American Technology Researchis Shaw Wu and Piper Jaffrayis Gene Munster on Thursday issued research reports that detail their positive reactions to the new video iPod and redesigned iMac announced by Apple on Wednesday. The Mac Observer has obtained copies of both reports.
"We are very impressed with the video iPod, or ivPodi as we like to call it," wrote Mr. Wu. "We find the pricing of [the 30GB video iPod] interesting at about $10 per GB versus $62 per GB for the universally-loved 4GB iPod nano.
"We might be alone in this, but we believe the 30GB vPod my steal some thunder away from the nanos and vie as one of the imust-havei consumer devices this holiday season ... Consumers obsessed with the smallest size will continue to prefer the nanos."
Mr. Wu cited proprietary checks in formulating two reasons why he thinks Apple has been so aggressive with iPod pricing: "1) test the price elasticity on the nanos to see how much of a premium customers are willing to pay for ismallness,i and 2) send a message to the NAND flash industry that prices still need to drop aggressively to remain competitive with micro-drives."
The analyst also pointed out: "Unlike other MP3 vendors, Apple is not dependent on NAND flash solely and can still sell a lot of iPods with HDDs that deliver superior price performance."
iLaying the Groundworki
Mr. Munster noted that the new iPod has a lot in common with the new iMac, namely the "theme of allowing users to consumer various forms of entertainment content (video, photo, audio) through either a Mac or portable device."
He continued: "Apple is laying groundwork for the iPod to be a device that can leverage all forms of content ... We believe video will be a key part of the iPod family going forward, but in its current form, the library of video content available for use with iPod is limited.
"We look to new video content deals (feature film, etc.) as the next major step to increase usage of video on iPod."
Mr. Wu described the new iPod as "a Trojan horse, much like the original iPod, in moving the industry forward to the digital domain."
iAn Elegant Solutioni
Regarding the new iMac, Mr. Munster said that the new Front Row application, which works with the included remote control, "gives the iMac the feel of a digital media hub."
Mr. Wu concurred, describing the new computer the "first legitimate step by Apple in addressing the emerging home entertainment service space ... We believe Apple has an elegant solution with a superior user interface and we believe these new iMacs will sell as well as PCs.
"However," he added, "we believe Apple still needs to add PVR capability and more video out options to make this enhanced iMac a true contender in the digital home as a home entertainment server."
Despite his upbeat reaction to Wednesdayis news, Mr. Wu maintains his "Hold" rating on Appleis stock, with a $48 price target. "Our concerns with its high valuation, INTC processor transition, slowing growth and high investor expectations remain," he wrote.
Mr. Munster is sticking with his "Outperform" rating, with a $60 price target. "Risks include the fact that Apple is highly dependent on spending trends in the education, consumer, and creative professional markets," he wrote. "Budgetary fluctuations in any of these markets can have a significant impact on Appleis revenue."
At 12:53 PM EST, Appleis stock was selling for $52.44, up $3.19, or 6.48%, for the day. The companyis shares took a beating in after-hours trading on Tuesday, after it announced financial results that were mixed compared to Wall Streetis expectations. However, it closed up for the day on Wednesday on the strength of the excitement surrounding the new products and has continued that trend on Thursday.