Analyst: Apple's bigger picture is becoming clear
After returning from yesterday's media event in Cupertino, analysts for American Technology Research said they were a bit "underwhelmed" with Apple's product announcements and now believe the company is making less visible progress in building a broader digital entertainment portfolio.
"At first, we felt a little underwhelmed with the product announcements [...] due to our expectation of more announcements," analyst Shaw Wu wrote in a research note distributed to clients on Wednesday. "But after morecareful thought and consideration, we believe Apple is making less apparent progress in building a broader digital entertainment portfolio with both its Macs and iPod+iTunes franchises."
In the analyst's view, the new Mac mini has evolved into a competitive compact entertainment center with faster Intel processors, giving it processing muscle previous PowerPC G4 processors didn't deliver. "In addition, to us it screams connect me to a TV with the inclusion of a remote control, Gigabit Ethernet, Wi-Fi, Bluetooth, DVD burner, enhanced Front Row software with Bonjour file sharing and streaming, and more robust display options (DVI, VGA, S-video and composite video output)," Wu wrote.
He also believes the new Front Row software with Bonjour auto-discovery file sharing capability is further proof of Apple's commitment to leading the industry in ease-of-use. "Bonjour software capability essentially allows iTunes clients to 'auto-discover' one another, making a product like a Mac mini a more powerful entertainment hub," Wu wrote.
However, the analyst finds the dual-core Mac mini's price point of $799 to be a bit steep, and suggest the company add more features in the future including PVR recording and TV-tuner capabilities, which "would arguably make it the most powerful digital entertainment center on the the market. Still, he notes that comparable Windows PCs cost around $900-1400.
Interestingly, Wu said, the new Mac mini is the first Intel Mac to utilize Intel integrated graphics versus the ATI Radeon graphics processor used in the previous Mac mini design. He also points out that the previous PowerPC-based Mac mini appears to have been discontinued -- a positive indicator that Apple has tight control of its inventory levels.
Meanwhile, the analyst notes Apple's announcement of the iPod Hi-Fi indicates the company is entering into a product category that's proven to be a hit with customers -- the iPod speaker space.
"To minimize disruption, Apple is entering the mid-range segment with the $349 price point versus $99 at the low-end and $1000 at the high-end," he wrote. "The difference with Apple's product is that it is more integrated and focused on delivering quality and bass in a single package."
American Technology Research continues to believe that Apple's fundamentals remain sound and arguably among the strongest in technology. However, the firm notes that negative investor sentiment and the company's "weak technicals" may indicate further drops in share price.
"Absent of technicals, for longer term fundamental investors, we would take advantage of the pull-back to build and/or add to Apple positions," the firm said.
American Technology Research maintains a 'Buy' rating on Apple shares with a price target of $101.
"At first, we felt a little underwhelmed with the product announcements [...] due to our expectation of more announcements," analyst Shaw Wu wrote in a research note distributed to clients on Wednesday. "But after morecareful thought and consideration, we believe Apple is making less apparent progress in building a broader digital entertainment portfolio with both its Macs and iPod+iTunes franchises."
In the analyst's view, the new Mac mini has evolved into a competitive compact entertainment center with faster Intel processors, giving it processing muscle previous PowerPC G4 processors didn't deliver. "In addition, to us it screams connect me to a TV with the inclusion of a remote control, Gigabit Ethernet, Wi-Fi, Bluetooth, DVD burner, enhanced Front Row software with Bonjour file sharing and streaming, and more robust display options (DVI, VGA, S-video and composite video output)," Wu wrote.
He also believes the new Front Row software with Bonjour auto-discovery file sharing capability is further proof of Apple's commitment to leading the industry in ease-of-use. "Bonjour software capability essentially allows iTunes clients to 'auto-discover' one another, making a product like a Mac mini a more powerful entertainment hub," Wu wrote.
However, the analyst finds the dual-core Mac mini's price point of $799 to be a bit steep, and suggest the company add more features in the future including PVR recording and TV-tuner capabilities, which "would arguably make it the most powerful digital entertainment center on the the market. Still, he notes that comparable Windows PCs cost around $900-1400.
Interestingly, Wu said, the new Mac mini is the first Intel Mac to utilize Intel integrated graphics versus the ATI Radeon graphics processor used in the previous Mac mini design. He also points out that the previous PowerPC-based Mac mini appears to have been discontinued -- a positive indicator that Apple has tight control of its inventory levels.
