Piper Jaffray analyst Gene Munster said on Friday that Apple “will likely not show significant upside for the iPod in the June quarter” with sales of 5.5 million units, but that the iPod business will “reaccelerate” in the seasonally strong September and December quarters.
Munster’s positive expectations are based on results from a recent survey of MP3 player sales reps at 100 U.S. retail stores (non-Apple), which on average 58% of recommended the purchase of an iPod over a competing device.
Munster said in a research note obtained by iLounge that 63% of sales reps recommend an iPod model in the 5GB or larger category, in most cases recommending the 6GB iPod mini or 20GB iPod. In the 5GB or less category, 52% of sales reps recommend an iPod (4GB iPod mini or iPod shuffle).
The analyst said that 32% of salespeople who recommend the iPod do so because of the device’s ease of use. Munster said that 21% see the “massive eco-system” of iPod accessories as the top reason to own an iPod.
Meanwhile, the top reason given by 25% of sales reps for recommending something other than an iPod was its lack of an FM receiver. Approximately 14% said its close integration with iTunes is too limiting, and an another 14% said there are some players that have a better design or are smaller than the iPod.
The 8.4 million iPods Apple shipped in 2004 accounted for nearly one third of all digital audio players last year, a recent report by research firm In-Stat found. Various models of the iPod made up 30.2% of the combined worldwide hard drive and flash-based music player market in 2004.
The firm said revenue for MP3 players reached approximately $4.5 billion, “a remarkable increase of almost 200% over 2003.”
In the same report, In-Stat also said that “the exploding market” for portable audio players is expected to reach over 104 million units by 2009, up from 27.8 million units in 2004. “Drivers for this booming market include falling prices, the availability of legitimate subscription and pay-per-download online music sites, smaller hard disk drives, and increasing Flash memory capacities,” the firm said.
As part of “a growing skirmish between the record labels and digital music master Apple,” both Sony BMG and EMI are releasing more and more copy-protected CDs that can’t be transferred to an iPod.
“CDs with the protective technology prevent users from posting them on the Internet and allow users to burn only three copies onto other discs, which themselves can’t be copied again,” reports Variety. “Sony BMG is already selling about half its discs with the technology, while EMI releases its first this summer. But the technology also prevents consumers from transferring songs onto an iPod… because the technology uses Microsoft’s Windows Media software.”
Variety says that both labels hope to reach a deal with Apple that will allow iPod owners to legally rip and transfer music from the CDs to their iPod for listening on the go.
“By launching the copy-protected CDs without iPod compatibility, the labels are raising the stakes in an ongoing conflict between Apple and the rest of the music business, which wants the tech company to open its proprietary iPod and let others sell antipiracy-protected songs that work on the device,” the publication reports.
Britain’s Queen Elizabeth II has joined the iPod generation. UK tabloid The Sun reported Friday that she is now the owner of a silver 6GB iPod mini, and that Prince Andrew, fourth in line to the throne, was behind the move.
“The Queen loves music and was impressed by how small and handy the iPod is,” a royal insider told the paper. “Obviously it is quite complicated to download songs, but I’m sure one of the courtiers will do it for her. Prince Andrew will probably also help out because he’s a real dab hand with gadgets.”
Morgan Stanley analyst Rebecca Runkle said today that Apple’s pact with Wal-Mart may be broader than some realize.
“While we don’t believe Apple iPod availability at Wal-Mart is completely new news, we do think the partnership is broader than people think, in transition and set to expand in the near-term,” Runkle said in a research note to clients.
Runkle said Apple and the retail giant have expanded their initial test rollout in the last few months. Confirming the report, iLounge readers in Florida, Indiana, Texas and elsewhere have noted in recent weeks that they’ve seen various iPod models at their local Wal-Mart stores. Select Wal-Mart locations are carrying the 20GB iPod, the iPod mini, and the iPod shuffle, along with HP-branded versions.
Runkle estimates that sales of iPods at Wal-Mart locations could boost sales by 100,000 units and add $20 million in revenue each quarter. “We view the growing Wal-Mart relationship as a positive—a way to expand the brand to the mainstream and additive to the bottom-line,” she said.
Microsoft CEO Steve Ballmer has tapped Senior Vice President Robbie Bach to revamp the company’s digital music offerings in an effort to keep up with Apple. Bach, who is also the head of Microsoft’s Xbox unit, has been called a “rising star” in the tech industry for his work on the video game console.
“Bach is expected to be given the authority to push for a range of changes, such as setting up a team focused solely on digital music, reorganizing product groups, or acquiring companies,” The Wall Street Journal reported Tuesday. “One immediate mission for him will be to make Microsoft’s new Xbox a hub for handling digital music.”
Ballmer reportedly assigned Bach to the new music role after an executive retreat in which his team privately showed the new Xbox 360 and marketing plans. “Later, executives talked about how they might employ lessons learned from Mr. Bach’s group,” the paper notes. “The retreat included a brief analysis of rival Apple’s music strategy.”
