Apple closes in on widescreen and wireless players

 

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Posted on 14 Sep 2006 at 13:19

By addressing the 'central issue' of battery life in its new 5G iPods, Apple is getting closer to adding widescreen and wireless to the portable player, according to American Technology Research analyst Shaw Wu.

He believes that these are likely to be introduced in the first half of 2007.

'With the advancements in battery life of over 70 per cent, we believe Apple is one step (or perhaps two steps) closer in adding widescreen and/or Bluetooth capabilities,' he wrote in a note to investors.

Wu said that the new iPods introduced this week were in-line with expectations. Then he added: 'However, we believe Apple made less apparent material progress in the key areas of battery life, higher resolution video, and user interface (UI) elements that strengthen its iPod + iTunes franchise and that this further distances Apple from the competition.'

Of the new iPods, Wu expects the redesigned shuffle to be the 'dark horse' and become an unexpected top seller.

'We find its small metallic matchbox form factor and [£55] price very compelling for those looking for the unique iTunes experience but [who] only want to pay an entry-level price,' he wrote.

Needham and Co analyst Charles Wolf said that the key part of Apple CEO Jobs Showtime announcements was the introduction of iTunes 7.

'It's the software, stupid,' Wolf wrote in his research note. 'It is an overused expression, but nonetheless software has been the secret sauce of Apple's success in conquering the legal online music market where it has an 88 per cent share in the US.'

He said that the renamed iTunes Store's new features make it more user friendly than it was.

'In our opinion, iTunes represents the greatest barrier to competitors ever catching up with Apple's multimedia ecosystem,' he wrote.

'The significance of Apple's Showtime announcements is that they should maintain, if not increase, the company's dominance of the MP3 player market and the music download market,' Wolf said. 'They also insure that Apple will be one of the major players in the emerging video viewing market both on portable devices and in the living room.'

Piper Jaffray analyst Gene Munster said that Apple is now intent on capturing the nascent living room market.

'This service and product are the first in what will be a multiple year strategy by Apple to target the living room as a new leg to the growth story. We consider the living room as one of the key, untapped consumer electronics markets,' he wrote in his investors' note.

'While the impact to numbers won't start until the March quarter of 2007, we consider the move into the living room as significant given it represents Apple's third major addressable market,' he said. 'In the 1980-90s Apple was a personal computing company, it added portal music in 2001, and now the living room in 2006.'

Merrill Lynch's Rich Farmer said that some investors will doubtlessly have been disappointed by the lack of a widescreen iPod and wireless connectivity, but added that, like Wu, he expects them soon, along with the long-rumoured 'iPhone'.

'In the long run we see fewer structural constraints on share gains in mobile devices (including phones) than exist for Apple versus Windows in the PC market,' the analyst said.

Author: Simon Aughton