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Apple Reportedly To Sell iPods In Target Retail Outlets, Could Have Major Impact On Bottom Line

Apple Reportedly To Sell iPods In Target Retail Outlets, Could Have Major Impact On Bottom Line

by , 3:00 PM EDT, October 24th, 2002

News.com is reporting, [Edit: ThinkSecret seems to have broken the story first. - Editor], that Apple will be selling iPods through Target's retail outlets, giving Apple a much broader exposure to mainstream consumers. Apple also recently announced a deal with once and future Apple retailer Best Buy for the same thing. The piece quotes Charles Wolf, an analyst with Needham, who says that Apple might be able to move as many as half a million iPods this quarter because of the Target deal. If that should be the case, it would offer a significant boost to Apple's bottom line. From the News.com article:

The Mac maker declined to comment on the move, although several Target stores confirmed they had the devices on hand, with stores reporting both Macintosh and Windows models on hand. A corporate spokesperson for Target Stores was not immediately available for comment.

The move broadens Apple's distribution of its popular MP3 music player in time for this year's holiday shopping season.

"It could sort of save the December quarter given the sorry state of home PC sales," said Needham analyst Charles Wolf, who owns Apple shares.

Wolf estimated that Apple might be able to sell as many as half a million of the devices this quarter, assuming the company can grab about 15 percent of the world market for portable music players and sales reach the 4 million units that some market researchers are projecting.

If so, Wolf said Apple might be able to do better than its recent estimate that sales for the quarter would be "slightly up" from last quarter.

There is more information, including more commentary, in the full News.com article.

The Mac Observer Spin:

Apple CFO Fred Anderson was asked during the company's recent Q4 conference call (also see our recap from the Q4 results for more information) whether or not Apple would be trying to place the iPod in additional retail outlets. At the time, Mr. Anderson played coy, saying that Apple was always looking for more places to market its products. If this News.com article is right, Apple has found a dandy. About the only place better than Target would be retail monster Wal-Mart. An arrangement with that outfit would blow the doors off of Apple's iPod sales. Until and if that occurs, however, the company has done an outstanding job by bringing Best Buy and Target on board. This should yield some excellent results for the company.

If Apple brings in US$250 as an average price to Apple for iPods sold, a number we base only on educated guessing, 500,000 units sold would mean somewhere around US$100 million added to Apple's revenue. That's new revenue, coming largely from Windows users buying the Windows version of the product. That is a Very Good Thing™ indeed. Also note that if Apple does indeed place iPods in Target stores, it will offer the company massive exposure, again to a very non-Mac specific audience.

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