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Analyst: iTunes Could Have "Notable Impact" on Fiscal 05, 06

by , 1:20 PM EST, February 22nd, 2005

iTunes downloads could move from being merely a driver of iPod sales to having a "notable impact" on Apple Computer's bottom line in fiscal 2005 and 2006, a Wall Street analyst predicted Tuesday.

Piper Jaffray analyst Gene Munster said in a research note obtained by The Mac Observer that downloads for fiscal 2005 could reach 513 million, and one billion in fiscal 2006, and that these sales would be meaningful to Apple's bottom line.

At the heart of these predictions is Piper Jaffray research that showed iPod owners were averaging 6.6 downloads from Apple's iTunes Music Store.

"If we apply this 6.6x ratio to our cumulative iPod- installed base estimates through CY05 and lower the ratio to 6.0x in CY06," wrote Mr. Munster, "iTunes downloads for CY05 would be at 513m vs. our current estimate of 387m, with CY06 iTunes downloads of 1.0b vs. our current estimate of 542m."

While Mr. Munster specified that iTunes sales wouldn't have as big an effect in 2005, he said that iTunes could contribute between four and seven cents per share in profit in 2006, depending on operating margins for the online music service.

The research note reiterated Piper Jaffray's "Outperform" rating for Apple's stock, as well as a 12-month price target of US$100.

*In the interest of full disclosure, the author holds a small share in APPL stock that was not an influence in the creation of this article.  


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Observer Comments

Show: Subjects Only | Full Comments
View Name:RealityCheck -   Troll Posts: 392 Joined: 06 May 2004
Subject: iLemmings Will Have To Rebuy Songs With Higher Bitrate
Close Name:Small White Car Posts: 1960 Joined: 02 Jul 2004
Subject: Re: iLemmings Will Have To Rebuy Songs With Higher Bitrate

Quote
RealityCheck wrote:
Can't wait until iTunes increases its lame 128 kbps bitrate for songs and the Apple disciples have to shell out again to rebuy the songs they thought they already owned. Get ready for an extra large gulp of Kool-Aid.


Why? WHY can't you wait? You never tell us the important part.

Close Name:Guest
Subject: you're assuming

you're assuming RL has something important to say...

Close Name:B-sabre Posts: 70 Joined: 18 Jan 2005
Subject:

Also, this just in from the analysts....

- Water is wet, can be considered to remain so for the rest of Fiscal '05;

- Analysts will continue to make "predictions" that can be charitably categorized as "bleedin' obvious" to most people with a clue, and get paid for them;

Close Name:Mace Posts: 9564 Joined: 07 Aug 2003
Subject:

B-sabre is so cruel to analysts.

Close Name:Guest
Subject: More RC FUD - You Own iTMS Purchases

OK I'll bite. What part of the iTMS Terms of Sale say that you don't own the music that you just purchased?

And just because they limit the ways you can use it doesn't mean you don't own it. Compare to software, which you also own, but whose right to use is limited by the license agreement.

Close Name:Small White Car Posts: 1960 Joined: 02 Jul 2004
Subject: Re: More RC FUD - You Own iTMS Purchases

Quote
Anonymous wrote:
OK I'll bite. What part of the iTMS Terms of Sale say that you don't own the music that you just purchased?


The Reality Check ammendment. It's at the bottom. In very, very small type.

I don't get it either. Usually RC links to some sort of mis-leading article taken out of context to "prove" his points, but for this particular idea he's never offered anything. And he keeps bringing it up again and again. I mean, he never gets anything right, but I'm also curious as to why he keeps returning to this one so much. Usually he moves on to something new eventually.

Close Name:B-sabre Posts: 70 Joined: 18 Jan 2005
Subject:

Quote
Small White Car wrote:
Quote
Anonymous wrote:
OK I'll bite. What part of the iTMS Terms of Sale say that you don't own the music that you just purchased?


The Reality Check ammendment. It's at the bottom. In very, very small type.

I don't get it either. Usually RC links to some sort of mis-leading article taken out of context to "prove" his points, but for this particular idea he's never offered anything. And he keeps bringing it up again and again. I mean, he never gets anything right, but I'm also curious as to why he keeps returning to this one so much. Usually he moves on to something new eventually.


It's his own personal version of the "Megahertz Myth". 128 kbps is less than 160 or 192 or whatever kbps, so it is OBVIOUSLY inferior. What he fails to account for is the difference in AAC encoding vs MP3 vs WMA or whatever. Same way you cannot do a flat comparison between PowerPC and Intel X86 chips soley on processor clock-speeds.

Mace, as far as analysts go, I am much too easy on them.

