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ML: Tuesday event was disappointing

updated 01:45 pm EST, Wed March 1, 2006

ML on iPod Hi-Fi event


Apple may be becoming a victim of its own success, as both users and analysts were disappointed by the announcements at Tuesday's invitation-only media event. Based on the product introductions and reaction by media and users, analyst Richard Farmer of Merrill Lynch said that Apple needs to be more careful about hyping its invitation-only media events: "We wonder if the announcements were substantial enough to merit an invitational media event and suspect Apple needs to be judicious if it expects to continue to convert journalists into marketing instruments with its aura of secrecy." Farmer also offered some caution about Apple's strategy to grab a larger share of the iPod accessory market.

"The iPod Hi-Fi and leather cases are just the latest examples of Apple's strategy to harvest a greater percentage of the accessories market derived from the growing iPod installed base," said Farmer in a note his clients obtained by MacNN. "We see the strategy working in the short term but creating ecosystem risk in the long run."

Echoing similar concerns by other analysts, the firm said that Apple's "increasingly aggressive moves" into the iPod accessory market and its move to collect an "iPod tax" with its "Made for iPod" logo and licensing program may be detrimental in the long term. "Apple risks alienating its ecosystem and creating a margin umbrella that is ripe for disruption from other platforms over time."

Farmer also said that sales of the high-end iPod accessories, which are priced at premium over competing products, would be an important test for Apple's brand. The firm noted that the Bose SoundDock digital music system provides a similar set of features for $300--$50 less than Apple's iPod Hi-Fi. Without comparing quality, Farmer note that "for an extra $50 the iPod Hi-Fi product offers battery power capability for music on the go and audio inputs which allow for streaming music if used with the optional Airport Express."

In addition, the analyst warned that the new Intel-based Mac mini was only an incremental step in the ongoing Intel transition and continued to be cautious as he noted the lack of important native Intel applications.

"The new Mac mini is an incremental step in the ongoing Intel transition. Though the long run prospects for Apple share gains on the Intel platform are likely to be promising, we continue to be concerned about brand risk from potential glitches in the Intel transition as well as delayed availability of native software from Adobe and Microsoft." Other analysts have also cautioned that lack of native professional applications may slow the transition and impact sales in the near-term.

While the firm's earnings scenario analysis showed a "modestly positive skew" in its risk versus reward analysis, Farmer said that the upside was not significant enough to change its rating on Apple stock. Merrill maintained its "neutral" rating on the stock.


by MacNN Staff

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Comments

  1. suhail

    Senior User

    Joined: Nov 1999

    0

    Boring!

    Apple is becoming a typical blah company... Sucks!

  1. dave a

    Fresh-Faced Recruit

    Joined: Jan 2002

    0

    nah...

    Really, they're right. Even though I immediately went out and got a Mini, I am underwhelmed by the news, esp. since the Mini part of it was known in advance! I am also disappointed by their choices, I would have gone for greater expandability (external SATA port!!!!!!) over standard gadgets I'll never use (BlueTooth, remote control).

  1. hayesk

    Professional Poster

    Joined: Sep 1999

    0

    agreed

    that Apple is the victim of their own success. They can't even release products any more without whining. Does everything they do have to be super amazing?

    It's not like Apple is going to say "we have some mediocre products to announce" - it's the job of their marketing department to hype their products regardless of how boring people think they are.

  1. howdesign

    Fresh-Faced Recruit

    Joined: Aug 2005

    0

    Fun? How about Small!

    Okay, the use of the term "fun" was a little liberal in the invite. Perhaps if they said they had some "small" surprises, I would go along with it. ML has a good point though that the press has a short memory and might perceive future events as less of a story (if the next one doesn't know their socks off)...

  1. eldarkus

    Fresh-Faced Recruit

    Joined: Feb 2004

    0

    the problem...

    The problem isnt WHAT apple released.. it's the fact that everyone gets all excited over the 'POSSIBILITY' of new products. And when those products dont show, it's a 'dissapointment'.

    WAAAHHHHH.. no new iPod/cell phone/toaster/bread slicer? WAAAHHHH I'm disappointed!!!

  1. Horsepoo!!!

    Banned

    Joined: Jun 2003

    0

    "The Important Apps"

    I've got a feeling journalists are gonna trot this one out for the next 5 years. What exactly *IS* an important app? To the journalists, I bet it's Photoshop and other professional apps that are used by a very small percentage of people.

    The real important apps are the consumer apps and games which everyone including the pros use.

    But just like the virus/malware scare tactics we've seen during the past month, we're gonna be hearing about these 'important apps' that aren't native.

  1. nickbirch

    Fresh-Faced Recruit

    Joined: Oct 2005

    0

    did something go wrong?

    Just a thought, it seems a bit odd to get everyone together to announce a loudspeaker and a disappointingly specified computer (I'm hoping there will be a mini v2 with a sensible graphics chip). I'd have thought a simple press release would have been sufficient. Could this mean that some other announcement got pulled at the last moment?

  1. cartoonspin

    Fresh-Faced Recruit

    Joined: Sep 2003

    0

    iPod Boombox

    When that journalist wrote that Bose also sells a similar speaker he obviously know nothing about sound.

    Although Apple revies many of the products, Apple only perfects their own. What does this mean? A premium sound system with the best sound in the industry for this type of product. Why do you think the shuffle has better sound than any other flash system? Sound Engineering. Their products continue to have superior sound and it continues to get better.

    And to the post...did something go wrong. It has happened a few times before so it might not be out of the realm of possibility. Good observation nickbirch!

  1. ScottEllsworth

    Fresh-Faced Recruit

    Joined: Sep 2001

    0

    Mini is keen!

    I just do not see the mini, as released, as a 'disappointingly specified' computer. It adds gigabit and wireless, both of which were on my must have list for a machine to move to my entertainment center. Adding a second dimm slot is also pretty keen - minis used to be more of a pain to upgrade - and the extra USB ports are nice, in that we are now less likely to need a USB hub.

    Further, the integrated graphics outperform what was in the box prior to yesterday. Sure, they could have put more in, but what they put should satisfy the majority of users.

    I do hope a $499 model comes back on the price list at the next speed bump, but that will have to wait until components get cheaper.

    All in all, Apple delivered a neat package, and an important one. Their entire desktop low end is Intel based, and I suspect we will see Intel iBooks at the next Intel price drop. This is a very rapid transition, and it makes it important for software vendors across the board to get Universal apps shipping.

    Scott

  1. mjtomlin

    Fresh-Faced Recruit

    Joined: Oct 1999

    0

    disagree

    The products aren't disappointing. As usual it was the media who over-hyped the event and sent everyone's expectations into the stratosphere. Most of us who know how to remain grounded and can remain level-headed look at the announcements and products for what they are, not they were "supposed" to be.

    With the "hi-fi Apple wants to make a little more money from some of the technologies they created. The hi-fi speaker compliments iTunes+AirTunes nicely. And it completes the equation; Mac+iTunes+AirTunes+AirPortExpress+iPod Hi-Fi = Excellent music listening experience.

    The nice thing about these products is that they don't need each other to work... they can work on their own and with other technologies. They can stand and function as individual products or mix'n'matched with other products.

    The mac mini upgrade was expected, but not the inclusion of the Dual Core. Very nice indeed. A lot of power in a small form factor. So for $799, you're pretty much getting an iMac without the the peripherals and display.

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