Apple faces the ‘ so what’s next?’ question
While iPod dominates the digital music market, Apple is already facing the “So, what’s next?” question, considering that shipments of music players came in at 6.45 million, short of analysts’ estimates, which ranged as high as 8.5 million.
The video iPod is seen as the logical successor because highspeed Internet networks are making it easier for consumers to find and download content such as movies, sports and television shows.
Mr. Enderle said a video iPod does not ensure continued success for Apple.
“It is far too early to tell,” he said. “ TV watching is passive. Music listening is active. A video iPod could mean users would have to avoid doing active things like running [when using the device.]”
Kaan Yigit, president of the Solutions Research Group, said the iPod has been a huge success that has restored Apple’s cachet but the product faces a significant challenge maintaining its sales and marketing momentum.
That momentum was driven in large part by the ultra-small iPod nano device released in the past quarter.
For the quarter ended Sept. 24, Apple reported net income of US$430-million, or US50¢ a share, up sharply from the US$106-million (US14¢) it reported a year earlier. Revenue climbed to US$3.68-billion from US$2.35-billion. Excluding a US12¢-a-share tax benefit, the company earned US38¢ a share, better than the US37¢ a share expected by analysts, according to Thomson First Call.
“I am cautiously optimistic Apple will keep making the right moves but what always scares me is the phenomenal level of competition in this sector,” said Mr. Yigit. “ What competitive edge Apple has is pretty thin in my mind. They dominate a relatively limited playing field that they have turned into Starbucks — a premium product — but it only goes so far.”
EchoStar Communications Ltd., the second-largest U.S. satellite TV provider, announced its own iPod device yesterday, further crowding the digital music player market. The device, called the PocketDish, goes on sale this week at U.S. retailers for US$329 to US$599.
Mr. Enderle said heightened competition makes it necessary for Apple to expand.
“ If anyone else gets a clue, they can be overwhelmed,” he said. “ Apple has to match those companies with product breadth and services depth. Losing share in the mobile music player space would do very bad things to the share price.”