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Analyst questions iPod line, lack of content

updated 08:45 am EDT, Thu September 6, 2007

Analyst questions iPod lin

Market analysis firm iSuppli says that while Apple's revamped iPod lineup plays catch-up with other players in the industry, the company generally benefits from better execution of features of new features and that Apple's Starbuck partnership and the iPhone price cut would help Apple's maintain its leadership in the market. The firm, however, criticized Apple for the lack of video content announcements during Wednesday's iPod/iTunes event and questioned some of the company's product development decisions, including the continuation of the iPod classic line and the limited capacity on the full-screen iPod touch models.

Although some have speculated the iPhone price cut comes in response to disappointing sales of iPhone, iSuppli's consumer research indicated that the iPhone outsold all competing smart-phone and feature-phone models in the United States in July on an individual basis. Despite the controversy, iSuppli said its teardown research indicates that Apple was generating a "robust hardware margins" at its previous $599 pricing, but that the iPhone would continue to be profitable for Apple at the new lower $399 price point.

Senior iSuppli analyst Chris Crotty was surprised that Apple didn't have any new video content announcements at special event -- especially given the recent controversial decision by NBC Universal to pull out of iTunes.

"One surprising aspect of the new nano is that Apple emphasized video at the start of its event today but did not follow through by announcing any content-related development for video," Crotty wrote. "Historically, Apple has coordinated hardware and content launches more effectively. An announcement involving video may have also diffused any of the potential fall-out resulting from Apple's recent quarrel with NBC, which will no longer be distributing its content through iTunes."

While Jobs indicated his desire for NBC Universal to return to iTunes, some analyst believe the divorce hurts Apple more than the studio.

iSuppli questions Apple's product choices

The senior analyst for iSuppli's consumer electronics also questioned Apple's iPod classic and iPod touch line-ups, saying that the continuation of the iPod classic product line was a "stop-gap measure" until the company could add enough flash memory at an affordable price to provide high-capacity options.

"It raises the question of why a company would offer its best display, needed for videos--particularly movies--without employing the corresponding high storage capacities useful for video storage," Crotty opined. "Why was Apple against the idea of an iPod Touch with a hard drive? It seems like Apple had anticipated flash prices being lower and being able to offer higher capacities for the iPod Touch."

Crotty, however, was upbeat about Apple's new WiFi features and hi-res screen, although rivals such as Microsoft and SanDisk have already introduced them to the market. He complimented Apple on its execution of the new features, sayin gthat Apple's Wi-Fi implementation is "more powerful" than those of its competitors.

In addition, iSuppli believes that the Apple's newly announced partnership with Starbucks ties into the Cupertino-based company's longtime iPod strategy of selling content at break-even prices to support sales of its high margin players and increasing switching costs among its customers. NBC Universal last week cited the same strategy -- in its public jousting -- saying it was at odds with the success of its content partners.




by MacNN Staff

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Comments

  1. Guest

    Joined: Dec 1969

    0

    ?

    http://www.isuppli.com/whyisuppli2/clients.asp

  1. ERG

    Joined: Dec 1969

    0

    Just my 2 cents

    I think the Touch, from a production POV is "only" an iPhone without the phone, so: 1) Flash memory vs. HD was a choice for cost/price reduction 2) Same goes for the Classic: 160Gb is a lot of storage! 3) "No Video content announces" hasn't been a problem for who lives out of USA: we still rely on our own homemade production (and frankly I can't see a great market for people who prefers to watch Heroes on a small screen instead of a 32" Plasma/LCD screen every day more affordable...) 4) iPhone price reduction: apart from the angry I can see in who just bought it before yesterday, I can see the same every day in the Cellphone market here in Europe: firstcomers always pay the highest price. (and then again we are still waiting the iPhone here..)