I'd give them the same treatment I reserve for "Windows Security Specialists", but then I'd never get a chance to clean my skinning knives.....

Close Name:kenaustus Posts: 602 Joined: 27 Jun 2003
Subject: RC's having a hard time

Close to 5 million iPods sold last quarter, Mac sales up almost 25% and now comes the iPod shuffle and Mac min - both with strong sales and backorders. All he has left to hold onto is a stripped down Longhorn that will be out some time in the future. Reality is turning into a bounced check for him these days.

Close Name:Biff Posts: 1479 Joined: 08 Apr 2004
Subject:

Longhorn is gonna rock! It's gonna have this cool open-GL based UI that uses the graphics card to accelerate it! And its gonna have this cool universal search tecnology.. oh wait that got cut. Well its gonna um... its gonna be $up3r L33t!

View Name:RealityCheck -   Troll Posts: 392 Joined: 06 May 2004
Subject: Check The iTunes Fine Print
Close Name:Small White Car Posts: 1960 Joined: 02 Jul 2004
Subject: Re: Check The iTunes Fine Print

Quote
RealityCheck wrote:
Nothing in the agreement prevents Apple from charging iLemmings for higher bitrate versions of the same songs already purchased.


Very true. But how do you deduce that you would be FORCED to buy new versions? Many people threw out their VHS tapes for DVDs, but no one was forced to do so.

I don't see this situation being any different. I, for one, can't tell the difference and would not re-buy my music again, and I can't find anything that indicates I would have to.

Close Name:Guest
Subject: RC continues to lose the plot

Is RC really this dumb. Read the terms and conditions of anything and you will be amazed (or it would seem he would) how little control the consumer actually has over anything. Microsoft business contracts are a very good case in point. Of course the music on sale at itunes, as else where, will over time change to higher quality (not necessarrily higher bitrates of course and consumers will have the right to either stick with what they have or buy that extra quality if they feel they wish to. The product as it stands is certainly in its present form as good as, or better than anything MS can offer at their bitrate. Equally of course it is soon going to get a whole load better which is maybe why he is trying to turn a further Apple success story into an apparent disadvantage - did you see his sleight of hand anyone? Certainly an upgrade in RC's brain cortex would also be an asset (though arguably not worth the monsy) but I doubt that true vision or even a modicum of honesty would be welcome by him in his present deluded state anyway.
Spy

Close Name:Guest
Subject: RC wants to shop at iTunes REAL BAD

Quote
Small White Car wrote:
Quote
RealityCheck wrote:
Nothing in the agreement prevents Apple from charging iLemmings for higher bitrate versions of the same songs already purchased.


Very true. But how do you deduce that you would be FORCED to buy new versions? Many people threw out their VHS tapes for DVDs, but no one was forced to do so.

I don't see this situation being any different. I, for one, can't tell the difference and would not re-buy my music again, and I can't find anything that indicates I would have to.


Exactly right, small white car. Caveat Emptor applies (in the nicest way possible) to this and any product purchase. For example, I could see the rationale in charging for high quality formats, different rates, etc. Apple is righly not limiting future options as technology evolves. Meanwhile, I have my purchased music at 128 and it's not going anywhere (so long as my hard drives don't crash and my CD backups don't melt in a fire).

RC = Envy
Kind of explains all about him, don't it?

Close Name:B-sabre Posts: 70 Joined: 18 Jan 2005
Subject: Pot to Kettle....

Quote
RealityCheck wrote:
Here's part of the iTunes agreement you must have missed:

"Apple reserves the right to change the terms and conditions of sale at the iTunes Music Store at any time. Customers are encouraged to review the Sales Policies on a periodic basis for modifications."

Apple's already changed the rules once by reducing the number of burns. Apple could reduce the number of burns to zero if the RIAA asked. Nothing in the agreement prevents Apple from charging iLemmings for higher bitrate versions of the same songs already purchased.


You mean sort of like this?

Quote
Napster reserves the right at any time and from time to time to modify or discontinue, temporarily or permanently, the Service (or any part thereof) with or without notice to you, without any liability to you or to any third party.


Or this?

Quote

Right to Change Prices. All prices for products within the Service are subject to change by Napster at any time.


Or this?

Quote

Loss of Rights by Napster. Napster may at any time lose the right to make certain Tracks and/or Materials available. In such event, you will no longer be able to obtain these Tracks and/or Materials or to utilize the "Sync/Restore" function for Purchased Tracks.


At least with iTunes, if they lose the rights to something I already purchased, I still get to keep it.

Close Name:Guest
Subject: Hey REALITY CHECK...

