Apple's Lead in Digital Music Tough to Beat, Analyst Says
TMO Reports - Apple's Lead in Digital Music Tough to Beat, Analyst Says
by , 10:20 AM EDT, August 8th, 2005
Apple Computer's dominance in the digital music world will be a tough nut to crack for the likes of Sony, Microsoft and others as the iPod maker continues to have a "substantial lead and advantage" over its competitors, according to analyst Shaw Wu of American Technology Research.
In a report obtained by The Mac Observer, Mr. Wu said that after a sit-down meeting with Apple executives late last week, he is convinced that despite efforts by competitors to cut into its 70%-plus market share in both MP3 players and music downloads, Apple is showing no signs of faultering.
"Progress is being made by the Windows Media camp (to cut into Apple's lead), but coordination and integration are proving difficult because of the many vendors involved including systems, semiconductor, software, content, and service providers, with their various agendas and diverse geographies," he wrote.
Mr. Wu said Apple "remains comfortable" with its current iPod inventory levels when measured by weeks, but that he remains "concerned with higher absolute levels of inventory due to the much greater number of store fronts (25,000 vs. 17,000 from a year ago) where one can purchase an iPod." Additionally, Mr. Wu said he has some concern about "excess inventory" Apple will be stuck with after Hewlett Packard ends its selling of the iPod line under its name.
Mr. Wu also said that Apple "could use the upcoming keynote by Steve Jobs at the Apple Expo 2005 event in Paris (September 20-24) to make a significant announcement beyond just new iPods. We believe this could be new markets including music subscriptions and video and the ever-elusive (Motorola-made) iTunes cell phone."
He made no change in his recommendation of Apple stock, saying "our fundamental view on (Apple) remains (as) 'Hold'" with a target price of US$42.
Observer Comments
Mon Aug 08, 2005 10:31 am Subject: The problem for iPod Killers
Apple's position is fairly solid because of the existing investment consumers have made in iPods and the half a billion songs from The Music Store. The problem iPod Killers face is the fact that customers investment in music would be lost on a different MP3 for all practical purposes - that's a hard challenge to overcome - especially when all competitors share a small market share and MS has not been all that successful in providing a solid solution. Add in the fact that Apple is going to continue to invest in R&D for the iPod and competitors face a tough market.
Mon Aug 08, 2005 1:32 pm Subject: market conversion
Apple is doing a good job of converting the market for Music in general from CDs to iPod and iTunes. Unless someone steps up soon to challange them, Apple will own the market for music until the next technology change occers. If you estimate the global market for MP3 players (several hundred million by my guess) and divide by Apple's current iPod run rate of about 25 million per year, Apple clearly has a way to go, but the window for someone to mount a meaningful challange will probably close in 2-3 years.
All bets are off if someone comes up with a quantum leap in the technology. Failing that, Apple are getting close to having a lock on the market, IMHO.
Mon Aug 08, 2005 1:32 pm Subject: the sky is falling!
Mon Aug 08, 2005 1:44 pm Subject: re: the sky is falling!
Mon Aug 08, 2005 3:54 pm Subject: Don’t feed the troll
QuoteAnonymous Coward wrote:
Just waiting for his response
AC: Don’t feed nor bait the troll. We don’t need her stupid opinion around here, nor your own moronic chatter, if that’s all you can think to say.
On Topic: I certainly hope the “substantial announcement†is more substantial than an iTunes phone, which has become nothing more than a big yawn at this point. If that’s all it is, i’ll be disappointed. I want to be utterly dazzled. Give me a tablet computer, a home media center, or buxom redhead… something truly sexy please!
While I'm a big fan of the iTunes music application, and the iPod as well, I believe most consumers don't really realize that any music they buy from the iTunes music store won't be compatible with another player (than the iPod).
When music fans consider getting an MP3 player, something other than an iPod for their next purchase (perhaps price, perhaps a desire to try a music subscription service) and then try to move their iTunes purchased music over to their new (MS/WMA) player man will be surprised! And I think quite ticked off with Apple that they can't take the music they purchased with them. Hardly fair use. This will either generate some badwill to Apple and/or further dampen the desire to support legitimate digital music services. The format wars are going to kill this otherwise exciting business model.
