Study reveals Apple still gaining ground in music space
After recently completing its 12th bi-annual teen survey, research and investment firm PiperJaffray said Apple Computer continues to gain share in the digital music player and online music markets, despite the constant emergence of new competitors.
According to the study, 45 percent of students expect to buy a new digital music player in the next 12 months, up from 41 percent who said they expected to buy a player in the 12 months after the firm's spring 2006 survey. Of those expecting to buy an digital music player in the next 12 months, 76 percent indicated they would buy an iPod — a figure which was slightly down from the 88 percent who said they planned to buy an iPod in the spring.
"While Apple may have lost some ground in this category, 76 percent is still significantly higher than the next highest at 8 percent (Sony)," Munster wrote.
Meanwhile, the study found that 79 percent of students are currently downloading their music online. However, most (72 percent in fall 2006, up from 65 percent in spring 2006) continue to use free (P2P) music sharing networks instead of paying for music legally.
"But of those students who use legal online music services, 91 percent said they use iTunes, which is up significantly from our spring 2006 survey, in which 71 percent of legal music downloaders said they use iTunes," Munster explained. "We believe this is a result of the increasing variety of content on iTunes."
At the same time, Munster said interest amongst teens in an music-enabled phone increased to 74 percent from 70 percent in the spring survey. "Importantly, teens are becoming more willing to pay more for this type of device with 43 percent of students said they would pay more than $200, up from 37 percent," he said.
The bottom line, Munster said, is that "Apple continues to dominate the [digital music] player and online music markets, despite new competitors constantly entering the market."
"We believe that winning over the teen demographic is critical to continued long-term growth and Apple is clearly in the lead in this market segment," the analyst added.
Munster maintains an "Outperform" rating on shares of Apple Computer with a price target of $99.