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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.”

Apple to benefit from home audio slowdown

The wide-spread shift from CDs to MP3s and iPods has caused a drop in sales of large home audio systems, putting Apple in a prime position to sell its new iPod Hi-Fi to consumers looking for a simple way to enjoy their digital audio at home. While electronics manufacturers race to add iPod connectivity to their equipment, a new report in the Wall Street Journal says it may be too little too late.

“Sales of traditional stereos have taken a hit,” the Journal reports. “Last year, retail sales of home audio equipment, including stereo system components and surround-sound ‘home theater in a box’ rigs, dropped nearly 18%, to 10.2 million units, according to market-research firm NPD Group Inc. In the same period, sales of portable digital players like Apple’s iPod more than tripled, to 22.4 million units in 2005, from 7.1 million in 2004, says the Consumer Electronics Association, a trade group.”

Music fans aren’t just exclusively listening to their downloaded tunes on an iPod either. “Even when consumers aren’t using portable devices, more are shifting their music consumption away from stereos,” the newspaper says. “Among 1,031 adult respondents to a consumer-behavior survey published last year by the CEA, 34% said they listened to music at home primarily on a PC, compared with just 26% who said they used a stereo or surround-sound receiver as their main home listening system.”

Apple media event coverage, with photo gallery

  • February 28, 2006
  • Apple,

imageBelow is a roundup of our coverage from Apple’s special media event, which took place earlier today at the company’s headquarters in Cupertino, California. During the presentation, Apple CEO Steve Jobs introduced the iPod Hi-Fi, leather iPod cases, and Intel-based Mac minis.

- Full iLounge Review: Apple iPod Hi-Fi
- Apple event photo gallery (iPod Hi-Fi, Jobs)
- Live coverage of Apple’s media event
- iPod Hi-Fi speaker system unveiled
- Apple intros leather iPod cases

Special Apple event live coverage

  • February 28, 2006
  • Apple,

imageThe iLounge team has arrived at Apple headquarters for today’s special event. We will deliver live coverage if at all possible. Closer to the beginning of Steve Jobs’ presentation we will switch the site over to a “lite version” to better handle heavy traffic loads. While many new products have been rumored to be announced, no reliable information has been leaked. The only hint Apple gave was on the invitation to the event, which read: “Come see some fun new products from Apple.

Analysts speculate on Apple event: Movie downloads, iTablet?

  • February 23, 2006
  • Apple,

Following Apple’s teaser invitation to a special event next Tuesday, analysts are weighing in on what they think the company will introduce. Speculation ranges from new Intel-based Macs to a movie download service to a tablet-size iPod with HD video.

American Technology Research analyst Shaw Wu expects an entry-level MacBook laptop and an updated Mac mini, but also says Apple could announce the availability of its first full-length movie downloads. “We believe there is a greater than 50 percent chance that Apple will announce its first, full-length feature films available for download on iTunes,” he says. Wu doesn’t believe the company will debut the so-called “true video iPod.”

Piper Jaffray analyst Gene Munster thinks the event will be Intel-focused, but could also bring new iPods. However, he says it is less likely that Apple will release the rumored touch-screen iPod. “While it is difficult to predict exactly what Apple will announce next Tuesday, it is easier to predict what Apple will announce in the next 12 months,” which he says could include new iBooks and Power Macs, a larger-screen iPod, a new iPod shuffle, Airport Express for video, an Apple-branded cell phone.

Bear Stearns analyst Andrew Neff says a new video iPod is likely, though it could turn out to be “tablet-sized or HDTV-based.” “As speculation begins to build around what Apple could announce on February 28, we think—focusing on the adjectives ‘fun’ and ‘new’—the most likely products are either a tablet-size iPod or a larger HDTV-based iPod,” says Neff. “While more Intel-based products (new iBook or iMacs) or a phone are possible, neither strikes us as ‘fun’ or ‘new’.”

