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AAPL Stock: 101.66 ( + 0.23 )

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Analyst: Sony, Napster will not impact Apple

updated 06:05 pm EST, Tue March 8, 2005

Apple vs. Sony vs. Napster

Despite new and Napster, Merrill Lynch maintained its 'Buy' rating on the stock, says that it does believe that either announcement will impact Apple. In a research report released today, analyst Steven Milunovich believes that Sony's new MP3 device will make it a "serious competitor," as they are priced similiarly to Apple's iPod shuffle line, but also offer a small LCD screen and battery life of up to 70 hours on AAA batteries. "We believe these are likely to be solid sellers, but they don't support iTunes and do not have the cache of an iPod....We view Sony as the most serious competitor, but since Apple will be supply-constrained on shuffle it will be difficult to assess the impact in the near term."

Earlier today, Napster CEO Chris Gorog said that he expects Napster to cut into Apple's dominant share of the digital music world with its $14.99 per month subscription service, but Milunovich believes that the subscription service would not be threat to Apple: "We don't see a big impact on Apple because (1) we are not big believers in the subscription model where consumers pay indefinitely to listen to their favorite songs, and (2) if we're wrong, Apple can establish a subscription service with few barriers to entry."




The report said that record label executives also believed that the market would begin to divide among the pay-per-song and subscription models, but that the Labels believed the majority of people would choose to purchase songs--leaving room a much smaller niche market for subscription services.



Concerns over Apple's dominance caused Apple shares to drop by more than 5 percent. However, Merrill reiterated its 'Buy' rating with a price target of $51 per share.




by MacNN Staff

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Comments

  1. jilipa

    Joined: Dec 1969

    0

    AH C'MMON PEOPLE!!

    For Christ's sake, are most Apple investors that bloody stupid! The minute news of a Joe bloe opening up his own music store or offering their own MP3 player comes out...ooooh Apple has competition...run...C'MMON!! Don't you people have a gram of sense and logic!! Why would these competitors take away from Apple's dominance?? or rather HOW??? 80% of the digital market is OWNED by iPods and there is NO indication of it going down. NONE of these retarded competitors are iPod compatible! Now HOW will that compete. on that 10% c*** that plays .WMV and runs of AAA batteries, that end up costing you more than the device itself in one month?? THINK PEOPLE.

    Unless Apple does absolutely NOTHING, then MAYBE its dominance will fade, and if so, ONLY in a few years. No one goes from 80% to nothing over night.

    We all know that Apple will NOT sit still, and if there is any sign of threat it will retaliate. Also, and more importantly, every bloody investor seems to see Apple as 'the iPod and iTunes' only. While its true that its those two things that boosted Apple the most, you can't dismiss all the insanely new things the company is doing. Mac Mini anyone?? Hello???? anyone awake out there. The Mac Mini is the n2nd trojan horse into the PC world TRUST ME. Tiger!!! etc etc...Mac sales on the rise!, etc etc...and to top it all off...all analysts continue to increase their BUY ratings on Apple. At least theyre smart enough to see the real deal.

    It's just sad to see the market react the way it does. It just shows the current Apple investor is one that lacks total long term vision and common sense. The right thing to do right now is BUY and HOLD...not SELL!!!!!

  1. aristotles

    Joined: Dec 1969

    0

    Yes, they are that stupid

    What did you expect?

  1. cameronx

    Joined: Dec 1969

    0

    Siriusly

    The stock seems to be exhibiting the speculative behaviour of Sirius--with almost extreme overcompensation for negative news and positive news. It seems to me that the sell-side pressure AAPL has been facing the last few days has been mostly focused around WORRIES that other investors will sell off (which, surprise surprise, creates a sell-off). The difference between AAPL and SIRI is that I believe AAPL IS actually priced right now beneath fair value, which I think is between $44-47. Consequently, that is the range that I expect AAPL to end the month of March with (probably on the topside of that range, if there is enough good news). The real good news for the "longs" (that have sense, that is) of the stock is that, though there's been overcompensation for negative news, there will almost as surely be even more overcompensation for positive news later.

  1. Buran

    Joined: Dec 1969

    0

    What supply constraints?

    I was at my local store picking up an ipod photo to replace my 20g click-wheel unit. There was a sizable pile of shuffles in green boxes stacked behind the counter.

    They probably had enough of them in the back to bury this guy in. His idea of "supply constraint" must be "if each store doesn't have a mountain of them ten feet high on each side of the door, supply is constrained". (And I think the fire marshal might have something to say about that idea!)

  1. LordJohnWhorfin

    Joined: Dec 1969

    0

    In other news...

    Another "iPod killer" bites the dust: Virgin Electronics shut down operations quietly yesterday, the mothership electing to stop funding in view of the lackluster sales numbers of the Virgin player. Oops...

  1. runningdog

    Joined: Dec 1969

    0

    Virgin player closed?

    Just had to check to see if it was true and came across this obnoxious comparison.

  1. Toyin

    Joined: Dec 1969

    0

    Sony competitor?

    1gb of music with a tiny LCD display for $180?????

    For $20 more you can have a 4gb iPod Mini. The batteries alone will make up the difference in a month or two.

    People don't get it. If you're looking for a MP3 player that does it all the iPod Mini and brethren are your choice. If your looking for a go anywhere, do anything, cheap and easy MP3 player, the shuffle's the way to go. This inbetween c*** just won't sell.

  1. 1800-whatever

    Joined: Dec 1969

    0

    re: Virgin player closed

    yep.

    http://www.engadget.com/entry/1234000183035022/

  1. testudo

    Joined: Dec 1969

    0

    Re: virgin closes

    Just had to check to see if it was true and came across this obnoxious comparison.

    Hey, I thought it was funny. Wow, dare try to make a joke that might be at the expense of Apple and you're obnoxious.

    Unless, of course, you're talking about the whole "Apple goes great with cheddar" thing, then I'd have to agree. Apples and cheese? WTF is up with that???

  1. testudo

    Joined: Dec 1969

    0

    BTW

    Virgin's online music store is still operational. Its just their hardware division (which isn't where the impact from competitors is going to be)

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