AppleInsider StaffOne analyst believes the iPod adoption rate will surge to critical masses over the next 6 years, transforming Apple into a steady 10 billion dollar company and increasing Mac sales along the way.
In a 27-page research note issued to clients, Needham & Co. analyst Charles Wolf claims the iPod will achieve 'critical mass' that could lead to a surge in Mac sales if only a nominal fraction of iPod users make a Mac purchase.
Voicing his belief that Apple— despite being tight lipped— will soon launch a flash-based iPod, Wolf wrote, "Although we expect hard drive players to capture an increasing share of the portable music player market, flash players should dominate the market through 2006."
Wolf also described Apple's online and brick-&-mortar retail stores as "the unsung heroes of the Apple story." He further predicts that by 2010, iTunes Music Store market share will have fallen to just 2 per cent, but equates this figure to sales worth $800 million per year by then.
Touching on the iPod mini, Wolf said Apple will soon have sufficient margin to reduce the price of the iPod mini from $249 to $199.
He also believes that Apple has successfully transformed itself into a $10 billion company again, predicting Apple to reach 2005 revenues of $11.7 billion, up from the previously assessed $10.2 billion.
"We’re forecasting iPod sales of 23.5 million units in 2006," Wolf added.
Several more interesting tidbits, including a valuation of Apple stock, are mentioned in the lengthy Macworld UK report.
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10 Comments
Looking to 2006 and 2010, with a company as unpredictable and out-of-the-pattern as Apple, seems like pretty wild speculation to me. Tons of iPods leading to more Mac sales makes sense... but the numbers? I'm highly skeptical. (I know all they can do is make their best guess.)
Also... runaway iPod success, but iTunes dropping to 2% market share? The two are an integrated system, and I don't expect that benefit to change if Apple DID allow others to play.
Lastly... "flash players should dominate the market through 2006" ...? What? Flash players don't dominate now. They could IF high-capacity 2-10 GB flash chips get cheaper faster than HDs do. Right now HDs seem to have a strong edge.
I should go out and get a job as an analyst, so I can pull in a 6-figure salary and post forecasts that are wildly out of touch with reality, while stating facts about the present market that are patently wrong.
That, or be a "journalist" for one of the major media companies.
Pfft.
I believe that the projections for the iPod Division are very hard to project, mainly because there has not been anything similar in recent history to compare it to.
iPods with HDs are selling as fast as they can be made. The U2 iPod is an unknown at this time, but Hot would be a good description and I feel sure that Apple will milk it for all it is worth. As the U2 sales grow there will be other groups, from the Rolling Stones to the Beatles, that will take a serious look at their own iPod. Might even convince Paul & Ringo to go with the flow and drop the suit.
Digital box sets are another new market that I believe will be profitable for a lot of groups, from the Descendents in the punk area to Elton John to any newer group with 100+ songs.
Next comes the flash based iPod (iPod micro) that will cause another backlog while component supplier struggle to ramp up their production. When supply equals demand I anticipate that the iPod micro will have the majority of the market, in part because of the iPod phenomenon and in part because of the elegance of the design.
Then there is the fact that Apple is not going to sit still. GarageBand and Asteroid are two examples of how Apple is going to continue developing this market - and the competition is left trying to catch up. The competition is always going to be at a disadvantage because their corporate culture is not as focused on innovation at near the extent as Apple's is. The advantage is definitely Apples for 3 to 5 years.
Finally there is the Halo effect. For Apple this means that a 5% conversion rate of Window users who own iPods will explode the computer division over the next few years. It will be a rolling conversion, however, as a new iPod owner might not be ready to replace their PC for a year or two. For some this may be pushed up because they "have to have" GarageBand and Asteroid - or whatever Apple cooks up in the next year or two, but I feel the rolling conversion will bring the majority of growth for Apple over the next 5 years.
AAPL at $100. Very probably unless there are external factors, like a terrorist attack, that kicks the entire market down.
All in all, Apple is in for a great ride over the next 5 years and it is going to be a joy to watch - unless you are MS.
Might even convince Paul & Ringo to go with the flow and drop the suit.
It was my impression that Apple and Apple had comed to a final understanding recently with respect to the issue of Audio hardware. I would certainly hope so as some of the rumored hardware pluys things like Garageband would need to have earlier agreements amended.
Personally I think Apple the computer company and Apple the record company made some pretty huge mistakes with the very first lawsuits. At this point if there are outstanding issues with Apple and Apple the computer company should just buy out the record company. After all the members of Apple the record company will soon be gone from this little rock we call earth. Hopefully the computer company has plans to survive after Jobs leaves this rock.
Dave
Personally I think Apple the computer company and Apple the record company made some pretty huge mistakes with the very first lawsuits. At this point if there are outstanding issues with Apple and Apple the computer company should just buy out the record company. After all the members of Apple the record company will soon be gone from this little rock we call earth. Hopefully the computer company has plans to survive after Jobs leaves this rock.
Dave
Yeah, nothing like wasting a couple of billion dollars on a record company. No one would complain about this, I'm sure (although it probably will cause hardware prices to rise, once the Beatle's ego distortion field intersects Apple, and they feel they can charge even higher prices for everything). And just because the bandmates will be dead doesn't mean the company will. Its a company with owners, just like Apple computer, and will most likely survive the death of Sir Paul and Sir Ringo.