In a summary piece of analyst opinions, MarketWatch has found a widespread interest in the iPod nano because of its perfect styling, technologically leading design and excellent pricing [that's my personal analysis], with share target prices raised from around the $50 area to just a few dollars below $60, with an average of around $57.
Apple, currently at $49.75 was below $35 in June. They’ve seen a 2.2% gain on the day, but what’s changed in the last couple of months to make investors so much more sure that Apple is worth almost twice what they were May/June?
I think one of the fundamental changes has been not of Apple’s doing but of the rest of the market. PlaysForSure, Microsoft’s effort to head off the iPod’s proprietary format, looked like it could have been a threat a year ago. Now, it’s not much more than a commercial sideshow. Sure the players sold by Microsft partners still take up space on the shelves, but they don’t have the market penetration or recognition that the iPod line does. As competing manufacturers fall by the wayside, Apple’s dominance of the music download industry is secured. They’re in new markets that they weren’t last year, with Japan’s new iTunes store showing a perfect example, and their designs for new players are getting better and better because they continually either improve on former products or enter new markets, as both the Shuffle and the nano have done.
Competing players by Creative and Sony, the largest opposition to Apple in the international market, haven’t come up with any groundbreaking decives. Sony’s latest effort, the Bean, is more likely to directly impact Apple than the Creative designs, still largely hard-drive based. The Bean, though ergonomically more suited to the human hand, doesn’t have the readily instinctive use that the iPods produce. It’s clear how an iPod works, just by looking at it, while the Bean typifies the ‘tortured user interface’ that Jobs spoke of when first launching the Shuffle against competitors’ Flash mp3 players. Because of this weakness, when handled instore or seen in the hand of a friend, the Bean will never have quite the impact that a Shuffle or nano will do. The iPod nano could readily become Apple’s best ever selling product.
The one cloud on the horizon for Apple’s digital music ambitions is the threat of changes from record companies across the world. With the iTunes Music Store becoming ever more successful, though only just breaking even on song sales, the companies have been complaining that Apple subsidizes the sale of its high profit margin players through inexpensive music sales and that the record companies are the ones feeling the hit. By making music low priced, those who produce the music get a lower return per song than they would were the price to increase. The record companies claim that Apple is deliberately suppressing the price of tracks to ensure people buy iPods which give them a much more healthy return.
The threats of removal of artists from the store and of demands for a spread of prices could be very real and damaging to the Apple business, but at the same time they could be far less serious than they currently appear. One must remember that Madonna has just released all of her back catalogue to the ITMS, so there can’t be all that much hostility out there if the Queen of Pop Capitalism is prepared to muck in with the rest of the crowd.
The Rokr was a disappointment because of its general lack of features, but the Rokr won’t determine the future fortunes of Apple Computer: increased innovation in their laptop line and a speedy transition to Intel chips will. Oh, and of course the iPod: that thing just never goes away.
Marketwatch.com: New products drive Apple to record high
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