The joint announcement from EMI and Apple that the iTunes Store will be offering DRM-free tracks will translate into even more music sales for the iPod maker, according to Piper Jaffray analyst Gene Munster. As additional consumers start purchasing songs from the iTunes Store, Apple will also likely see an increase in iPod sales.
"We expect increased iTunes music sales, because the removal of DRM takes away one barrier to entry into the iTunes+iPod ecosystem," he said. "This effect could also result in more iPod sales as consumers have positive experiences with iTunes+iPod and the overall move to the digital music world gets easier."
Mr. Munster added that as the iTunes user base grows, iPod sales will climb as a result of positive consumer experiences with Appleis music-related products.
Since iTunes does not sync with non-iPod products, only tech-savvy users are expected to use other MP3 players with iTunes Store purchases. He commented "[Other MP3 players] will not sync as simply as an iPod does in iTunes. We believe this will keep most users from using MP3 players other than iPods with iTunes."
Mr. Munster is maintaining his "Outperform" rating and target price of US$124 for Apple stock. Apple is currently trading in the pre-market at $93.85, up 0.94 (1.01%).
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