ML: \"fun new products\" a bit light for invitational event
Analysts for Merrill Lynch are the latest to express a lack of fanfare over Apple Computer's new product introductions and are unconvinced that the company's announcements were substantial enough to merit an invitational media event.
By integrating an Intel graphics processing unit to the petite computer — instead of the previously used ATI discrete graphics card — Apple was able to speed up execution in the Intel transition, the analyst believes. But in the long run, Intel's increasing vertical integration into systems components is a strategic threat for the PC ecosystem, including systems vendors, he said.
Meanwhile, Farmer believes the iPod Hi-Fi and leather cases are just the latest examples of Apple's strategy to harvest a greater percentage of the accessories market derived from the booming iPod installed base. According to the analyst, this strategy will likely suit Apple fine in the short term but could create iPod ecosystem risk over time.
"In the long run, however, by competing with its ecosystem partners with increasingly aggressive moves into categories such as speakers and the implementation of an iPod connector license 'tax', Apple risks alienating its ecosystem and creating a margin umbrella that is ripe for disruption from other platforms over time, in our view," he wrote.
Farmer believe Apple's new iPod Hi-Fi boombox offering compares best with the Bose SoundDock digital music system which retails for $299. "For an extra $50 the iPod Hi-Fi product offers battery power capability for music on the go and audio inputs which allow for streaming music if used with the optional Airport Express," he wrote. "The relative quality of audio between the iPod Hi-Fi and the Bose SoundDock is not clear to us."
Overall, the analyst was not overly impressed with the company's new products, of which many believe combined for a lackluster media event.
"We wonder if the announcements were substantial enough to merit an invitational media event and suspect Apple needs to be judicious if it expects to continue to convert journalists into marketing instruments with its aura of secrecy," Farmer wrote.
He said pricing for the iPod Hi-Fi and leather cases suggests Apple believes it can position its accessories at a premium to competing alternatives.
"Sell through will be an important test of the Apple brand," Farmer wrote. "Initial blog activity (an admittedly unscientific measure of customer sentiment) reflected some skepticism."
Merrill Lynch sees Apple stock as neither inexpensive nor expensive. However, the firm sees "insufficient magnitude" to recommend the company's shares at this time.
20 Comments
95% the hype that led to people expecting more came from outside Apple--sources with no information at all just guessing or wishing. Apple just invited a SMALL number of people to a SMALL venue for "fun" products. Beyond that, the anticipation was irrational, and analysts are as guilty as Mac rumor fans.
"Apple risks alienating its ecosystem" with its accessories? I think that's overlooking the sheer SCALE of that ecosystem. Apple couldn't topple that if it tried. They could, of course, push those vendors to compete with better and better things.
Not to mention, I don't think the iPod Hi-Fi (nor the overpriced cases) are exactly targeting the mainstream center of the accessories market. Selling cheap cases with a lot of different styles and functionality might to that--but not a high-end speaker system.
I do agree that it probably wasn't necessary to hold any type of media event given the products that were announced...
I like this, this is tempering expectations for future Apple events, that way, when the big things hit, it will hit harder because less people will be expecting it.
Apple knew that a special event would create a lot of hype based on the previous two they held. I'm sure they were counting on this.
Nagromme
dammit! Don't you dare try to inject common sense and logical thought into this discussion. What the hell are you trying to do man? I can't wait to hear this "boombox" really looking at pictures does nothing. You have to hear this baby and decide if it's for you or not.
Hell if I like it I might have to stack a LCD on it and us it as my main stereo system. Who knows.