Apple seen introducing cheaper, more innovative Wi-Fi iPods
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.
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.
Comments
"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.
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.
Munster is incredibly unreasonable with his $250 target. Maybe it's a 5 year price target...
$250 shares? They're at $130 now, what is he thinking?
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.
Not to mention how much more work it becomes for those kids behind the counter.
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.
"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?
"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?
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?
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.
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?
Apple seen introducing cheaper, more innovative Wi-Fi iPods
Seen where exactly?
Someone's imagination doesnt count, no matter HOW well informed they are
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!
Of course I could just ring them and place the order instead.
As for me, once bitten, and all that. If it hits $200 again, I'll be profit taking.
I've liked the idea of iPod as generalized debit card tho' ever since that became the obvious goal with the Starbucks announcement last year. But I don't think that will be widely available until there' some sort of agreed-upon protocol. IP$ ?