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Analyst addresses unanswered questions on Apple

Piper Jaffray senior analyst Gene Munster has released a research report in which he addresses more than 20 unanswered questions on Apple, the majority of which are iPod and iTunes related. In the report, Munster gives his views on several topics, including the possibility of a built-in iPod FM tuner, an Apple iPhone, how the iPod will keep its competitive advantage, and whether or not the iPod shuffle will be cut from the iPod lineup. The analyst also digs into the average number of iPods each iPod owner has, advertisements in iTunes, the downtick in last quarter’s iPod sales, Sony’s hopes of creating an iPod competitor, and when we’ll see full-length movies on the iTunes Music Store. You can read Munster’s answers to the iPod and iTunes questions in their entirety after the jump.

iPod lawsuits transferred, Apple vs. Apple decision due soon

Six lawsuits filed against Apple over iPod nano problems have been consolidated and transferred to the Northern District of California. The case will now be heard by Judge Ronald Whyte in San Jose. “Three lawsuits have been filed in California and one each in New Jersey, New York and Louisiana on behalf of customers who claimed their iPod nanos scratched excessively with normal use,” reports CNET News.com. “The suits also allege that Apple failed to disclose and repair the alleged defect and that Apple failed to abide by the warranty.” Meanwhile, Macworld UK reports that the judgement in the Apple Computer vs. Apple Corps case will take place on Monday, May 8. “Justice Edward Mann has been deliberating on the case since before Easter,” the publication notes. “At the ruling he will reveal if he has decided to grant an injunction barring Apple Computer from using its logo within iTunes.”

Future products, Disney plans discussed at Apple shareholders meeting

During Apple’s annual shareholders meeting yesterday, Apple CEO Steve Jobs described Apple’s upcoming products as “the best I’ve ever seen in my life,” and said that he had no interest in becoming an executive at Disney. While Jobs didn’t go into detail, he hinted at an Apple media center device and mentioned that an “exciting” television ad campaign would launch next week. Jobs said that after Disney completes the acquisition of Pixar, where he is also the CEO, he actually plans to spend more time at Apple. In response to a concerned shareholder question about his role at Disney, Jobs said “it’ll require less of my time than Pixar did.”

Former iPod chief inks consulting deal with Apple

Jon Rubinstein, the former senior vice president of Apple’s iPod division, has signed on with the company as a consultant for one year. In a filing with the Securities and Exchange Commission, Apple said Rubinstein agreed to make himself available to the company for about one business day a week until April 16, 2007, for which he will be paid a non-material flat fee for his services. Apple announced last year that Rubinstein would resign at the end of March and be replaced by Tony Fadell, Apple’s vice president of iPod engineering. The company said Rubinstein’s official last day as an Apple executive was April 14, 2006.

Apple ships 8.5 million iPods during Q2 [updated]

Reporting its second quarter financial results today, Apple said it shipped just over 8.5 million iPods during the quarter—slightly below analyst predictions, but a 61 percent increase compared to the same quarter last year. Apple’s net profit for the quarter was $410 million, or 47 cents per share, on $4.36 billion in revenue. These results compare to revenue of $3.24 billion and a net profit of $290 million, or 34 cents per share, in the year-ago quarter. While Apple has not yet officially announced its total iPod sales numbers, the addition of these 8.5 million additional iPods brings the total to more than 50 million iPods shipped since the device was introduced in 2001.

Apple plans new 50-acre Cupertino campus

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Apple is planning to build a new 50-acre campus near its current headquarters in Cupertino, California, company chief executive Steve Jobs said yesterday. “What’s happened at Apple is that our business has basically tripled in the last five or six years,” Jobs said at a Cupertino city council meeting. Apple “has gone from $6 billion in sales to $20 billion in sales,” Jobs said. “We’re pretty thrilled. Since we’re your largest taxpayer, I thought you might be happy for us.” Jobs said it could take three to four years to design and build the new Apple headquarters, which could accommodate 3,000 to 3,500 employees. Jobs said that, in addition to its present Cupertino campus, Apple employees are spread among 30 other buildings in the city. “We’ve rented every scrap of building we could find in Cupertino,” Jobs told the council. Updated: A video of the announcement is now available online.

Research firm: Apple to become MVNO, iPhone ‘inevitable’

Market research firm Visiongain believes Apple will launch an “iPhone” and become a mobile virtual network operator (MVNO) by the end of 2007. “Apple acknowledges the threat mobile handsets pose to portable MP3 players in the long term,” says Visiongain. “Apple will embrace mobile more fully and pose a greater threat to the mobile phone industry itself—as an MVNO challenging carriers and a cellphone brand challenging handset makers. Upcoming US MVNO Helio presents a good entry strategy for Apple’s iPhone, an own-brand Apple mobile phone that is likely to be launched by the company. Indeed, the release of which is both logical and inevitable.”

