Analyst: MP3 market’s problems aren’t Apple’s

Creative Technology’s warning of sagging demand for its devices is no indication that the MP3 player market as a whole is suffering, a Wall Street analyst said Monday. Creative earlier today cut its fourth-quarter sales outlook and said it will have an operating loss, citing weaker-than-expected demand for its products.

“We believe that iPod’s continued dominance of the portable audio market, especially as shuffle gains market share for flash-based players, is likely having an impact on Creative,” Piper Jaffray senior analyst Gene Munster said in a research note obtained by iLounge. “In addition to Apple’s market share gains in the flash segment, we believe the June quarter is a seasonally slow time for this market and we do not expect blow-out iPod numbers from Apple (expect iPod units of 5.5 million for June, up from 5.3 million in March). We do, however, believe that Apple will significantly benefit from back-to-school and holiday buying in the September and December quarters.”

Munster also said that his recent retail survey shows that Apple’s presence in stores remains significantly greater than Creative. “We spoke with MP3 player sales reps at 100 U.S. retail stores about what portable audio devices they recommend to customers and why,” he said. “58% of reps recommend some variation of iPod, while only 16% of salespeople would point their customer to a Creative device. We believe these checks provide another indication that Apple is holding its ground, if not gaining momentum, as the leader in portable audio.”

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