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iPod shuffle share jumps to 58 percent

updated 08:15 am EDT, Wed May 4, 2005

Merill on AAPL

Apple's share of the US flash-player MP3 market grew from 43 percent in February to 58 percent in March, according to research firm NPD. Apple's share of the US hard-disk player market was also at 90 percent, while the iTunes Music Store marketshare was above 70 percent in April. The data were reported by Merill Lynch analyst Steven Milunovich in a research note to clients. The analyst also discussed future iPod enhancements expected by the end of the year, the (non-existent) mobile phone threat, and more. The firm reiterated its 'Buy' rating on Apple stock with a price target of of $51 per share.

Based on data obtained during an interview with Apple CFO Peter Oppenheimer, Milunovich noted that Apple's iPod market share in Japan was around 40 percent, representing a "good" international growth opportunity and that the "stunning" numbers from March, during a supply-constrained quarter, would make April numbers even more interesting.

During the same interview, Oppenheimer said that Apple was not concerned about the cell phone threat to iPod. According to the research note obtained by MacNN, Apple's management believes that the iPod still offers the best way to manage and listen to music and the ability to listen to music in cell phones is a complementary feature--rather than a replacement for iPod. Oppenheimer said that the "worse" user interface and limited battery life would help iPod maintain its competitive edge over the "mobile phone threat."

Despite rumors to the contrary, Apple management also believes that it find a way to work with the mobile carries to bring iTunes to mobile phone users. Many industry reports said that said that the delay in the introduction of the Motorola iTunes phone was in part due neogotiations with mobile phone carriers who see digital music as an incremental source of revenue. It is believed that mobile carriers, eager to see a slice of the profits, wanted the cell phone to be the primary interface for purchasing songs (rather than the computer, as in the iTunes model).

Apple said it "doesn't foresee problems working with carriers," implying that negotiating shared economics wouldn't be a deal killer, according to the research note.

Milunovich also said that he expects wireless and video capability in iPods for the holidays. "Our guess is that iPod will run short video clips, such as Britney Spears gyrating while 'Toxic' plays."

The note also indicated Apple may begin another heavy ad campaign highlighting Macs. Currently, Apple's TV spots only feature the iPod, but the analyst is lookig to coming Mac ads to augment the halo effect.

 
Previous Comments

Wow, that's AMAZING

05/04, 09:38am reply

To have taken over the market for Flash players so quickly and strongly is astounding. They are low margin, but that's not the key here. The key is the more people using iPods, the more leverage and brand recognition Apple has. The iTMS is much stronger -- even than it was -- now that the Shuffle has a firm footing. This is great news.

Zkatz007

Fresh-Faced Recruit

Joined: May 1999

0

Up & Up

05/04, 09:58am reply

"The only way is up....baby!"

finknottle

Dedicated MacNNer

Joined: Aug 2000

0

A world-beater.

05/04, 10:51am reply

My wife has a MUVO 256+FM, I have use of a first-gen 5GB iPod thru work, and now own a 1GB Shuffle.

The Shuffle is the best deal going. I don't miss the display (the MUVO display is unreadable), it takes zero effort to reload it, runs forever, is a flash drive besides over USB. I never thought I'd have a flash player. The only use for the iPod display has been Contacts, but Tiger can now sync my phone like Panther couldn't - so it all works with less juggling.

jpellino

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Joined: Oct 1999

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doomed!

05/04, 11:53am reply

this is just further proof that Apple is DOOMED!

when are they going to put Paris Hilton in Apple Stores? It's the only way to save them!

/M$ whoring anal-yst

climacs

Fresh-Faced Recruit

Joined: Sep 2001

0

Real and Whatnot

05/04, 12:09pm reply

Weren't they just predicting that Apple missed the mark by introducing such a simple, no frills MP3 player?

Wonder how long before they try to roll out their own shuffle knock off...?

legacyb4

Mac Elite

Joined: May 2001

0

Idiots!

05/04, 12:41pm reply

All you people buying a Shuffle are apparently without the mental faculties to resist buying anything from Apple. Don't you people realize you're being ripped off.

First, its got no FM tuner.

Add in the lack of display (how are you supposed to find the song you want to listen to without a 3x5 screen?).

There's also no voice recorder. How can you record all those hours of conversations with your friends without a voice recorder. Linda Tripp wouldn't dare be without one.

Then there's the lack of choices. You can't buy music from anywhere but iTMS. No Napster, no Walmart. Certainly no support for the quality and affordable subscription services out there.

Now tack on the lack of a stopwatch. How are you supposed to time things without a stopwatch? Those three-minute eggs you're making turned into 5 minute eggs. Haha! If you had a real MP3 player, you wouldn't be eating overcooked eggs!

Basically, what it comes down to is that those 58% that use the shuffle just don't realize how they're s******* up their lives!

testudo

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Joined: Aug 2001

0

Calm down now

05/04, 01:13pm reply

I think it takes a small-minded individual to slag off others who may have different tastes and requirements.

Life has the potential to become fairly complicated in so many ways that a return or digression to simplicity and less organisation/control is often a dream. For many, an iPod Shuffle might just suit that dream.

I love iTunes and digital music but I don't go for portable music players so I take an outsider's view, which is often amusing. It's just when you read opinions from individuals who clearly have issues in other aspects of their lives that I am motivated to comment.

dougalzene

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Joined: Apr 2005

0

iPod shuffle saturation

05/04, 01:38pm reply

Latest NPD data showed iPod shuffle saturation in current US market. Their m/s is fallen into mid 40%. Not all the people look for low cost MP3 player, but look for more premium features such as Voice recording, LCD screen and FM Radio.

imacmac

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Joined: Oct 2003

0

Re: iPod shuffle saturati

05/04, 02:05pm reply

Maybe. Time will tell. Nobody said Apple has to cater to all markets. They don't with their computers, they don't with their music players.

BTW, I wouldn't call Voice recording a premium feature. The voice recording feature built into MP3 players is paltry compared to a dedicated voice recorder that professionals use. It's a toy.

And testudo, that was hilarious! Made me laugh.

hayesk

Professional Poster

Joined: Sep 1999

0

Re: iPod shuffle saturati

05/04, 02:10pm reply

So where is this source that shows the iPod shuffle US market share fell from 53% to 40% in April?

Link please.

ff11

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Joined: Apr 2004

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