Michael Gartenberg, an analyst at the industry research firm Jupiter Research, reminds Apple watchers that no one really knows what to expect. “We’re talking about Apple, so it could be all of those things, none of those things, or something brand new,” says Gartenberg. Ross Rubin, an analyst at the market research firm NPD Group, said trying to speculate on what Apple might roll out at the event is a “fruitless guessing game.”

Apple to hold special event on Feb. 28

  • February 21, 2006
  • Apple,

imageApple has sent out an invitation to select media, including iLounge, to a special event that will be held at Apple headquarters in Cupertino, California on February 28th.

The invitation, which only features the iCal-like calendar image shown right, reads: “Come see some fun new products from Apple.” The special event begins at 9:00 a.m. at Apple Town Hall, Building 4.

iLounge has confirmed with Apple that this event will be taking place and is not a hoax like the email sent out last week purporting to be an Apple invitation to a special event on March 1st.

Apple confirms AIDS-related special event invite a fake

  • February 15, 2006
  • Apple,

Contrary to an earlier report, Apple will not be holding a special event on March 1. An Apple representative has confirmed to iLounge that an electronic invitation—marked with indicia of a benefit for AIDS—is an elaborate fake. The sender was apparently taking advantage of recent speculation that Apple would introduce a red iPod as part of Bono’s Product RED initiative. iLounge apologizes for any confusion this may have caused.

Companies including American Express, Converse, Gap and Giorgio Armani have all joined the project and plan to release specially-designed red products with a portion of the profits going to the Global Fund to support AIDS programs in Africa. The U2 frontman was reportedly overheard mentioning that Apple would be joining the initiative by introducing a red iPod.

AT&T warns Apple of video patent infringement

  • February 10, 2006
  • Apple,

AT&T claims that Apple and others are infringing on its MPEG-4 video compression patents. Looking for global licensing agreements, AT&T has targeted Apple, CyberLink, DivX, InterVideo, and Sonic Solutions as companies whose products use the MPEG-4 technology. AT&T has also reportedly contacted national retailers that sell products from the companies, informing them that they may be held liable for infringement.

“With the recent explosion of products that use the MPEG-4 standard, including Apple’s video iPod and Creative’s Zen Vision:M, AT&T could stand to gather a financial windfall from its patented technology,” reports PC Magazine. “An increasing trend in mobile phone multimedia also signals potential future profits to be made through the global licensing program.”

Analysts see iPod speakers, iPhone in Apple’s future

  • February 9, 2006
  • Apple,

Following a meeting with Apple executives at company headquarters in Cupertino, California, analysts from UBS Investment Research believe Apple could introduce several new products in the coming year, including iPod speakers and an Apple-branded cell phone.

“We also believe that Apple may choose to enter new consumer markets for iPod speakers and Apple branded cell-phones over the next year where the company would be able to leverage its market leading innovations and creative designs that have made the iPod such a tremendous hit with customers,” the firm said. “In addition, we anticipate that Apple will continue to announce new partnerships with content providers and build on the media it currently has available for download.”

iPod, iTunes highlights from Apple’s Q1 conference call

  • January 19, 2006
  • Apple,

Following Apple’s announcement of record earnings and revenue yesterday, the company held its quarterly conference call with press and analysts. Below are the highlights pertaining to Apple’s music business, which accounted for 59% of the quarter’s total revenue.

- The iTunes Music Store had an 83% share of the US market of legally downloaded music during the month of December.

- There are now over 2,000 different iPod accessories.

- Apple said it did “very well” in sales of both Apple-branded and third-party accessories. The company sees the accessories as a “recurring revenue stream.”

- The iPod gross margins in the December quarter were above 20%.

- The iPod is now sold at more than 35,000 outlets, although not every retailer sells all iPod models.

- Stock of the 4GB iPod nano is still “lean” in certain areas, following tremendous holiday demand.

- The iTunes Music Store operated “above break even” during the quarter for a slight profit.

