested method for drink identification: they write your name on the cup.
  • Reply 16 of 41
    Quote:

    Expanding his notion somewhat, Munster in his note to clients went on to speculate that an Internet-connected iPod could even stream content from users libraries hosted remotely, which would eliminate the capacity issues surrounding locally stored media. It could also leverage wireless e-commerce to upset the status quo.



    "If for example you are on your way to Starbucks, you could wirelessly order your drink from your iPod, pay for it using your iTunes account or the attached credit card, and pick it up without ever standing in line or waiting at a cash register," he hypothesized. "These features (and possible features) make the iPod touch more of a mobile computing device than a simple iPod."



    Erm, he didn't hypothesize anything.

    http://www.forbes.com/technology/200...7appatent.html

    http://www.genoco.com/link/interactive_quickOrder.html



    The first link points to a Forbes article from the day after Christmas that uncovered an Apple patent to the Starbucks effect. The second to a rather convincing UI of the vaporware.



    Also, who here thinks Piper Jaffray sounds like a seedy stripper?
  • Reply 17 of 41
    Quote:
    Originally Posted by AppleInsider View Post


    Apple seen introducing cheaper, more innovative Wi-Fi iPods



    Seen where exactly?



    Someone's imagination doesnt count, no matter HOW well informed they are
  • Reply 18 of 41
    Quote:
    Originally Posted by jouster View Post


    they use a tried and tested method for drink identification: they write your name on the cup.





    Have they patented that ?? it sounds like a promising innovation!
  • Reply 19 of 41
    hattighattig Posts: 831member
    Not a fan of the Starbucks example. However if my local curry or chinese had a website that I could order on, I could see myself browsing the options whilst I was on the train, placing an order, then by the time I'm there it would be ready for my to pick up. That would be incredibly useful, and certainly contribute to my general lack of healthy behaviour.



    Of course I could just ring them and place the order instead.
  • Reply 20 of 41
    gqbgqb Posts: 1,934member
    Keep pumping that $250 price, Gene.

    As for me, once bitten, and all that. If it hits $200 again, I'll be profit taking.



    I've liked the idea of iPod as generalized debit card tho' ever since that became the obvious goal with the Starbucks announcement last year. But I don't think that will be widely available until there' some sort of agreed-upon protocol. IP$ ?
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