Merrill Lynch: Look for flash iPod at Macworld Expo

Merrill Lynch analyst Steve Milunovich expects Apple to introduce a flash memory-based iPod in early 2005, possibly in January at Macworld Expo. In a research note obtained by iLounge, Milunovich said that he is looking for the new flash iPods to be priced in the $149 to $199 range. He notes that the flash MP3 market is five times the size of the hard drive player market in units and about two times its size in revenue. “This is a market Apple should want to participate in because it will pull new customers into the iPod/iTunes ecosystem,” Milunovich said. “We believe consumers will hesitate to switch once they become accustomed to the iPod’s scrollwheel or have purchased a number of iTunes (which only work on iPods). The land grab is on.”
The analyst also increased his iPod sales estimates from 3.5 million to 4 million units in the current quarter, and from 10.7 million to 12.9 million units in fiscal 2005. “We are raising our iPod estimates since we look for the product line to expand and demand continues to be strong,” Milunovich said. “iPods are being adopted faster than Sony Walkmans were back in the early 1980s. We believe customer response will be heightened by the introduction of a flash memory iPod.”