Analysis - Apple to Introduce Cheaper, Better Wi-Fi iPods

According to Gene Munster, an analyst covering Apple for investment bank Piper Jaffray, Apple Inc. will struggle to maintain growth by introducing a range of more innovative and cheaper iPod models, featuring touch-screens and even multi-touch tech.

AppleInsider makes mention of the analyst's report to clients, released early Monday morning, revealing forecasts for current modeling for iPod growth rates that should stabilize at around 15 percent through the company's fiscal 2009.

"In order to achieve this level of year-over-year iPod growth, we are expecting Apple to introduce cheaper, innovative iPods with Wi-Fi and multi-touch technology," wrote Munster. The Piper Jaffray analyst also notes that the last 3 years have seen Apple maintaining a steady, yet dominant 70 percent share of the MP3 players market. But that's not reason enough to force Apple to introduce a cheaper and more innovative range of iPods.

During the same 3-year period, Apple also grew its dollar share of the segment from 71 percent in 2004 to 84 percent in 2007, as AppleInsider notes. That dollar share jumped through the roof later on, to an amazing 90 percent (during the first full month of iPod touch sales). The newly introduced touch-screen players are to thank for that.

Now, that's reason enough for Apple to want to replicate that success in such rough times: "We believe these numbers imply that, despite a slowdown in growth in the MP3 market, Apple's vision of the iPod lineup becoming a mainstream Wi-Fi mobile platform will have two results," Munster advises. "First, it will spur growth in the portable media player market, particularly from the replacement cycle. Second, if Apple is able to lower prices on Wi-Fi connected and possibly touchscreen iPods, it will be able to maintain or grow its leading market share position."

The analyst goes as far as claiming he believes the iPod touch is a mere first step in this direction. According to Munster, the touch is only the first of several iPods that will emerge from Apple's basement, as Internet-connected devices:

"Whereas the iPod classic simply enables users to listen to audio and watch video (with some remedial calendar and contacts applications), we believe that Internet connectivity opens the iPod to an entirely new set of possibilities," he wrote. "For starters, as we have seen with the iPod touch and the iPhone, email, full-featured web browsing, a mobile iTunes Store, YouTube, and Google Maps are all possible on an iPod."

The analyst concluded his report with a prognosis of Apple seriously planning to launch such solutions "that will enable the company to deliver lower cost, Wi-Fi connected iPods in the near future."

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