Apple Exec: Shuffle Grabs 58% of Flash Player Market; What Cell Phone Threat?

On the market less than six months, Appleis iPod shuffle has grabbed a 58% share of the flash-based digital media player market, up from 43% in February, company chief financial officer Peter Oppenheimer has told Merrill Lynch analyst Steven Milunovich in a recent interview.

In a report to clients released Wednesday and obtained by The Mac Observer, Mr. Oppenheimer said the Apple executive told him preliminary March results from research marketing firm NPD showed the shuffleis market share rose from 43% in February to 58% in March, what Mr. Milunovich characterized as "a stunning figure."

Mr. Oppenheimer reportedly said Apple was "supply-constrained in March and will be interested to see the April (sales) data." Mr. Milunovich said he was told by the exec that "Apple isnit feeling competitive heat yet" in the digital media device market from the likes of Creative, Sony, iRiver and others.

The Apple CFO reportedly told Mr. Milunovich NPD numbers also showed Apple with a 90% market share in hard disk-based players -- such as its iPod and iPod mini -- while its iTunes music store market share was above 70% in March. In Japan, Appleis said it controls 40% of the market with its iPod player, but gave no evidence as to where their numbers came from.

Representatives of NPD were not immediately available to confirm the numbers from Mr. Oppenheimer. As for Appleis numbers of market share for online music sales, Apple is calculating itis own market share number based on its knowledge of downloads from its iTMS and subtracting from the total number of online music service downloads reported weekly by Nielsen/SoundScan.

Cell phone threat minimal, exec says

Mr. Oppenheimer said Apple "doesnit appear concerned" about the future threat from cellular phones that play music.

"(Apple) management argued that iPod will remain the best way to manage and listen to music with MP3 capability in handsets more complementary than a replacement," Mr. Milunovich wrote. "The negatives of music on a handset include a worse user interface and limited battery life," he said he was told.

Mr. Oppenheimer said he "doesnit foresee problems working with (cellular) carriers," to employ iPod features in mobile phones.

The Wall Street analyst said he expects "wireless and video capability" in iPods before the Christmas buying season, but gave no indication if Mr. Oppenheimer hinted of such a product or not. "Our guess is that iPod will run short video clips," he wrote. Appleis long time policy has been to not discuss un-announced products.

Mac TV spots on the horizon?

Mr. Milunovich did not say he was told so specifically, but wrote to clients that "Macs may be more advertised" on television in the U.S. in the near future. The Wall Street analyst said "we look for coming Mac ads to aid the halo effect."

Mr. Milunovich reiterated his iBuyi rating on Apple stock (AAPL) with a price target of US$51 per share.

"We believe Appleis emerging consumer franchise can grow earnings and cash flows," he wrote. "Apple?s earnings growth could have upside surprises due to Apple?s emerging strategic position in the digital home."

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