Burst.com files patent infringement suit against Apple

Responding to a preemptive lawsuit filed by Apple earlier this year, Burst.com today announced that it has filed counterclaims officially accusing Apple of patent infringement. Burst alleges that Apple’s iTunes, iTunes Music Store, iPod, and QuickTime application infringe on four of Burst’s U.S. Patents (4,963,995; 5,995,705; 5,057,932 and 5,164,839). Burst’s counterclaims come after a suit that Apple filed against the company in January, seeking a declaration that Burst’s patents are invalid and that Apple does not infringe on them. Burst is seeking “a reasonable royalty for Apple’s infringing products and services, and also seeks an injunction against further infringement.”

Apple tops list of world’s most innovative companies

BusinessWeek and the Boston Consulting Group have released the results of their second annual ranking of the 25 most innovative companies. Apple’s iPod and iTunes put the company at the top of the list this year. “To launch the iPod, says innovation consultant Larry Keeley of Doblin Inc., Apple used no fewer than seven types of innovation,” reports BusinessWeek. “They included networking (a novel agreement among music companies to sell their songs online), business model (songs sold for a buck each online), and branding (how cool are those white ear buds and wires?). Consumers love the ease and feel of the iPod, but it is the simplicity of the iTunes software platform that turned a great MP3 player into a revenue-gushing phenomenon.”

Apple trademark ruling unlikely before Easter

A ruling in the Apple vs. Apple trademark case is unlikely before Easter. Following closing arugents yesterday, judge Edward Mann said his judgement in the legal battle between Apple Computer and the Beatles’ Apple Corps over the use of the apple logo was unlikely to be before the Easter break. “In one corner, Apple Corps Ltd.‘s lawyer Geoffrey Vos said Apple Computer is a ‘Johnny-Come-Lately’ that is attempting to steal the British company’s trademark and increasingly encroach on its territory,” reports the AP. “In the other corner, Apple Computer lawyer Anthony Grabiner said the company is doing nothing wrong and music lovers are smart enough to tell the difference between the use of the apple logos.”

Apple lawyer gives closing arguments, defends right to logo

During his closing arguments in the Apple vs. Apple case today, Apple Computer lawyer Anthony Grabiner defended the company’s right to use its logo on the iTunes Music Store and in ads for the service. Grabiner said ads featuring U2, Eminem and Coldplay were entitled to use the Apple logo because they were promoting the iTunes store and not the music itself. “Viewers aren’t ignorant people, but… have significant understanding of what Apple Computer does and the object of the exercise, accepted by people watching, was to get the benefit of the download,” Grabiner said. “Apple Computer has the exclusive right to use the apple mark on such a broadcast, if used to indicate the source or origin of the hardware and downloading services mentioned in the advert.”

Apple vs. Apple: iTunes exec takes witness stand

Eddie Cue, vice president of iTunes at Apple Computer, took the witness stand Monday to defend his company in the trademark lawsuit brought on by The Beatles’ Apple Corps. Cue testified that Apple Computer did not violate a 1991 agreement between the two companies by using the Apple logo on the iTunes Music Store. Apple Corps lawyer Geoffrey Vos asked Cue to confirm that the iTunes Music Store had offered exclusive songs from artists such as U2 and Bob Dylan. “We have tracks that are temporarily exclusive to us in the Music Store, and so do most of the other services,” Cue said in the High Court in London. James Hoffman, CEO of Woodstock Systems, testified earlier on behalf of Apple Corps that Apple Computer converts its music files into a proprietary format to restrict how they are used.

Apple: iTunes doesn’t violate trademark agreement

In the second day of the Apple Corps vs. Apple Computer case, lawyers for Apple Computer said iTunes does not violate a trademark agreement the companies signed in 1991 and that it has rights to distribute digital music. Apple Computer lawyer Anthony Grabiner said the “distribution of digital entertainment content” was allowed under the agreement, adding that “even a ##### in a hurry” could tell the difference between iTunes and a record label like Apple Corps.

Apple vs. Apple trial begins

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The Beatles’ Apple Corps and Apple Computer faced off in court on Wednesday in the first day of their trademark battle over the Apple logo and the iTunes Music Store. “Apple Computer can go into the recorded music business in any way they want. What they cannot do is use Apple (trade)marks to do it,” Apple Corps counsel Geoffrey Vos said in his opening presentation. Vos said the use of the Apple logo on the iTunes Music Store is a violation of a previous agreement.

iPod propels Apple to top of BusinessWeek top 50 list

Apple has taken the top spot on this year’s BusinessWeek 50 list, which ranks the best performing companies of 2006. “All those little white earbuds are a bona fide cultural phenomenon—and serious business for Apple. Booming sales of its iPod music players have propelled the Cupertino (Calif.) icon to the top of our list of the best corporate performers,” says BusinessWeek. “Apple shows few signs of slowing down. Of the 42 million iPods sold since the line was introduced five years ago, 32 million were sold in 2005, including 14 million in a killer Christmas quarter. Apple’s profits leapt 216% in 2005 on a 66% jump in sales. Investors are still bullish, not only for what Steve Jobs has done, but also for what lies ahead.”

