Analyst: Teens Hot for iPod, iPhone

by , 8:10 AM EDT, April 10th, 2007

The popularity of the iPod and iTunes Store is on the rise among teenagers, and that will play an important role in the continued success of Apple's music related offerings, according to Piper Jaffray analyst Gene Munster. Piper Jaffray's 13th bi-annual teen survey revealed that of 500 teenagers surveyed the iPod market share grew from 79 percent in fall 2006 to 82 percent in spring 2007.

Based on the survey results, the iPod is the preferred portable media player among teens. 78 percent of high school students own a portable media player, and of those 82 percent are iPods. Sony comes in second at about 4 percent.

"We believe that the teen demographic is a critical component of long-term growth in both markets," Mr. Munster said. "And Apple is clearly leading the category."

Although the iTunes Store is still clearly the market leader for legal music downloads, the study showed that the number of teenagers using the service is down slightly. Of the students that legally download music, 89 percent are using the iTunes Store, compared to last fall when 91 percent were using Apple's online music store.

The iPhone, Apple's combination iPod and smart phone, also ranked well with teens. 84 percent of the teens surveyed where aware of the iPhone, and 25 percent said they would pay US$500 for one.

"Apple's dominance in the portable media and online music markets is going largely unchecked," he commented.

Mr. Munster is maintaining his "Outperform" rating and $124 target price for Apple stock. Apple is currently trading in the pre-market at $93.60. down 0.05 (0.05%).

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