Merrill Analyst Still Expects Flash-Based iPod in Early 2005

Merrill Lynch analyst Steven Milunovich reiterated Monday that he still expects Apple Computer to unveil a flash memory-based iPod in the first quarter of 2005.

In a research note obtained by The Mac Observer, Mr. Milunovich wrote that he believed the new device will be priced between US$149 and $199 and that it could possibly be announced at Macworld Expo San Francisco beginning January 10. He made the same prediction back on October 25 in a commentary first reported by TMO.

Mr. Milunovich wrote that the MP3 flash market is five times the size of the hard disk drive-based player market in units and about two times in revenue. It is also fragmented with the leader, Samsung, at only an 8 percent share. The flash MP3 market is expected to be $2.6 billion in 2004, slightly larger than the HDD player market at $2.3 billion. Combined, the music player market could be $8.1 billion by 2006.

"This is a market Apple should want to participate in because it will pull new customers into the iPod/iTunes iecosystem,i he wrote. "We believe consumers will hesitate to switch once they become accustomed to the iPodis scrollwheel or have purchased a number of iTunes (which only work on iPods). The land grab is on."

It should be noted that Mr. Milunovich was also the same analyst who predicted the iPod photo would not debut until sometime next year. Instead, it was announced within a week of his original prediction on October 25.

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