- There is more downloadable content on the way for video iPods.

- iPod Radio Remote sales are doing “well.” Apple said it is “currently not meeting demand” for the device, but it is “working really hard” to try to do so.

Apple reports record earnings, revenues [updated]

  • January 18, 2006
  • Apple,

As expected, Apple today announced record financial results for its fiscal 2006 first quarter ended December 31, 2005. Apple’s net profit for the holiday quarter was $565 million, or 65 cents per share, on $5.75 billion in revenue—the highest quarterly earnings and revenue in the company’s history. These results compare to revenue of $3.49 billion and a net profit of $295 million, or 35 cents per share, in the year-ago quarter.

During his keynote speech at Macworld Expo last week, Apple CEO Steve Jobs announced that more than 14 million iPods were sold during the quarter, which represents a 207 percent growth in iPods compared to last year. The total number of iPods sold now stands at over 42 million.

“We are thrilled to report the best quarter in Apple’s history,” said Jobs. “Two highlights of an incredible quarter were selling 14 million iPods and getting ready to launch our new Macs with Intel processors five to six months ahead of expectations. We are working on more wonderful products for 2006, and I can’t wait to see what our customers think of them.”

Update: In an SEC filing, Apple said all iPod models accounted for more than $2.9 billion in revenue during the quarter, an increase of 177 percent compared to last year. Apple’s “Other Music Products” category—which includes the iTunes Music Store, iPod related services and accessories—accounted for $491 million of the quarter’s revenue, a 177 percent increase year-over-year.

Apple’s Jobs suggests Dell should eat his words

  • January 16, 2006
  • Apple,

After the close of the stock market Friday, Apple CEO Steve Jobs took advantage of his company’s recent good fortunes to have a laugh at the expense of Dell’s boss.

Shortly after Jobs returned to Apple in 1997, Dell’s founder and chairman, Michael Dell, was asked at a technology conference what he might do to fix Apple. “What would I do?” Dell said. “I’d shut it down and give the money back to the shareholders.”

Apple’s stock price saw a 12 percent surge last week, which pushed the company’s market capitalization to $72.13 billion, passing Dell’s value of $71.97 billion.

On Friday, Jobs sent an email to Apple employees, which read: “Team, it turned out that Michael Dell wasn’t perfect at predicting the future. Based on today’s stock market close, Apple is worth more than Dell. Stocks go up and down, and things may be different tomorrow, but I thought it was worth a moment of reflection today. Steve.”

Apple posts Macworld Expo keynote stream

  • January 10, 2006
  • Apple,

Apple has now posted the QuickTime video stream of Steve Jobs’ Macworld Expo keynote address. During the speech, Jobs introduced the new iPod Radio Remote and other iPod accessories, as well as Intel-based Macs and updates to its iLife and iWork suites.

Apple reports highest quarterly revenue ever

  • January 10, 2006
  • Apple,

In a rare move ahead of next week’s expected earnings report, Apple CEO Steve Jobs revealed the company’s holiday financial numbers during his speech at Macworld Expo. Jobs reported that Apple had its highest revenues ever—$5.7 billion. “One for the records,” said Jobs. In addition, the Apple boss noted that Apple retail stores had their first $1 billion revenue quarter.

Apple in legal dispute with Burst over digital media patents

Burst.com, which develops video and audio delivery software, said it was sued by Apple on Wednesday for declaratory relief, alleging patent invalidity or non-infringement. The suit, filed in U.S. District Court in San Francisco, follows “a breakdown in protracted negotiations for issuance of a license of Burst’s patents to cover Apple’s iPod and iTunes products,” according to the company.

“Burst anticipates responding to the complaint and filing a counterclaim for patent infringement shortly,” the company said in a statement late Thursday. “Burst remains committed to the enforcement of its intellectual property and looks forward to successfully resolving this litigation through a license covering Apple’s Quicktime, iPod and iTunes products, including Apple’s iTunes Music Store.”