  1. imactheknife

    Joined: Dec 1969

    0

    isuppi

    these guys are idiots...plain and simple....the ipod classic with a touchscreen would be thicker than the ZUne t*** because of the AHEM 160 gig HD. These isuppi freaks don't understand that some people have different uses for thier ipods. Getting rid of the classic would be STUPID...Getting rid of the 2nd Gen nano was dumb, I really liked that form factor...

  1. mjtomlin

    Joined: Dec 1969

    0

    Battery Life

    Hard Drive + Big Touch Screen = No Battery Life

    Of course, they could've put a bigger battery in the "touch" but how fat would that have made it?

  1. TiDual

    Joined: Dec 1969

    0

    Content

    As noted above, in Europe there is no iTunes video context (UK just got a little), and yet people still buy a ton of iPods with video, and will buy these new machines. The vast majority if ipod owners, even in the US, have *never* purchased a song (let alone video) on iTunes: they simply rip their own content.

    Video content from studios is *not* something Apple really needs for the iPod to succeed ... but it is the most important platform for content providers to break into in the long run. Otherwise people will resort to solutions (like EyeTV) for automatically recording and syncing to iPod, and the studios won't even get $1.99/episode. My 16GB 'Touch is ordered!

    As for HD on iPod touch ... yeah ... I find 16GB a bit skimpy: basically 5GB each for tunes, photos, and a few films. But getting the form factor and battery life right is crucial. 160GB is no use if the thing becomes too clunky to carry, and the batt. life drops to 2.5 hrs video.

  1. bloggerblog

    Joined: Dec 1969

    0

    numbers

    iSuppli is dealing with numbers alone. Apparently they have no clue why people buy iPods, they're not the same reasons as to why people buy PCs.

  1. Feathers

    Joined: Dec 1969

    0

    competitors?

    ...sorry but Apple isn't competing with anybody as far as I can see. Just because two cars enter the same race doesn't mean they are competing with each other, both are fighting the clock...and time is running out for some of the other "drivers"!

  1. ZinkDifferent

    Joined: Dec 1969

    0

    everyone ignores...

    ...the little, tiny snippet about Jobs pointing out how the iPod Touch is localised for all these different languages. Being Americans it was just glossed over by the media and 'analysts' (after all, everyone speaks English, right :-) - but since Touch and iPhone use the same operating system, it stands to reason that these localizations will soon find their way into the international version of the iPhone (and this was Jobs' way of saying "We are capable of shipping the iPhone worldwide!")

    Again, classically ignoring obvious signs tossed right in front of you... yep, that's what analysts are good at.

  1. paulc

    Joined: Dec 1969

    0

    Well

    I still find it odd that the gizmo to play video best also has the smallest capacity, while the one designed to play music first has the kind of capacity a video device SHOULD have.

    Plus I do NOT think 16G flash or 160G HDD means significant cost difference, I would think them very close to the same. Still, I AM happy they are continuing with the Classic players... they really are no fuss, no muss music devices first and foremost. Face it, all the good demo toys on the Touch are simply overkill for a music player.

    I wonder if the 160G Classic is the exact same size as the 5.5G 80G? And do we think of them as 6th Gen? Or 5.75???

  1. testudo

    Joined: Dec 1969

    0

    Re: everyone ignores...

    ...the little, tiny snippet about Jobs pointing out how the iPod Touch is localised for all these different languages...but since Touch and iPhone use the same operating system, it stands to reason that these localizations will soon find their way into the international version of the iPhone (and this was Jobs' way of saying "We are capable of shipping the iPhone worldwide!")

    Again, classically ignoring obvious signs tossed right in front of you... yep, that's what analysts are good at.


    What's there to pounce on? Did you think that the reason the iPhone isn't worldwide was because of localization issues, and this is obviously pointing to the fact that its around the corner?

    The iPhone is based on OS X, which is localized for loads of languages. Most people would just assume that localization would be in the iPhone as well, and so it gets glossed over out of the sheer "Well, duh" factor.

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