Wednesday, May 11, 2005, 01:00 pm
Analyst: Yahoo music service will not impact iPod market share
Although Apple stock is seeing some pressure following Yahoo's recently announced music download service, Wall Street analysts believe Apple's iPod market share will remain largely unaffected by the emergence of the subscription-based service.In a research note released to clients this morning, research and investment firm PiperJaffray said it views the pull-back in shares of Apple as a buying opportunity. "We do not anticipate the market share of the iPod will be meaningfully impacted by the emergence of Yahoo! and other music subscription services," said Gene Munster, a senior analyst at the firm.
Earlier this morning, J.P. Morgan analyst Bill Shope offered similar sentiments, saying Yahoo's new service "does little to break the tight grip that Apple has on the nascent digital music market with its iPod-iTunes link."
"We have seen over the last 2 years that the success of online music services is driven by compatible devices," Munster said. He noted that despite the emergence of new music services in the past year, Apple has maintained its approximate 80% market share in the portable audio device market. "In other words, the risk to Apple is a killer new MP3 player, not a new online music service."
Yahoo's music download service, announced last night in beta form, offers introductory pricing of $6.99 per month or $59.88 per year. But Munster believes that Yahoo will raise pricing to between $10-$15 per month once the service gets on its feet.
PiperJaffray is maintaining its "Outperform" rating on Apple stock with a price target of $52 a share.
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The Introductory Pricing is only going to last so long. People will flock to the service until the price goes up and then Yahoo will be where all the others are. Sharing a minority market where noone gets their bellies full.
Poor Napster though...they just raised their guidance and Yahoo could negatively affect their remaining qtrs this year.