Microsoft insiders say that Bach plans to work more closely with certain media player makers to aid them in building better devices. “It would be an extension of the PlaysForSure branding program Microsoft started last year that subjects partners’ music players and services to a battery of tests to assure they will work smoothly with music services,” the paper reports.
Thought Out’s Mike Talmadge provided iLounge with an update regarding the ongoing trademark dispute with Apple over the use of his company’s iPed name.
“We understand Apple’s request in protecting their trademark of the ‘iPod’ name, but we feel we are being singled out,” Talmadge said. “We pointed out to Apple that many other companies use the iPod/Pod name and variations of it in their products such as i_od or Pod this or that. We have been told by Apple as excepted, (in so many words) that this is not of your concern, and that Apple is, has, will be addressing them too.”
“We have been making every effort to come to terms with Apple in regards to the iPed name with out any major legal battle,” Talmadge said. “Apple and Thought Out plan to meet in the near future to discuss further actions for our iPed name.”
Helmes Innovations has announced the release of iPurseona, new content that turns your iPod into a “digital purse accessory” using the iPod Notes feature. iPurseona includes: Beauty Recipes & Homemade Remedies; Body Care Tips & Tricks; Hair Care Tips & Tricks; Skin Care Tips & Tricks; Make-Up Tips & Tricks; Fragrance Tips & Tricks; Pick-Up Lines; and How-To’s. The $9 shareware works with both Macs and PCs.
Wrigley’s Extra has teamed up with Apple to launch a major iPod promotion in the UK and Republic of Ireland. The company will give away 10,000 iPods (5,000 20GB iPods and 5,000 iPod shuffles) and over 90,000 other prizes, including front row concert tickets, online album vouchers and £5 iTunes vouchers. The promotion will run across the entire Extra chewing gum and Extra mints product line, and winners have until December 31, 2005 to claim their prizes.
Apple advertising agency TBWA\Chiat\Day last night was given the Grand EFFIE Award for its work on the iPod “Silhouettes” ad campaign. “Our Grand EFFIE winner honors a product at the forefront of popular culture complemented by a creative, breakthrough marketing campaign that has proven to skyrocket sales,” said Mary Lee Keane, Executive Director of the New York American Marketing Association.
In addition to the Grand EFFIE, TBWA\Chiat\Day walked away with three Gold EFFIEs (two for iPod and one for Nissan), two Silvers (Adidas and Infiniti) and one Bronze (Nextel), bringing their total awards to seven. The EFFIE awards, now in their 37th year, are the “only award program that recognizes effective advertising and marketing campaigns that have achieved market place results.”
In addition to announcing a transition to Intel processors for Macs, Apple CEO Steve Jobs offered an update on iPod and iTunes sales, as well as a look at the upcoming podcast support in iTunes during his keynote speech at Apple’s Worldwide Developer’s Conference in San Francisco.
Jobs said that 16 million iPods have been sold as of the end of March, accounting for 76% market share of all music players. He said more than 430 million songs have been purchased and downloaded from the iTunes Music Store so far, and that it commands 82% of legal digital music sales.
The Apple chief next discussed the previously announced podcasting features of iTunes 4.9. Jobs called podcasting “iPod plus broadcasting,” “TiVo for radio” and “Wayne’s World for Radio.” He said that anyone can make it and get a worldwide audience, and said Apple sees it as the hottest thing going in radio right now.
Jobs said you can easily subscribe to the podcasts and have them automatically synced to your iPod. “We’re going to make this even easier,” he said. “We’re going to build it right into iTunes and iPod.” Jobs then went into a quick demo in which podcasts were shown in the source list of iTunes, and there was a podcast directory directly in the application. He quickly went to Adam Curry’s “The Daily Source Code” and then to KCRW public radio. Subscribing was as easy as clicking one button.
Finally, Jobs said that Apple plans to do its own podcast for iTunes Music Store releases every Tuesday, and revealed that artwork will be supported for each podcast.
Update: We’ve now posted our photo gallery from the WWDC keynote.
Following a meeting with Apple management in California, Merrill Lynch analyst Steven Milunovich said that despite all of the news recently surrounding the company, Apple doesn’t want to get distracted from its music products.
However, Milunovich said Apple continues to downplay bringing video support to the iPod. “Movies take too long to download for now, are not watched over and over, and that unlike music there are many ways to acquire movies,” he said Apple pointed out. “Still, we think video capability (especially for music videos) could be added to the iPod.”
The analyst said that audio books and podcasting should contribute to iPod’s popularity, but that the Apple executives were not optimistic that satellite radio would take off.
Milunovich also said that Apple is not against a subscription service like those offered by its rivals, but the company still thinks most users want to own their music instead of “renting” it. “We think Apple could introduce a subscription service in the next year, which could be less profitable than selling songs initially though possibly more profitable long term if sub rates rise,” he said.
Milunovich said that Apple doesn’t expect iTunes to make much money. “Although moderately profitable, the company doesn’t seem optimistic that songs will be a major profit contributor,” the analyst said.
