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AAPL Stock: 102.5 ( + 0.25 )

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ML: Apple building consumer electronics franchise

updated 01:15 pm EST, Wed January 12, 2005

ML report on MWSF

Following Apple's new product introductions at this week's Macworld Expo, analyst Steve Milunovich said he believes Apple is building a sustainable consumer electronics franchise and is showing off its strategic flexibility with its lowest price Mac ever and iPod shuffle, which boasts more capacity than expected for $99. "We believe the Mac mini will sell well to both PC switchers and Mac lovers wanting to put iTunes, iPhoto, and iVideo into entertainment room," the analyst said. "The lower price point could entice PC owners to consider the Mac, particularly those with iPods." Milunovich believes the Mac mini's S-video output could be an overlooked feature that many a Mac lover will use to drive their TVs.

Merrill Lynch also believes Apple is poised to take the top position in the flash-based MP3 market in the next few quarters if the company ramps production, citing attractive pricing on the new flash-based iPod shuffle. "If Apple hits 5% share this quarter, that could be 300,000 units. If it takes off, the number could be much higher, possibly passing the 1 million mark." With a retail price of just $99, the firm foresees the iPod shuffle as a great low-cost gift item, breaking under the key $200 consumer price point versus the iPod mini's $249 price.



Going forward, the firm believes the iMac and iPod need to be positioned to feed off each other. "The new Mac mini should act as a bridge to the iPod in the living room and the basis for an entertainment server." The firm said dropping price points could be the catalyst needed to get consumers to switch from Windows or at least try out the Apple offerings. "There are two interesting target audiences for the Mac mini: the PC Windows switcher and the Mac aficionado wanting to consolidate their digital lifestyle in the family room."



The firm also expressed a favorable reaction to this year's Macworld Expo in San Francisco, which it says was packed with both exhibitors and attendees. "We had trouble navigating the showroom floor as the Mac faithful mingled with the press and investors. The show had a festive atmosphere with attendees jumping at products from QLogic SAN switches to Mercedes iPod attachments to video professional editing systems." Merrill Lynch contrasts this to the last LinuxWorld it attended, which was 'much calmer' despite Linux's growth.



Merrill Lynch maintains its 'Buy' rating for AAPL with a price objective of $78 per share based on a 2.2X EV/Sales ratio, which is an 18% premium to Dell and Lexmark. The firm is modeling earnings of $0.47 for the December quarter on $3.35 billion in sales, stating that strong iPod sales could have pulled up retail and notebook sales, which should help the company's margins.




by MacNN Staff

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Comments

  1. lemuel777

    Joined: Dec 1969

    0

    I agree..but...

    I agree many like myself will try to use the Mac mini as an entertaiment device using the the DVI to Video adapter for only $19.99. But, the problem I have and it's a HUGE problem... there is not an optical sound out port for surround sound. Including that one port would make the Mac mini the ultimate media machine. Or does anyone know of a usb or firewire sound converter that converts to optical out?

  1. Paul Huang

    Joined: Dec 1969

    0

    S-video: get over it

    TFT/plasma is taking over, so get over it. S-video is like a floppy drive. Just like BMW's Christopher Bangle (but I disagree with his 5/7 series design anyway) said: we have to leave some people behind.

    DVI is the way to go. S-video is a baggage that no one will need in 12 months. Apple has been and will always be a forward-looking company.

    I do agree that optical audio is a serious omission.

  1. technocoy

    Joined: Dec 1969

    0

    what we need now...

    is someone like belkin to make a DVI to component converter that looks nice and fits neatly onto the back of this unit. i want to turn this into a home intertainment server so bad, but my HDTV only has component input, as i imagine many do. only the higher end ones have the DVI. this could be HUGE if it get optical and HDTV capability.

  1. awcopus

    Joined: Dec 1969

    0

    S-Video?

    Am I blind. There is no S-Video output on the iMac mini.

    From http://www.apple.com/macmini/graphics.html ...

    "You can use any TV with Mac mini as a display. Some newer HDTV models already sport a DVI connection, but you’ll need the optional S-Video/ Composite Video adapter to use Mac mini with regular TVs."

  1. Paul Huang

    Joined: Dec 1969

    0

    Time to buy a new TV

    It is intentional. S-Video output is not able to allow text under 24 point to be displayed legibly.

  1. Paul Huang

    Joined: Dec 1969

    0

    playing DVD?

    Playing DVD on the iMac mini, you say? If you must use S-video, you should just spend $50 and buy a DVD player. You have to make it simple and leave the unworthy devices behind.

  1. TylerDurden

    Joined: Dec 1969

    0

    S-Video is an adapter

    The S-Video thing is an optional adapter that you plug in to the DVI port... I have one that I used on my G5 tower to play Quicktime videos to a TV... It wouldn't really be a selling point to include an S-Video jack on the back, then mom and pop would think that they could just plug it into an average low Res television and use it as a computer and then get pissed off when they realize how blurry it all is and how you can't read any text... However, a DVD playing off of it will look okay... The Mac mini is meant to be a Mac computer, not a media server... But it's awesome that apple does provide an S-Video jack adapter for those that want to try and make it that.

  1. ender

    Joined: Dec 1969

    0

    Re: I agree..but...

    Your question about an optical out...

    Yes, someone does make a digital optical out (and analog in/out) that hooks up via USB 2.0. It's listed on the Mac mini's accessories page, which links to:

    http://www.m-audio.com/products/en_us/Transit-main.html

    It's a bit pricy ($99), and I'm curious about latency, but they do give an example of using it with DVD Player. Add that and the $20 s-video adaptor, and you have a pretty sweet system for DVD, iTunes, iPhoto, etc. right in your living room.

    Add a SuperDrive and then compare it to the $400-600 set-top DVD burners. With iDVD and all the other iLife capabilities, think it stacks up pretty nicely!

  1. Ratm

    Joined: Dec 1969

    0

    It's already here!

    Elgato, ATI introduce EyeTV Wonder
    January 11 - 16:40 EST Elgato and ATI Technologies today unveiled the jointly developed EyeTV Wonder USB 2.0 analog TV tuner for the Mac. EyeTV Wonder combines ATI TV tuner technology with the EyeTV software to "deliver an unparalleled TV experience." [b]EyeTV software features include on-demand recording as well as remote programming via the included electronic program guide, TitanTV.[/b] EyeTV Wonder will begin shipping at the end of January with a suggested retail price of US$149.

  1. automorrow

    Joined: Dec 1969

    0

    Mac Mini Tech Specs..

    Where can I find the following information:

    What is the schematic and pin voltages for the power adapter plug ( it looks like a new design with several different voltages )

    Can the Mac Mini boot from anything other than the rear power button ( USB or Firewire?)

    Can the CD / DVD eject from a USB / Firewire command or button?


    Why ?... automobile installations...

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