Apple still gaining teen interest

Apple is still gaining ground in the MP3 player market and the online music business, according to a new study conducted by analyst firm Piper Jaffray. The firm asked nearly 1,000 high school students about interest and buying patterns for MP3 players and online music. Teen responses revealed that iPod market share grew to 79 percent in the spring of 2006 from 77 percent from fall of 2006, and that interest in purchasing an MP3 player in the next 12 months increased to 45 percent from 41 percent over the same time period. Of those students who legally purchase music online, 91 percent said they use Apple's iTunes Music Store, up from 71 percent. Additionally, interest in all brands of music-enabled cell phones increased to 74 percent from 70 percent. "Apple continues to dominate the MP3 player and online music markets, despite new competitors constantly entering the market," said senior analyst Gene Munster of Piper Jaffray.

"We believe that winning over the teen demographic is critical to continued long-term growth and Apple is clearly in the lead in this market segment," Munster said.

Of the students surveyed in the fall 2006 teen survey, 72 percent own an MP3 player and 79 percent specifically own an iPod, up from 77 percent who owned an iPod in the spring 2006 survey. Some 45 percent of students indicated that they expect to purchase an MP3 player (including first time buyers and those seeking replacements) within the next year,marking a rise from 41 percent of teens who expected to buy an MP3 player in the year after the spring 2006 survey. Of those teens expecting to buy an MP3 player in the next 12 months, 76 percent expect to purchase an iPod. Some 88 percent in the spring 2006 survey indicated that they expected their MP3 player purchase to be an iPod, according to the analyst firm.

"While Apple may have lost some ground in this category, 76 percent is still significantly higher than the next highest at 8 percent (Sony)."

Regarding music downloading 79 percent of students indicated that they download music online. While most (72 percent in the fall of 2006, up from 65 percent in the spring of 2006) continue to use free P2P music sharing networks instead of paying for music legally. Of those who use legal online music services, however, 91 percent said they use iTunes, which is up significantly from 71 percent in the spring.

"We believe this is a result of the increasing variety of content on iTunes," Munster said.

Additionally, the survey found that interest and willingness to pay for music-enabled cellular handsets is growing. Interest in an MP3 phone increased to 74 percent from 70 percent in the spring survey.

"Teens are becoming more willing to pay more for this type of device," the analyst said. "37 percent of students said they would pay more than $200, up from 43 percent."

Filed under: iPod, industry