In March of last year Burst settled a major patent and antitrust suit against Microsoft. The software giant paid Burst $60 million to license its patents. “Since the Microsoft settlement, the company has been in patent licensing discussions with several companies engaged in the distribution of audio and video content on computer networks,” Burst said.

Apple requests iPod Camera Connector compatibility updates

  • December 7, 2005
  • Apple,

Apple Computer is interested in updating the list of cameras that are compatible with the Apple iPod Camera Connector to reflect as many compatible models as possible. Developers and vendors of cameras can self-certify their cameras by downloading the PDF document iPod Camera Connector Compatibility, and follow the instructions to have products added to Apple’s list of compatible cameras.

Apple details iPod sales in annual report

  • December 1, 2005
  • Apple,

In its annual report (SEC form 10-K) filed Thursday with the Securities and Exchange Commission, Apple summarized several iPod and iTunes related details.

Apple said that net sales of iPods rose $3.2 billion, or 248 percent, during 2005 compared to 2004. The company said it sold 22.5 million iPods in fiscal 2005, an increase of 409 percent from the 4.4 million iPod sold in 2004. Apple has now shipped more than 30 million iPods since the device’s introduction four years ago.

“Strong sales of iPods during 2005 continued to be experienced in all of the company’s operating segments and was driven by strong demand for the iPod shuffle introduced in January 2005, the release of an updated version of the iPod mini in February 2005, the release of the iPod nano in September 2005, and expansion of the iPod’s distribution network,” Apple said in the filing.

Apple said that net sales of other music related products and services, which consists of sales associated with the iTunes Music Store and iPod accessories, increased $621 million, or 223 percent, compared to last year.

“The company has experienced strong growth in sales of iPod services and accessories consistent with the increase in overall iPod unit sales for 2005,” Apple said. “The increased sales from the iTunes Music Store is primarily due to substantial growth of net sales in the U.S. and expansion in Europe, Canada, and Japan.”

Steve Jobs to kick off Macworld Expo with keynote

  • December 1, 2005
  • Apple,

IDG World Expo today announced that Apple CEO Steve Jobs will once again deliver the opening keynote address at next month’s Macworld Conference & Expo in San Francisco. The event is being held at the Moscone Convention Center January 9-13, 2006. The keynote will begin at 9:00 a.m. PT on Tuesday, January 10, 2006.

Apple plans after-Thanksgiving sale

  • November 21, 2005
  • Apple,

Apple will once again this year host an after-Thanksgiving sale at its online and brick-and-mortar stores. The one-day event, which Apple is calling “The feast after the feast,” will take place on Friday, November 25. “Come back to the Apple Store on the day after Thanksgiving for a special one-day-only holiday shopping event,” reads a note on Apple’s website. “You’ll find dozens of great gift ideas for everyone on your list, and you’ll get free shipping on all items.” Last year’s sale saw $20 price reductions on iPods, as well as discounts on iPod accessories, iMacs, digital cameras and more.

Lugz sends Apple cease and desist notice over TV ad

  • November 4, 2005
  • Apple,

imageLugz Footwear said late Friday that it has sent a cease and desist letter to both Apple and its adverstising agency, TBWA/Chiat/Day, over the similarities between a Lugz TV commercial from 2002 and Apple’s new iPod + iTunes spot featuring rapper Eminem.

As previously reported, Apple’s new ad is strikingly similar to the three year old Lugz commercial, with both featuring an urban background in red, orange and yellow hues with a hip-hop soundtrack and black silhouette dancers.

“If you look at these spots, common sense would tell you that there’s a problem here,”  Larry Schwartz, executive vice president and a principal of Lugz parent company JSSI, said in a statement. “The Apple commercial uses the most powerful elements of our campaign, making the ads disturbingly similar. We are prepared to vigorously pursue all legal remedies in order to protect our rights.”

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