Apple talks iPod next week
Posted
Sep 03 2008, 02:51 PM
by
Kim Peterson
Rating:
Apple is having an event for reporters next week, and sent out invites with the words "Let's Rock" and the image of someone listening to an iPod. It doesn't take a Genius Bar employee to know what that's about. We're talking iPod, and we're talking price cuts.
Apple is already running an iPod promotion for college students and faculty, offering a free iPod with every Mac. One analyst, Doug Reid of Thomas Weisel Partners, is concerned about the effect on margins, suggesting that the kids are buying the cheaper $1,300 Macbook but then taking the more expensive iPod Touch as the freebie. Damn those students and their shoestring budgets!
But another analyst, Piper Jaffray's Gene Munster, says Wall Street isn't appreciating the Mac and iPod unit sales that this promotion will produce.
Margins will take an even bigger hit with the expected iPod price cuts next week. Munster is expecting the iPod Touch price to fall to $200 from $300. Apple already warned us that a margin drop is coming, though it still hasn't explained exactly why. Is there something else on the horizon affecting the bottom line?
We hear a lot about the iPhone these days, but it's the iPod that brings nearly a quarter of the company's revenue. Yet growth is slowing, and iPod sales are up only 7% from a year ago. Apple is still paying plenty of attention to the iPod, trying to keep the line fresh as competitors roll out new offerings.
Price cuts are one way to do that, but I suspect the company might have a surprise or two up its sleeve.
Here's what others are saying about Apple lately:
Wall Street Journal: "Of its many offerings, Apple's iPod line is the most in need of a refresh. Growth in the business has slowed in recent years as the digital music-player category, dominated by Apple, has matured."
Pacific Crest Securities analyst Andrew Hargreaves, on next week's event: "I'm not expecting anything revolutionary."
Portfolio: "The iPod/iTunes combo still dominates, and it dominates because right now it is the best, most complete solution for most consumers. But iPod's growth has stalled, and competitors aren't banging at the door because they're stupid -- they're banging because they think they can have an impact on the market."
