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Last Updated: Feb 18th, 2008 - 14:39:01 |
iPod customer base expanding
iPod customer bas is expanding day by day. Interestingly, the iPod installed base appears set to skew towards the higher function iPod video. Demand for non-Music digital content also expands beyond just the iPod customer base. Industry experts believe this provides evidence that management of digital content in the living room is important to consumers and could drive incremental demand this coming year. Given below are some facts and figures:
Over half of people planning to purchase an iPod this holiday DONT currently own an MP3 player pointing to considerable expansion of the iPod customer base this holiday season.
Of the current MP3 player owners planning to buy an iPod this holiday, 40% currently own a non-iPod MP3 player a sign of additional iPod market share traction.
Only 4% of people planning to purchase an iPod would buy another brand if a store ran out of the desired model.
If we look at those that already own an MP3 player (iPod or other brand), none would buy a non-iPod brand if a store was out of the desired iPod model. In other words, the 4% that would buy another brand are likely less educated/experienced with the iPod brand.
Meaningful shift away from low-end (Shuffle) and towards higher function iPods (Video).
Near-term, low-end mix could be stronger than this data reflects since 76% of people planning to buy an iPod as a gift this holiday will purchase the Nano or Shuffle (vs. 24% for Video).
Non-iPod owners are just as, if not more likely, to watch digital video content (movies, TV shows) on an MP3 player. We think this points to incremental opportunities to penetrate the non-iPod customer base over time.
iPod owners value Podcast content something we believe helps build brand/portfolio loyalty.
Of non-Mac owners today, those that own an iPod are three times as likely to seriously consider the purchase of a Mac.
This is a good read on near-term trends as it only includes people that expect to purchase a PC (for themselves or as a gift) within the next six months.
Importantly, only 25% of those surveyed were aware of Apples transition to Intel chips next year.
Of those aware of the transition and planning to buy a computer over the next six-months, 23% plan to buy a Mac regardless (vs. 25% market share in that sub-segment today). Clearly, some will push-out purchases ahead of the transition but we think this data implies Apple will, at least, maintain market share near-term.
An iPhone product is likely over the next 12+ months. Timing is less clear on this product but industry analysts have started to pick up data points that suggest production is in early stages. Apples strategy is to be an innovation leader. Apple can grab about 2 points of market share in the video phone market next year and earn 10% operating margins (slightly below C05 company average of 11.7%) it adds roughly $1.2B in revenue and $0.09 to C06 EPS. This analysis just includes the financial
impact of hardware sales, but if Apple adopts a service provider model most likely a Virtual Mobile Operator (VMO) platform similar to Virgin Mobile it could drive an additional revenue/profit stream.
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