Standard & Poor’s: Apple Is Widely Perceived As The Market Leader In Online Music

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BusinessWeek has published an article from Standard & Pooris analyst Scott Kessler about Real Networks. The article is focused on the challenges facing Real, a company that competes with Apple in streaming content technology, as well as the online music business. Mr. Kessler says that the S&P rates Real Networks a sell, and the article explains why. What we found particularly interesting, however, was a comment about Apple saying the company is perceived as the leader in the online music business, despite so far only catering to the Mac platform. From the article (the specific comment is in the 4th paragraph quoted):

RealNetworksi shares have perhaps benefited from its increasing participation in online music services. This segment has garnered considerable interest following the successful April, 2003, launch of Apple Computeris iTunes Music Store. That same month, RealNetworks announced the acquisition of Listen.com, and in May launched its RealOne RHAPSODY service in conjunction with Listen.com.

We believe that RealNetworks has made significant efforts to be perceived a leader in online music services -- including beefing up the roster of available artists on RHAPSODY, and widening its distribution through kiosks in Best Buy locations.

However, we think these efforts are already reflected in RealNetworksi stock price. We believe the companyis association with the online music segment has piqued the interest of investors in recent months, following a groundswell of optimism related to both significant untapped revenue opportunity and competitive gains due to legal actions the recording industry is taking against file-sharers. However, competition in this area has been mounting and will continue to do so, in our opinion.

Apple is widely perceived as the market leader in online music, despite catering to about only 3% of personal computer users. It plans to launch a version of iTunes for the Windows operating system sometime before yearend. Roxio has indicated that it expects to relaunch Napster as a legitimate online music service in time for the holiday shopping season. According to survey data supplied by Roxio, Napster continues to be a widely recognized brand for digital music. Privately held Buy.com introduced its Buymusic.com service in July, 2003, accompanied by an active advertising campaign.

Thereis a lot more in the full article, including stock ratings for several companies competing in this article. We recommend it as an interesting read.

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