Meanwhile, the analyst notes Apple's announcement of the iPod Hi-Fi indicates the company is entering into a product category that's proven to be a hit with customers -- the iPod speaker space.
"To minimize disruption, Apple is entering the mid-range segment with the $349 price point versus $99 at the low-end and $1000 at the high-end," he wrote. "The difference with Apple's product is that it is more integrated and focused on delivering quality and bass in a single package."
American Technology Research continues to believe that Apple's fundamentals remain sound and arguably among the strongest in technology. However, the firm notes that negative investor sentiment and the company's "weak technicals" may indicate further drops in share price.
"Absent of technicals, for longer term fundamental investors, we would take advantage of the pull-back to build and/or add to Apple positions," the firm said.
American Technology Research maintains a 'Buy' rating on Apple shares with a price target of $101.
Comments
Apple is in the business of selling video and tv content through the iTMS for $1.99 an episode. That is their business model... SELLING CONTENT..
They'd be shooting themselves in the foot and PISSING OFF all of their network content partners if they offered PVR functionality on the mini or any Mac.
It doesn't make sense to sell a computer that will out of the box record television content for free and then expect people to buy that same content from the ITMS for $1.99.
It ain't gonna happen..
I think that this quarter will be a bit lackluster despite the Billionth song on itms.
I also believe that this quarter more is going on behind the scenes than We would be led to believe.
With April 1st and the still hoped for but as yet unannounced 30th anniversary event looming, I think that Apple will take that opportunity to Release something that will be groundbreaking.
This event was more about keeping Apple in the eye of the Press and about mindshare than anything else. Two products that are solid and mid priced were released. The mini shows that apple is serious about honing this little gem. Within a very short period of time the mini will evolve into its true calling and that is a direct threat to the Microsoft Media Center.
The mid priced "boombox" is also a solid plant in the lucrative ipod speaker market. Apple has data that would suggest that products like the Bose Soundock are strong sellers. Apple clearly wants a piece of this market. This is well in keeping with apple's strategy in the past. Apple often cannibalizes or copies products that have been demonstrated to work well with its products.
I maintain a Buy rating on Apple (nasdaq AAPL)
There, I have stated the obvious and nothing all of you don't already know.
Originally posted by solsun
If this guy is really an analyst why can't he understand that the Mac Mini will never include PVR functionality?
Apple is in the business of selling video and tv content through the iTMS for $1.99 an episode. That is their business model... SELLING CONTENT..
They'd be shooting themselves in the foot and PISSING OFF all of their network content partners if they offered PVR functionality on the mini or any Mac.
It doesn't make sense to sell a computer that will out of the box record television content for free and then expect people to buy that same content from the ITMS for $1.99.
It ain't gonna happen..
I agree completely. The PVR part will come from 3rd parties like elgato or even TIVO itself. Only at the very end after itms has evolved significantly from its current state will we see pvr capability and I think that the PVR capability will occur WITHIN itms very much like podcasts are handled now via a subscription.
So, Buy a whole season of lost $30 then 5 minutes after the airing on regular TV you would see the episode download to your mini automagically.
Look it is a $599 PC, with a remote control, 4 USB ports, wireless, bluetooth, firewire, digital audio in/out, iLife, Front Row, can access 64MB of DDR2 RAM for video, wirelessly streams video/music, photos around the house with zero configuration, and handles all of Tiger's requirements and HD video. What else does it need to do? Good lord! Get a grip!
As for the PVR functionality, just add an Elgato and it'll do everything you want.
Some people really want blood for $599 don't they...
If this guy is really an analyst why can't he understand that the Mac Mini will never include PVR functionality?
Apple is in the business of selling video and tv content through the iTMS for $1.99 an episode. That is their business model... SELLING CONTENT..
They'd be shooting themselves in the foot and PISSING OFF all of their network content partners if they offered PVR functionality on the mini or any Mac.
It doesn't make sense to sell a computer that will out of the box record television content for free and then expect people to buy that same content from the ITMS for $1.99.
It ain't gonna happen..
uuuuh...do they make profit from iTMS? No. Where does Apple's money come from? Hardware. Stuff that PLAYS content. Macs and iPods.
What will sell Mac minis?
PVR.
What will the next Mac mini have?
PVR.
IF it doesn't?
Someone will make the software and/or hardware. And therefore it will cost us more, but we'll still buy it. Why? Because it will be the best solution on the market. Just like the Mac is the best computer on the market and the iPod is the best music player on the market.
