Barron’s: Apple shares might be pressured due to wireless phone companies’ push into music

“Apple Computer Inc.’s soaring shares might come under pressure if wireless phone companies’ push to turn most cellphones into music players slow the sales growth of Apple’s hugely popular iPod digital music players, Barron’s newspaper said,” Reuters reports. “The newspaper said that by 2006, many new handsets will carry software, circuitry and data storage for portable music. It said this will let people download songs from personal computers, like iPods, but also download music over the air.”

“Barron’s said that while some analysts believe Apple might sell 45 million iPods next year, that pales next to the 750 million or more handsets that might be sold,” Reuters reports. “Apple is the No. 1 seller of portable digital music players, often called MP3 players, which let users carry thousands of songs on a device smaller than a wallet. Users of iPods include Britain’s 79-year-old Queen Elizabeth II.”

Full article here.

MacDailyNews Take: Apple might sell 45 million iPods next year, but Apple shares might come under pressure? Okay. Has anybody mentioned Apple’s deal with Motorola regarding iTunes mobile phones?

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28 Comments

  1. The article makes good points. At some point, iPods will face competition from mobile phones that play MP3’s, but only if these phones have an interface that is as easy to use and as intuitive as the iPod’s, and if they have music management software as good as iTunes. In my opinion, the iPod’s success is mostly due to iTunes. Digital music players existed before the iPod, but the iPod became a huge hit because it was the easiest to manage. That’s thanks to iTunes and the iTunes Music Store.

    As to Apple’s stock coming under pressure, that’s actually quite likely. The share price of most companies is driven by day traders, the mom and pop who dabble with the stock market on E-trade, and let’s face it, how many of them really know anything about the viability or profitability of the company whose stocks they fool around with? These are the folks who jump on the bandwagon or stampede for the exits on the say so of analysts, who then look like geniuses by issuing self-fulfilling prophecies.

  2. Apple might also take out full page ads telling everyone to fuck off. Mobile phone manufacturers might listen to them and stop putting music playing capability on their phones.

    magic word: might

    Worthless.

  3. Cingular may prevent music on computers to be downloaded onto the new motorola phones and require you to purchase songs directly from iTMS to be downloaded into the music phone. This would require you to pay cingular monthly and per data bit rates. This way people get songs onto their phone and Cingular rapes the average consumer by forcing to do everything via their network.

  4. Looks like AAPL shares are down today – but on interesting news.

    Seems the down tick is due to a report by Creative that their mp3 players are seeing lower than expected demand. They expected to sell about $330M-360M this quarter but are now guiding to $300M. (See the story here: http://www.thestreet.com/_yahoo/tech/hardware/10229760.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA)

    This is the same Creative that declared war on the iPod and had all sorts of talk about taking over the MP3 market.

    Oops!

    my magic word is “move”

  5. What’s with clearing my name and address in the feedback space?

    Back to the article: Does your phone run for 8+ hours while pumping out music? Mine can barely make it though the day if I talk more than 10 minutes. Another point: It’s the interface, stupid. It’s also the whole package from finding and managing music to playing it and playing with it. A cell phone pales to a laptop in these functions. Even the iPod doesn’t manage music.

    This is just a ploy by the cell phone networks to control a possible revenue stream. They’ll catch some of the market, but we’ll hate them for the way they’ll do it and it won’t be a net gain. In the end we’ll have less choice and less freedom.

  6. And just to clarify why Creative’s report drove Apple’s stock down – Analysts are insane some times. They see the Creative’s lower demand means that general market demand for digital music players is weakening. In reality, there are a few possibilities:
    (1) Digital Music Player market is softening
    (2) Creative over estimated their own sales in an attempt to bolster their marketing campaign and issue a sign of strength.
    (3) Apple/other competitors are taking Creative’s sales while the DMP market is strong.

    I believe it is #2 myself.

    My magive word is “members”

  7. The “idea” of convergence is nice– but it’s really convergence that works well that’s the key. If someone can create a machine that does everything AND it’s elegant to use, convergence will succeed. If the gizmo is a jumbled, hacked together geek-machine, it’ll make someone some money, but Queen Elizabeth (and my mom) won’t come near.

    MDN word: policy, as in “Don’t get arrested by the policy while converging your gizmo.” ” width=”19″ height=”19″ alt=”tongue rolleye” style=”border:0;” />

  8. Mobile phones have been able to play music almost as long as the iPod has been around (or longer?) with little impact. Apple will probably come to dominate that sector too with its iTunes Mobile Music and strategic partnerships with Motorola, Cingular etc.

  9. It occurred to me the other day that an ipod phone could have a rotary dial style mechanism combining the number pad and the scroll wheel. I miss rotary dial. It could then look pretty much like an ipod, no myriad of buttons, no stupid joystick/pad for navigation etc.

  10. Solution: Apple starts making mobile phones.

    What’s the difference between an iPod that makes calls or a Motorola that can play MP3s, eh?

    Bet they’d look a damn sight better than the rest, too!

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