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TMO Reports - Piper Jaffray: Apple Will Hit Street iPod Expectations in June Qtr.
by , 12:25 PM EDT, June 24th, 2005
On Friday, Piper Jaffray analysts Gene Munster and Michael Olson issued a new research report that begins: "The Street is generally aware that Apple will likely not show significant upside for iPod in the June quarter, but we do believe Apple will hit the Street iPod number of 5.5m units, up from 5.3m in March." Based on a survey the analysts conducted with 100 non-Apple U.S. retailers, they also believe that "the iPod business will reaccelerate as Apple enters into the seasonally strong September and December quarters."
Mr. Munster and Mr. Olson's survey touched on Best Buy (25 stores), CompUSA (25), The Good Guys (25), Circuit City (15) and Fry's (10). When asking about devices with 5GB or more storage capacity, they found that 63% of the sales reps they talked to recommended an iPod, with the 6GB iPod mini and the 20GB iPod the most popular two choices. In the under 5GB of storage category, 52% of the salespeople recommended the iPod.
Among salespeople who direct customers toward an iPod, 32% of them do so because they think it's easy to use, while 21% see believe that what Mr. Olson and Mr. Munster call "the massive eco-system of iPod accessories" is reason enough. 14% of them like the integration with iTunes.
Among all the salespeople who don't recommend the iPod, 25% pointed to the lack of an FM receiver while 14% think the iTunes requirement is too limiting and another 14% believe that other devices are simply better. In the 5GB or more storage category, 19% of the sales reps who don't prefer the iPod lead customers to a Creative MP3 player while 11% like what iRiver has to offer. In the under 5GB of storage segment, 13% of them recommend Rio's devices and 12% like Creative.
According to Mr. Munster and Mr. Olson, the big picture view of Apple is that the company's "domination in digital music is a critical piece to the story, but we do not believe iPod is the only growth avenue for the company." They continue to see evidence of the halo effect, pointing to NPD sales data that showed Apple picking up 2% U.S. retail market share in May, and "expect that by the end of [calendar year 2005] more than 35m iPods will have shipped, providing Apple with a greater scope of awareness for various products."
The analysts maintain their "Outperform" rating on Apple's stock and have set a US$52 12-month target price. As The Mac Observer posted this article, Apple's stock was at $38.41, down 1.23% for the day.
If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.
Observer Comments
Fri Jun 24, 2005 3:13 pm Subject: iTunes Distribution Forced To Shutdown
Fri Jun 24, 2005 3:32 pm Subject: Re: iTunes Distribution Forced To Shutdown
QuoteRealityCheck wrote:
Stockholders, there may be a small problem ahead for Apple. A court is about to order that iTunes distribution be shutdown. Don't sell your stock now, wait till it's worthless. Check the facts:
http://www.theregister.co.uk/2005/06/21/apple_sued_over_itunes/
So all software that transfers music to portable devices is going to be shut down?
That does suck.
Fri Jun 24, 2005 3:35 pm Subject: You just have to stand in awe.
You just have to stand in awe with the BS RealityCheck spews. I for one solute you.
QuoteRealityCheck wrote:
Stockholders, there may be a small problem ahead for Apple. A court is about to order that iTunes distribution be shutdown. Don't sell your stock now, wait till it's worthless. Check the facts:
http://www.theregister.co.uk/2005/06/21/apple_sued_over_itunes/
Now back to reality (pun intended). As most of you know that there have been for quite some time other.
Quotehttp://www.theregister.co.uk/2005/06/21/apple_sued_over_itunes/ wrote:
a "computer control system and user interface for media playing devices" in which "the system provides a user interface for allowing a user access to media pieces stored in a media database".
It still amazes me the that anything innovative happens at all in this country with patents like this. Now as far as shutting down iTunes there is still the problem of defeating Apple's legal ninjas.
QuoteRealityCheck wrote:
Stockholders, there may be a small problem ahead for Apple. A court is about to order that iTunes distribution be shutdown. Don't sell your stock now, wait till it's worthless. Check the facts:
http://www.theregister.co.uk/2005/06/21/apple_sued_over_itunes/
Where is in the article does it say that a court is about to "shut down" iTunes distribution? All it says that the plaintiff is asking the court to "ban" iTunes distribution, doesn't mean that it is going to happen.
Not to worry fellow ilemmings
Fri Jun 24, 2005 11:50 pm Subject: Actually
It should be an interesting case to watch if it ever goes to court, because as goes iTunes, so goes EVERY OTHER JUKEBOX SOFTWARE IN EXISTENCE. They all do the same basic tasks. If he doesn't sue everybody else, I'm sure a judge will notice that he is only suing Apple because he thinks he can get money from them rather than to protect his patents. And it also doesn't bode well that he waited nearly 10 years to do this, since jukebox software has existed for almost that long. You need to protect patents early in the game rather than waiting for several years, otherwise it is essentially abandoned.
QuoteInteresting. Personally, I find two of these reasons rather weak. One buys an iPod because one wishes to listen to one's OWN music, not what is on the radio. I don't think a radio is a "core feature" for many users.Among all the salespeople who don't recommend the iPod, 25% pointed to the lack of an FM receiver while 14% think the iTunes requirement is too limiting and another 14% believe that other devices are simply better.
The link to iTunes is similar - the iPod comes bundled (effectively) with an easy to use software program that is supported on both major consumer platforms. Unless what they actually mean is that they think the iTMS is too limiting. This is possibly a reasonable opinion, although it's certainly possible to use any source of unencoded music with iTunes/iPod.
The third is a reasonable opinion.
One thing I note is missing is any discussion of FairPlay vs WMA as a restriction. Or perhaps this is what they mean by "iTunes"?
Mon Jun 27, 2005 1:06 am Subject:
Back to the topic at hand, Apple should hit the quarter's iPod traget set by the Street. I suspect there's one more decent holiday season for the iPod in its current form before product development (and competition) push Apple to expand the product line and add additional features to the popular device.
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