01/23/2008, 10:30am, EST
Wednesday, January 23rd
AmTech: Apple must upgrade iPods
Apple must substantially upgrade its iPods in order to rescue sales, says Shaw Wu of American Technology Research. While revenue growth from iPods was 17 percent in the last quarter, the fastest of the past four, the company only sold approximately 22 million iPods, when consensus views were predicting 24 to 25 million. This likewise represents a mere 5 percent growth year-over-year, in spite of the fact that Apple recently made major changes by introducing the Touch and adding video to the Nano.
The solution, Wu suggests, is to substantially improve the value of iPods, as they may be facing cannibalization from cellphones, which are increasingly supportive of at least basic media player functions. A recent study indicated that phones are used for as much of 83 of mobile music listening in the US, UK, France, Germany, Italy and Spain. The damage may be offset for Apple by high iPhone sales, which have doubled sequentially to 2.3 million.
Looking ahead to the end of 2008, AmTech is now forecasting annual revenue of $31 billion, with an EPS of $5; the firm previously expected $30.8 billion in revenue and a $5.10 EPS. The new 2009 forecast has shrunk as well, shifting from $35.7 billion and $6.10 to $35.2 billion and $5.95. The price target for Apple stock has been reduced to just $175, when it was once $210.
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"Lost in the Numbers. It’s hard to be too upset about Apple’s iPod sales. It sold 22,121,000 iPods, which while only five percent more units compared to the winter quarter last year, represented 17 percent higher revenues. That’s because Apple brought a more powerful and expensive iPod to market, the iPod Touch. Brisk sales of the higher end model bumped up revenues and profits and raised the average selling price of iPods in general. Apple enjoyed the highest growth rate in revenue for the iPod in a year.
Consumers enjoyed the best iPod ever. In addition to the new Touch, Apple also released the new video playing Nano, converting its product lineup into one than can play both music and video purchased from iTunes. More recently, they can also handle rented movies as well. Perhaps the company knows what its doing after all.
Another secret that seems to have slipped through the fingers of every analyst on the planet is that the iPhone is also an iPod. It’s essentially an iPod Touch with a camera and a mobile phone. Apple sold 2.3 million iPhones in the winter quarter, so if you add those into the iPod units, you arrive at 24.4 million iPods, which is what analysts were looking for, albeit in the wrong column of the report.
The other difference between the iPhone and the standard iPods is that the iPhone generates steady, subscription-accounted income as well as a share of mobile operator service fees. The nibbling cannibalization of iPod sales by the iPhone is kindest competition Apple could hope for."
You beat me to that reference of roughly drafted. Apple just overhauled the entire ipod line this Fall, what do people expect in terms of upgrade?
This analyst is missing the bigger picture with the itunes rental and the iTouch/iPhone. The iTouch AND iPhone ARE ipods!!!
While the displays and interfaces on iPhone & iPod touch are nice, they don't have enough space for entire song libraries with a few movies sprinkled in.
Still waiting on the cheap technology trend in the storage sector...
He does meet his expectations on somebody paid far too much to say the bloody obvious, indeed he exceeded that by 23%.
How long has the iPod been around? How many units sold? At some point, there's less people to sell them to, they HAVE to understand this, right? I have my iPod, I don't need a new one right now. How many others are just like that anymore?
I'm sure a good percentage more than in 2002, that's for sure.
Word for the day, Mr. Wu: Market Saturation
"Add. Capacity.
While the displays and interfaces on iPhone & iPod touch are nice, they don't have enough space for entire song libraries with a few movies sprinkled in. "