Apple Takes a Positive Step Forward

Evolution may not be as exciting as revolution, but it still represents a positive step forward, when it comes to Apple Inc.'s (AAPL) latest iPod lineup. 

RBC Capital Markets analyst Mike Abramsky was one of at least two analysts that called Apple's new iPod Nano, iPod Touch iTunes and iPhone firmware – all unveiled at an event Tuesday – an "evolutionary, not revolutionary" step for the company. 

In a research note to clients titled "Rumors of iPods' Death Greatly Exaggerated," Mr. Abramsky said:

The updates should reinvigorate iPod momentum.

He added, however, that the refreshed iPods alone won't be enough to offset Apple's recently lowered outlook, which may be related to planned lower pricing in refreshed Macbooks (expected soon) or some other new innovation, perhaps a low cost iPod phone.

Mr. Abramsky reiterated his "outperform" rating on Apple and left unchanged his $200 price target. 

Citigroup Global Markets analyst Richard Gardner reiterated his "buy" rating and 12-month pricing target on Apple stock of $287, telling clients that Apple's holiday lineup looks good based on the new iPods and expected Macbook refresh in October.

Citigroup Global Markets analyst Richard Gardner said,

While we are generally impressed with the new iPod lineup, we view the hardware refresh and additional features as “evolutionary” rather than “revolutionary." Pricing of new products were also largely in line with expectations. As such, we feel little need to change our current estimates.

Comments

[jmmx:]

Hey guys (analysts, author) - the iPod Revolution is over. The iPod WAS the revolution. What do you expect? A transporter?

The new revolution was the iPHONE. Get it? This is the revolution in process that Apple is currently leading. Did you see the 100M Apps downloaded? Don't you think that THAT was a revolution?

I know what they are looking for - an iPod the size of a toothpick that transmits your music directly into your brain and runs off your body heat. Get real guys. The new design is beautiful, the new features add new value.

Get real!!

2008 Sep 11 10:30 AM

[jmmx:]

@ why so serious

Good points. I only meant the "revolution is over" in the sense that new products will no longer be revolutionary - though the Touch certainly is. You are 100% correct in saying that modest updates are needed to update the line, keep it fresh, and stay #1.

These updates keep it ahead of the competition (don't you just love that "shake to shuffle" feature?) and give incentives for people to update that 2-year-old Pod they have.

2008 Sep 11 12:55 PM

[Tb4me:]

"give incentives for people to update that 2-year-old Pod they have."

How about 10% off a new iPod when you recycle your old one?
Apple's been doing it for years...

2008 Sep 11 01:12 PM

[FishWife:]

The iPhone and iPod Touch represent a technology five years ahead of its time. Only morons and analysts expect Apple to keep on producing revolutionary products every few months. I never realized how intelligent I was until I started reading analysts on Apple!

2008 Sep 11 03:02 PM

[aapladay:]

Well, frankly, I'm about ready for an iPod Touch. I want to stay on Verizon, but would like a handheld computer with wifi. I will probably wait a little longer to see if they can make that a wifi phone as well.
As far as they price cuts, they really don't cut prices. They put the old models on sale and charge the same price for more storage, which is probably offset from costs and economies of scale. Same with the Mac, more sales=lower cost to make=pass on savings to get more sales=even lower cost to make=increasing market share=look out dell and hp!

2008 Sep 11 05:59 PM

[KenC:]

The original iPod click-wheel revolution is over. The NEW iPod Touch revolution has just started. The App Store only just opened two months ago. The first Xmas selling season after the opening of the App Store hasn't yet passed. Next year, will bring more trickle-down features to more Touch devices. The revolution has just begun.

2008 Sep 11 07:06 PM

[brewer:]

iPod has enabled Apple to basically own the media downloads industry. But the real story for investors is the Mac and the iPhone at this point.

iPod is a massive success beyond all reason. The question isn't how do you IMPROVE on that, it's WHY would you need to.

2008 Sep 12 11:18 AM

[brewer:]

Uh, "Why so serious" the original iPod touch has an accelerometer, so they didn't exactly need to add that.

2008 Sep 12 11:00 PM