Which music store do you propose we use? Hmm? Because according to a chart on buymusic.com, the following stores encode their music at 128 k...

iTUNES MUSIC STORE
NAPSTER
MUSIC MATCH
WAL-MART

Most of the songs available through sites like LIMEWIRE are also at 128k.

Don't try dishing out the BS that we should all rent our music from Napster -- because according to that chart, it is the same bitrate.

So what is it, Reality Check? Which store do you recommend?

By the way, the songs I purchased through the iTunes music store sound great! I feel no need to re-purchase songs I've already paid for -- regardless of the bitrate. You can't possibly know how they sound unless you use iTunes?

You should get a life, you tool.

-Sethtv

Close Name:Guest
Subject: hey you dummies

All your analysts, FUD's, RC's, TOS's, AND purchased iTunes are belong to us NOW !

Close Name:Bookman Posts: 543 Joined: 22 Apr 2002
Subject:

RC is an ass - I used to think he had a point once in a while, but lately he's blown his cover - I see a 15 year old kid with no social skills and no friends who lives on his computer, who mistakenly confuses his warped version of "technological literacy" with intelligence, who no doubt works himself into a frenzy with first-person shooter gamez that he pirated and Bawls energy drinks.

Close Name:Guest
Subject:

"Can't wait until iTunes increases its lame 128 kbps bitrate for songs and the Apple disciples have to
shell out again to rebuy the songs they thought they already owned."

That doesn't make sense. If Apple increases the bitrate for iTMS, nobody has to purchase higher bitrate versions of their songs unless they want to. And considering Apple accounts for over 70% of the online music business, I don't think many people care for a higher bitrate.

"
Here's part of the iTunes agreement you must have missed:

"Apple reserves the right to change the terms and conditions of sale at the iTunes Music Store at any
time. Customers are encouraged to review the Sales Policies on a periodic basis for modifications."
"

That's talking about the terms and conditions of sale. Of SALE. Not the terms and conditions of storing songs purchased from the iTMS on a computer. It does not say Apple can suddenly decide the iTMS is a subscription service and make a person pay rent on the songs they've downloaded, and neither does it say they can decide to delete a person's songs. The terms of sale spell out that whoever buys a song, OWNS that song. I know you've been lying and saying the opposite is true, but reality contradicts you again.

Close Name:Guest
Subject: And RC Is Massively PWNED Yet Again...

Why does he bother? He's like a human pinata around here... he says something (always stupid) and it gets blown out of the sky the second it leaves his mouth.

I think the score by now is like

MacObserver Regulars 293
Reality Check 0

I almost feel sorry for the poor little Bill Gates wannabe. Almost.

Close Name:jhonka Posts: 77 Joined: 05 Sep 2003
Subject:

Quote
RealityCheck wrote:
Can't wait until iTunes increases its lame 128 kbps bitrate for songs and the Apple disciples have to shell out again to rebuy the songs they thought they already owned. Get ready for an extra large gulp of Kool-Aid.

What's this have to do with ANYTHING in the story??

Close Name:jhonka Posts: 77 Joined: 05 Sep 2003
Subject: dude. think.

Quote
RealityCheck wrote:
Here's part of the iTunes agreement you must have missed:

"Apple reserves the right to change the terms and conditions of sale at the iTunes Music Store at any time. Customers are encouraged to review the Sales Policies on a periodic basis for modifications."

Apple's already changed the rules once by reducing the number of burns. Apple could reduce the number of burns to zero if the RIAA asked. Nothing in the agreement prevents Apple from charging iLemmings for higher bitrate versions of the same songs already purchased.

And why would I be "forced" to buy a higher bitrate version in the future? And why does 128 kbps AAC actually sound fairly good to the untrained ear? Why would audiophiles who want CD-quality sound shop at an online music store in the first place, considering all music stores/subscription services use compressed (read: not lossless) formats? Why not come back with a reasonable post? I swear it's like talking to a brick wall--except the brick wall is more reasonable.

Close Name:Guest
Subject:

Analysts can go suck my b*lls

Close Name:Guest
Subject:

Quote
Anonymous wrote:
Analysts can go suck my b*lls


suck my bills, I mean. I have lots of bills to pay.

Close Name:Guest
Subject:

Mac idiots.

Close Name:Intruder -   TMO Mac Specialist Posts: 3144 Joined: 07 Jul 2004
Subject:

Quote
Anonymous wrote:
Mac idiots.


Wow! A troll bot poster!

Another PWNED Windows machine strikes again!

Close Name:Guest
Subject:

Quote
Intruder wrote:
Quote
Anonymous wrote:
Mac idiots.


Wow! A troll bot poster!

Help me. I need the power of the Apple.

Mac idiots.

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