Beatles’ Apple Corps, Apple Computer to meet in court this week

The Apple Computer vs. Apple Corps case is scheduled to begin on Wednesday at London’s High Court before iPod-owning Justice Edward Mann. Apple Corps, owned by the Beatles and their families, claims that the iTunes Music Store breaches a 1991 agreement on the companies’ use of the Apple trademark. “Any damages for this latest clash could amount to tens of millions of pounds because it concerns Apple Computer’s hugely successful iTunes Music Store and iPod,” reports the Times UK newspaper. “The court will be treated to a demonstration of an iPod, but it is unlikely to play a Beatles song.”

Report: Apple choosing manufacturers for ‘iPhone’

Apple is working on “an iPod with phone functions” and could use Taiwanese electronics manufacturer Hon Hai Precision to build the device, says Johnny Chan, a J.P. Morgan analyst based in Hong Kong. Barron’s Online reports [paid sub. req.]: “Apple still hasn’t decided whether to give the contract for what’s being referred to as an ‘iPhone’ to Hon Hai or to another manufacturer, says Ellen Tseng, a Morgan Stanley analyst in Taipei. One analyst in Taipei who declined to be identified said Taiwan Green Point Enterprises, which makes plastic cases for the iPod, is in talks with Apple for a role in the phone.”

Analyst: 75% chance of iPhone in next 12 months

Apple’s stock will benefit this year from new iPods, Intel-based Macs and the possibility of an Apple-branded cell phone, investment firm Piper Jaffray told clients this week. “We would be buyers of AAPL on the recent pullback given we believe iPod demand will accelerate in mid-CY06, based on upcoming positive seasonality and new form factor iPod’s,” Piper Jaffray analyst Gene Munster wrote in a research note sent to iLounge. “Additionally, we believe Apple will benefit from the new Intel-based Mac’s, along with what we estimate to be a 75% chance of a iPhone in the next 12 months.”

Apple posts new, non-silhouette iPod + iTunes ad

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Breaking with its well-known series of “silhouette” ads, Apple Computer this evening introduced a new 1,000 Songs television commercial, depicting the piece-by-piece construction of a city from album cover building blocks. The blocks then transform into a tornado that funnels into the top of an iPod nano, followed by the tagline, “1,000 songs in your pocket.” Already spotted by readers on television, Apple’s new ad can be seen online at this link; high-definition (720p/1080p) and iPod versions are also available.

Analysts weigh in on Apple announcements

The consensus among tech analysts is that Apple’s new iPod Hi-Fi and updated Mac minis bring the company closer to the center of the digital living room, but also show that Apple is not afraid of alienating iPod accessory makers.

“Both these products are a way to get more people slowly hooked into the Apple brand in the living room, sort of like what Sony did in its heyday,” said Sam Bhavnani, an analyst at research firm Current Analysis.

Needham & Company analyst Charlie Wolf said he thinks the announcements are “just the start” of Apple’s digital home strategy. “It’s still a little computer, but it’s adding a lot of capabilities that will allow it to morph into an entertainment center in the living room,” said Wolf.

“Apple is taking steps to move their brand to other rooms beyond just the Mac,” said analyst Tim Bajarin of research firm Creative Strategies of the Hi-Fi. “It’s no longer just sitting in the den.”

“I think they are going straight at the ultimate goal of digital convergence,” Lehman Brothers analyst Harry Blount commented. “Apple already has a powerful media portal on the Internet and they need to extent the virtual portal into your living room.” Blount said Apple “stills need to do more work on the boom box,” referring to the iPod Hi-Fi. “That is where I wasn’t blown away.”

Merrill Lynch analyst Richard Farmer wonders if the two products required a special event, and if they’re both too overpriced. In a research note provided to iLounge, he said that Apple “needs to be judicious if it expects to continue to convert journalists into marketing instruments with its aura of secrecy.” Farmer also said that high pricing for the Hi-Fi and new leather iPod cases suggests Apple “believes it can position its accessories at a premium to competing alternatives.”

“The price point and form factor are likely to appeal to people who are younger and have less disposable income, and who are making their first home stereo purchase,” said IDC analyst Susan Kevorkian. “It’s less likely to appeal to people who have a home entertainment system.”

Rob Enderle, principal analyst for the Enderle Group, said that iPod accessory makers should be wary of Apple’s major new entrance into the iPod add-on ecosystem. “If you’re an iPod accessories maker, (Tuesday’s) announcement has to make you nervous,” said Enderle. “The accessories market is clearly very lucrative, and Apple will be getting more aggressive.”

“I was surprised when I saw that Apple was releasing another major iPod accessory,” said Technology Business Research senior analyst Tim Deal, noting the release of the iPod Radio Remote earlier this year. “This sends a clear message to iPod developers and I’m sure it will breed some ill will.”

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