Apple's high volume computers are now running on Intel. Some %60 of their lineup is Intel now and the transition is going along smoothly. Far smoother than the 68k to PPC transition which seemed like it took forever.
Frankly the pieces to a completely converged solution aren't ready. You basically need.
1. A working DRM solution for the entire computer
2. Fast CPU and preferrably some GPU acceleration.
3. An easy 1 connector A/V solution like HDMI/UDI
4. Media management software including DVR
5. Great wired and wireless networking 802.11n
We still need more pieces to come together. Apple is preparing people nicely though with the IR remotes and Front Row
Originally posted by Aquatic
[What will the next Mac mini have?
PVR.
IF it doesn't?
Someone will make the software and/or hardware. And therefore it will cost us more, but we'll still buy it. Why? Because it will be the best solution on the market. Just like the Mac is the best computer on the market and the iPod is the best music player on the market. [/B]
Umm.. PVR already available for Mac for many years from www.elgato.com
If you have to have PVR on your mini, you can.. RIGHT NOW. Good lord I wish people would check their facts.
If I'm paying $50 a month for Comcast right now with my HD DVR why the hell would I spend $1.99 for a show that I can record on my DVR?
The answer is I wouldn't unless I missed an epsidoe that I couldn't record at a later date. The point here is that online downloads are not a viable solution for people already buying their TV entertainment in bulk. Well viable is a touch harsh let's just say you're not going to get high volume business.
Budets are finite and a la carte pricing means that it's easy to throttle back or cancel planned purchases. Apple would be foolish to think that the downloading and consumption of video follows the same trajectory of music.
(Also--the Mac Mini has always had those same 4 display options, it's not new.)
Originally posted by Tommo_UK
As for the PVR functionality, just add an Elgato and it'll do everything you want.
Some people really want blood for $599 don't they...
I have an Elgato and it leaves a lot to be desired. Many digital cable channels are missing or have no audio and there is no way to watch encrypted content at all. People want an integrated solution matched with Apple software.
Microsoft is making great strides in this area. They will soon have a HTPC with an HDTV tuner and CableCARD 2.0 support.
Plus they'll have iHD built right into Vista that'll kick in for HD DVD or online downloads.
If all Apple has to offer as competition is iPods playing overly compressed iTunes files ..Game Over.
Originally posted by Aquatic
uuuuh...do they make profit from iTMS? No. Where does Apple's money come from? Hardware. Stuff that PLAYS content. Macs and iPods.
What will sell Mac minis?
PVR.
What will the next Mac mini have?
PVR.
IF it doesn't?
Someone will make the software and/or hardware. And therefore it will cost us more, but we'll still buy it. Why? Because it will be the best solution on the market. Just like the Mac is the best computer on the market and the iPod is the best music player on the market.
Wrong!
What will sell Mac minis you ask?
The low cost and the ability to use it as a media center... Hook it up to your tv with a wirless keyboard on the coffee table.. Order a streaming movie rental from the iTMS (coming soon,) switch on front row and watch.
I would love it if a mini had built in PVR functions, but it will not happen.. Content partners would be pissed and it would cost too much.. Elgatos system is $349 alone... That would put the mini around $1000 bucks... It won't happen..
Originally posted by Tommo_UK
I can't believe all this fuss over the graphics capabilities. Do you really think that Joe Public, in the market for a cheap PC, cares a jot about integrated graphics versus a graphics card?
Maybe not, but it was an explicit selling point of the old mini that it could play then-current games at reasonable speeds. Apple even devoted an entire paragraph talking about how bad Intel built-in graphics are and why it's better to have a separate video card on the old mini page.
The real question is not how the new mini's graphics stack up against the now-ancient 9200. The real question is whether this mini, like its predecessor, can play recently-released games at a reasonable clip.
Originally posted by AppleInsider
"At first, we felt a little underwhelmed with the product announcements [...] due to our expectation of more announcements," analyst Shaw Wu wrote in a research note distributed to clients on Wednesday. "But after morecareful thought and consideration, we believe Apple is making less apparent progress in building a broader digital entertainment portfolio with both its Macs and iPod+iTunes franchises."
I think it's a sign of the times that journalists these days turn 'Apple doesn't appear to be making much progress' into something positive rather than another "Apple is dying" article.
Originally posted by hmurchison
I'll likely never use digital downloads for movies using iTunes.
If I'm paying $50 a month for Comcast right now with my HD DVR why the hell would I spend $1.99 for a show that I can record on my DVR?
