Merrill Lynch: It’s still the music at Apple
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.
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