Analyst Maynard Um of UBS believes that Apple's purchase of online music service Lala is part of a broader strategy for the company to provide users the ability to have their media with them anywhere and everywhere. In a research note to clients obtained by The Mac Observer, Mr. Um said that this will broaden Apple's halo approach and be a draw that, "drives future additional Apple product sales."
Mr. Um also tied the purchase into Apple's data center development in North Carolina, writing, "We believe the Lala acquisition fits into our view that Apple is building a data center for a service to provide seamless access and mobility of digital content across all its products including media-focused content of iTunes and user-generated content of MobileMe."
Reports that Apple was buying the online service surfaced Friday afternoon, with several mainstream news outlets piling on throughout the day. After not commenting to Bloomberg and issuing a non-denial to The New York Times on Friday, Apple finally confirmed the news over the weekend.
Lala is, in some ways, a competitor to Apple's own iTunes Store, but the company has also developed services such as Web-only song purchases for $.10 and the ability to access music already on your hard drive through Lala, bringing your Lala purchases and existing music library together through a browser.
Mr. Um reiterated his price target of $280 per share for AAPL, and his "Buy" rating. The markets, however, are so far having none of it, and have continued Apple's recent sell-off. As of this writing, Apple was trading at $190.58, down $2.74 (-1.42%), on moderately strong volume.
*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.