Following months of pressure from environmental activists, Apple today announced a free iPod recycling program with an added incentive. The company said that beginning today, “customers can bring iPods they no longer want to any of Apple’s 100 retail stores in the US for free environmentally friendly disposal, and those who drop off an iPod, iPod mini or iPod photo will receive a 10 percent discount on the purchase of a new iPod that day.” Apple said that iPods received for recycling in the US are “processed domestically and no hazardous material is shipped overseas.”
The Silicon Valley Toxics Coalition has been pressuring Apple since late last year to do more with its environmental practices, claiming that the company doesn’t do enough to ensure that its products are disposed of properly. The group focused largely on the iPod and its hard-to-replace battery. Protests were staged outside Apple’s headquarters in January and during this year’s Macworld Expo a few days later. The group also picketed at Apple’s annual shareholders meeting in April.
The Toxics Coalition described the iPod as “a time-bomb for our health and environment because of the toxic metals that will either go into incinerators or landfills.” Apple has acknowledged the device does contain “a small amount of lead,” which the company says it is working to phase out. “To call the iPod an environmental time bomb is just inexcusable,” Apple CEO Steve Jobs said at the shareholders meeting.
If you’ve been reading iLounge recently, you’re probably familiar with Luxpro’s line of iPod shuffle knock-offs. What you may not know is that there are numerous companies copying every model of the iPod and even iPod accessories. At this week’s Computex trade show in Taipei, an iLounge reader snapped several photos and collected specs on a number of these clones.
The most brazen iPod copy seen at the show was an iPod mini look-alike from a Taiwan consumer electronics OEM supplier. Said to cost only US$50, the “i-Pocket” is roughly the same size as Apple’s iPod mini, but includes no internal storage—instead it has a memory card slot. It supports SD/MMC/MS cards for music storage, and acts as a card reader for SD/MMC/MS/MS Duo/MS Pro formats. The player also offers voice recording, an FM radio and recorder, a color OLED display (128 x 64), USB 2.0, and supports MP3, AAC, WMA, WAV, WMV, ASF file formats. It is available in gold, red, blue and black.
Continue reading for a full report (with photos) on iPod shuffle and iPod accessory clones, as well as new products.
iPod owners who complained of battery problems will get $50 vouchers and extended service warranties, according to the terms of a tentative class-action lawsuit settlement. Lawyers representing consumers said that the settlement could affect as many as two million people who purchased first, second and third-generation iPods through May 2004. Eight consumers filed the suit against Apple in 2003 claiming the iPod failed to live up to claims that its battery would last the product’s lifetime and play music for up to 10 hours.
“People who fill out a claim form are entitled to receive $50 redeemable toward the purchase of any Apple products or services except iTunes downloads or iTunes gift certificates,” reports AP. “They can redeem the voucher within 18 months of final settlement approval at any bricks-and-mortar Apple Store or online. Consumers who had battery troubles can also get their battery or iPod replaced through the lawsuit. Apple currently replaces or repairs defective products that are returned within one year but the class-action settlement extends the warranty to two years, plaintiffs’ lawyers said.”
As announced late last week, we’ve teamed up with Mediafour, publisher of XPlay, on a new photo contest for iPod owners. The “X Marks the Spot” contest will run for four weeks and will feature four different challenges with a total of four prizes.
To enter, submit a creative photograph of yourself and your iPod at each week’s themed location. Photos will be judged on the creative depiction of iPods in the context of each week’s theme. The deadline for this week’s entry—“Public iPod
iBar is new software that turns your iPod into “the ultimate bartending tool.” It includes 450 drink recipes organized by category, beverage and bar tips and tricks, drink histories and toasts. “Bring your iPod anywhere you will be mixing a drink and impress with your bartending savvy! From mastering essential mixing techniques, to stocking your own bar, to learning the history of alcohols, to mixing over a thousand classic and contemporary drinks. iBar will surely make you the talk of the party or give you the knowledge to mix drinks professionally.” iBar sells for $29.95.
Silvanti Development has released iShop, a collection of audio files that when added to your iPod help create an editable shopping list. iShop is basically a series of more than 300 blank mp3s—each with a different name (for example “Snacks: Ice Cream”)—that you add to your iPod as a playlist. After syncing the playlist, you then create an on-the-go “shopping playlist” that you can add these product named files to just like you would when adding tracks to an on-the-go music playlist. iShop is free, but donations are accepted.
Piper Jaffray said today that it expects Apple to ship slightly more iPods in its fiscal third quarter than it did last quarter. The research firm said it believes Apple will have iPod unit shipments of 5.5 million for the June quarter, up from 5.3 million in its second quarter.
“The bottom line from our checks is that while we are not expecting significant upside to June [third] quarter numbers, Apple’s business appears to be solid in what is typically a seasonally slower period,” Piper Jaffray said. “We believe iPod sales are increasingly becoming less of a focus for Apple specialists, due to improved iPod supply and availability at mass retailers.”
Apple received four design awards at the 43rd D&AD (Design and Art Direction) awards last night in London. The iPod and iPod mini, along with Apple’s Cinema Display won silver awards for product design. Jonathan Ive, Apple’s head of industrial design, was honored with a special president’s award in recognition of outstanding contribution to the industry. The iPod won a gold award in 2002.