Despite a 12% drop in its share price over the last week, Mr. Munster said he believes Appleis competitive position “is strong and in some segments may become even stronger.”
Speaking of Sonyis Monday announcement of nine new flash-based portable audio devices, Mr. Munster said, “Sony will only be successful at chipping away at iPod market share if a significant amount of highly effective advertising is done and the devices that Sony creates offer functionality benefits over the iPod.
“We believe that any highly effective advertising would allow Sony to gain mindshare, but expect that a shift in consumersi appetites would take a minimum of several quarters to achieve,” he told clients in a commentary obtained by The Mac Observer. “Even if Sony were successful at gaining mindshare, Appleis head start in this market is so significant that we would expect the company could sell 20 million more iPods before Sony, or other potential competitors, start materially impacting the market, which is a good worst-case scenario.”
As for reports that Yahoo! is close to launching an iTunes-like music service, Mr. Munster wrote that successful online music services must have a more closely tied marketing strategy with portable audio devices, like the Apple iPod to be a true success.
“While we do expect some Windows based devices to exhibit material growth starting in the second half of 2005, Yahoo! has not yet indicated that it will have co-branding partnerships with these device manufacturers,” he wrote. “We expect iTunes will maintain leading market share for, a minimum of, several quarters due to the continued success of the device that is the fuel for the service: the iPod.”
Mr. Munster reiterated that he is targeting Appleis stock price at US$50.00.