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iPod competitors can\'t compete with Apple


Apple Computer's massive iPod shipment volume is allowing it to produce digital music players at a cost far below its competitors, and thus will remain atop the digital music player market for years, says one analyst.

Gene Munster, an analyst at PiperJaffray, recently surveyed a broad number of digital music players to see if any competitors can compete with Apple's iPod based on price.

The study looked at 20GB and 30GB players from device makers: Creative, iRiver, Samsung, and Sony. "Apple's 30GB iPod provides the lowest cost per gigabyte at $10, followed by Creative's Zen Vision:M at $11," Munster wrote in a research note. "It should be noted though that the Zen Vision:M has a few more features (i.e., personal organizer, recorder, more song storage, more hours of video, and an FM tuner) than the iPod."

The analyst noted that the only other video capable devices were from Samsung and iRiver, and cost between $15-$25 per gigabyte, while those without video capabilities cost at least $11 per gigabyte.

Looking closer at device maker Creative, Munster said he was impressed by the features of its new Zen Vision:M, a knock-off of Apple's 30GB video iPod. However, the analyst believes the key question was: "Will Creative be able to pack these features into a 30GB device and price it below an iPod?"

"The answer is no," Munster said, noting that the device is $329.99, $30 (10%) higher than the price of Apple's 30GB iPod. Although, the iPod's competitors often have similar, if not broader, feature sets than the iPod, none have proven they compete in the two key areas of user interface and "cool" factor," he said.

"We believe that non-iPod devices must compete on price to gain adoption, but Apple has such massive relative shipment volume with the iPod that other MP3 player manufacturers are not able to replicate the economies of scale achieved by Apple," Munster added. "We believe this reality will allow Apple to sell iPods at the lowest prices in the market, thus retaining the iPod's pole position for years."

PiperJaffray maintains an "Outperform" rating on Apple shares with a target price of $79.