Only one real story came out of yesterday's keynote speech by Phil Schiller, write analysts with Needham & Co. Despite the announcement of new versions of iLife and iWork, as well as a 17-inch unibody MacBook Pro, the most important revelation is said to be the switch to DRM-free music and variable pricing at iTunes. Even this may have minimal impact, Needham suggests.The firm notes, for instance, that while the major record labels attempted to pressure Apple into multi-tiered song pricing by dropping DRM restrictions at other online stores, this did little to improve their marketshare compared to iTunes, which has remained the most popular digital music source. Even Amazon has accumulated its significant share at the expense of stores other than iTunes.
The new pricing scheme could also backfire, at least for the labels, says Needham. Attaching higher prices to the most popular songs may drive more people to filesharing programs, thereby depriving both Apple and labels of revenue; dropping back-catalog songs to 69 cents may compensate somewhat, but Apple will have to pay labels less. As a consequence, the labels may have to sell as much as 40 percent more just to reach the break-even point.
Outside of iTunes, Needham does praise changes to iPhoto, which should increase the attachment of Facebook users through integration and face recognition support. A similar sentiment is expressed by Kaufman Bros. analyst Shaw Wu, who argues that iPhoto and the rest of the iLife suite should increase the "appeal and stickiness" of Macs.
Wu expresses disappointment with the rest of the keynote, calling it one of the "weakest" product introductions during the last 10 Macworlds. He remarks, however, that sources indicate new Macs are still forthcoming in the near future. Apple is either planning a separate event to reveal them, he suggests, or else the company is having trouble producing quality products at such a high rate. It may also want to bring out new Apple TVs and iPod shuffles to revive sales, according to Wu.
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