iPod to dominate in 2006

Apple's competitors are unlikely to make a dent in the iPod's market share, and the iPod will continue to dominate the market in 2006 according to one research firm. Investment research firm , which surfaced today, will erode the iPod dominance and said that it is bewildered by Sony's offerings: "We continue to be shocked at how Sony's devices miss the mark despite the resources that are being put into creating a competitive product."

The analyst believes non-iPod devices must compete by lowering prices to gain adoption, however Apple has such massive relative shipment volume that other MP3 player manufacturers are not able to reproduce the company's low-cost strategy. In light of this, Apple is expected to continue its race to stay ahead of the competition in 2006.

"While 2005 was clearly a year heavy in iPod innovation at Apple, we do not expect a slowdown in new/updated iPods in 2006. In addition to new and updated iPods, 2006 will be a significant year for the Mac line." Munster believes that the incorporation of Intel, as well as the introduction of new form factors will both likely lead to the launch of several new/updated Macs this year, revealing more changes to the Mac lineup than were seen in 2005.

While Apple's domination in digital music is a critical piece to the story, the analyst does not believe iPod is the only growth avenue for the company. Munster expects the iPod to continue to serve as a foundation for growth in other parts of Apple's business, maintaining its "halo" effect.

Piper Jaffray still maintains an "outperform" rating on Apple, which is currently up $2.26 to $76.64, and projects a price target of $80.

by MacNN Staff