Brian FitzGerald
Au contraire nothing currently prevents anyone from ripping their entire itunes collection and uploading it to another vendor's MP3 player except time and the will to do it. But why would you go to all that trouble to prove you have just made a very unwise purchase. I have a little over 400 songs on my 15 gig Ipod which is about 10% capacity. Actually you could just use Itunes to convert all your music files to MP3's and just copy it to your rogue vendor MP3 player assuming that any MAC or PC would launch this player as a spare hard drive. Another vendors player would probably launch as a spare HD on a MAC without a problem. Have Itunes spit out the MP3 version of your songs on the desk top and then just drag them to the other vendor's player. If that does'nt work then you rip and burn them to CD's to get around the DRM issues.
Guest View One:
While I'm a big fan of the iTunes music application, and the iPod as well, I believe most consumers don't really realize that any music they buy from the iTunes music store won't be compatible with another player (than the iPod).
When music fans consider getting an MP3 player, something other than an iPod for their next purchase (perhaps price, perhaps a desire to try a music subscription service) and then try to move their iTunes purchased music over to their new (MS/WMA) player man will be surprised! And I think quite ticked off with Apple that they can't take the music they purchased with them. Hardly fair use. This will either generate some badwill to Apple and/or further dampen the desire to support legitimate digital music services. The format wars are going to kill this otherwise exciting business model.
Guest View Two (Re: Guest View One):
Au contraire nothing currently prevents anyone from ripping their entire itunes collection and uploading it to another vendor's MP3 player except time and the will to do it. But why would you go to all that trouble to prove you have just made a very unwise purchase. I have a little over 400 songs on my 15 gig Ipod which is about 10% capacity. Actually you could just use Itunes to convert all your music files to MP3's and just copy it to your rogue vendor MP3 player assuming that any MAC or PC would launch this player as a spare hard drive. Another vendors player would probably launch as a spare HD on a MAC without a problem. Have Itunes spit out the MP3 version of your songs on the desk top and then just drag them to the other vendor's player. If that does'nt work then you rip and burn them to CD's to get around the DRM issues.
Mon Aug 08, 2005 7:34 pm Subject: Re: Guest View One
You use the phrase Fair Use as if Apple isnt as open as its competition. Get yer fuckin' facts right before assuming you are. Because you're not. I've already wasted so much air trying to force feed truth down ignorant throats that no, i'm not going to link, i'm not going hint, i'm not going to do anything other than to say A: WMA sucks ass and is NOT open either, and B: both parties are guilty of trying to make money. Welcome to the fuckin united states of america.
:: goes back to bed. obviously woke up in foul mood ::
"While I'm a big fan of the iTunes music application, and the iPod as well, I believe most consumers don't really realize that any music they buy from the iTunes music store won't be compatible with another player (than the iPod).'
Maybe most consumers don't realize that because it isn't true. Every single song downloaded from the iTMS can be converted to MP3 and loaded on to any other MP3 player in existance. As a big fan, shouldn't you know that?
"When music fans consider getting an MP3 player, something other than an iPod for their next purchase (perhaps price, perhaps a desire to try a music subscription service) and then try to move their iTunes purchased music over to their new (MS/WMA) player man will be surprised!"
You're clueless. The problem you're talking about doesn't exist.
"And I think quite ticked off with Apple that they can't take the music they purchased with them."
Maybe in your fantasy world, but here in reality, they CAN take the music they purchased with them wherever they go, and on whatever MP3 player they use. I mean, you did know it's really, really, really easy to convert AAC tracks to plain unprotected MP3, right? But that makes your argument fly right out the window, so... Did you miss that fact on purpose or on accident?
"This will either generate some badwill to Apple and/or further dampen the desire to support legitimate digital music services. The format wars are going to kill this otherwise exciting business model.
Brian FitzGerald"
Bad will? When? Do you know how long the iPod/iTMS combination's been out? If Apple's business model could generate bad will, it would have a long time ago. And what format wars? When the iTMS won, AAC won. There aren't any format wars.
<Maybe in your fantasy world, but here in reality, the iTMS login prompt can trick users into getting music they purchased on accident. >
I think the fantasy world is yours! If you've ever bought music from the ITMS, you'll recognize the little dialog box that asks you once again: "Do you Really want to buy this?" or words to that affect. Nobody's gonna get fooled by that, unless you've purposefully turned that dialog box off, in which case you've just screwed yourself!
And I don't think that a business model that just sold over a million downloads in its first four days open in Japan is "going out of business". Get a life, troll!
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