The answer is I wouldn't unless I missed an epsidoe that I couldn't record at a later date. The point here is that online downloads are not a viable solution for people already buying their TV entertainment in bulk. Well viable is a touch harsh let's just say you're not going to get high volume business.
Budets are finite and a la carte pricing means that it's easy to throttle back or cancel planned purchases. Apple would be foolish to think that the downloading and consumption of video follows the same trajectory of music.
You need to think about this a little differently. Let me lay it out...
I currently have the following (TV/movie) entertainment monthly costs:
Cable: $14 (+ tax)
Netflix: $17 (+ tax)
TiVO: $13
Total: $45
Now...if Apple provides me with a solution that replaces the true value I get from these three combined for the same (or slightly higher) average monthly cost, I might go for it.
For example, I only watch 3 regular TV programs. Let's say that is 66 episodes a year (monthly breakdowns a little rough here because of the way they do TV shows). At $2/episode we are up to $132/season. This averages out to about $11/month (remember summers are "off"). Plus I don't have to fast forward through commercials or navigate show scheduling conflicts.
Now...suppose we add movies...say they are $3/each...imagine I do 6-7 movies per month...$21/month.
We're up to about $32/month.
Hmmm...I still have room.
Plus I only pay for what I watch (with TiVO and Cable I am paying for everything whether I watch it or not).
Plus I "own" (have access to) everything (as long as I have an Apple "media box").
I think this is where Apple is heading.
They are, plain and simply, planning to reinvent (and "streamline") TV and movie "rentals"/"purchases". Their targets are:
- cable
- TiVO
- Netflix/blockbuster/Hollywood Video
NOTE: I don't assume that the above scenarios works for everyone. But it may just work for enough millions (4-5) to make it worth the try for Apple.
Originally posted by Tommo_UK
Umm.. PVR already available for Mac for many years from www.elgato.com
If you have to have PVR on your mini, you can.. RIGHT NOW. Good lord I wish people would check their facts.
Ummm...yeah, if you want to pay close to a thousand dollars for a Tivo substitute.
why don't we ask dvorak!
... Bonjour file sharing and streaming, and more robust display options (DVI, VGA, S-video and composite video output)," Wu wrote.
Hasn't Bonjour/Rendezvous been around... for like years? And the mac mini has always had those outputs with adaptors. What gives?
You need to think about this a little differently. Let me lay it out
I have a DVR. You're going to have to do VERY good here.
Read your post. It didn't cut the muster.
While I don't want to trivialize your needs the vast majority of people watch more than 3 shows. Hell if I had more time I'd watch 3 sporting events a week.
They are, plain and simply, planning to reinvent (and "streamline") TV and movie "rentals"/"purchases". Their targets are:
- cable
- TiVO
- Netflix/blockbuster/Hollywood Video
The problem is this. With my DVR it manages scheduling conflicts by giving me two tuners. The recorded content is cool and I love it but the magic comes from how it deals with interruptions. You know that errant phone call or emergency that happens. When you first get a DVR you forget that you can pause the show and do what needs immediate attention. It's also allows you to go BACK a certain amount of minutes so you can replay what someone has missed if they come late. Couple this with a way to navigate your cable/satellite options and record only what you truly want to watch and it becomes clear that you are getting your monies worth without a DVR managing your programming.
My ideal Entermainment scenario is
At least 35 channels of HD with DVR
Netflix 3 out at a time
Downloads will not figure prominently into my plans until they
A. Offer HD
B. Give me effective management of my media
C. Are priced effectively as well.
My needs are that of my own but if Apple thinks they can bypass the DVR revolution then they are in for a RUDE awakening. They literally do not stand a chance at success beyond maybe breaking a bit above even. No one I know with a DVR EVER wants to go back to TV the way it was before. Apple hasn't improved anything but Access with downloads whilst in comparison DVRs change the way you manage and watch your media. No contest
Originally posted by hmurchison
My needs are that of my own but if Apple thinks they can bypass the DVR revolution then they are in for a RUDE awakening. They literally do not stand a chance at success beyond maybe breaking a bit above even. No one I know with a DVR EVER wants to go back to TV the way it was before. Apple hasn't improved anything but Access with downloads whilst in comparison DVRs change the way you manage and watch your media. No contest
I agree. And to take it step further, if I had to choose between Tivo/DVR and High-Def, I would choose Tivo without a moment's hesitation.