Coming off of one of
in memory, Apple will kick off
Tuesday, with Steve Jobs building on the company’s momentum with his annual keynote. Tech-industry analysts expect the Apple CEO to concentrate on the ongoing transition to Intel-built processors and on digital entertainment.
JupiterResearch senior analyst Joe Wilcox and Technology Business Research analyst Tim Deal agree that
and the recently introduced
are two products likely to receive an update this week.
Wilcox believes that Apple may make media offerings part of the latest Front Row “starting with video downloads, available through the update. Movie trailers available with Version 1 foreshadow things to come.”
On the hardware front, Wilcox is looking towards Apple’s
notebooks, more specifically the consumer-level
“The time is right for Apple to start talking about new consumer notebooks using
Intel Duo Core processors,” said Wilcox. “Intel announced the chips last week, and other vendors have announced Windows notebooks using the product. A new consumer notebook wouldn’t shock me. Integrated WebCams is a growing trend in all-in-one computers, so I would look for iSight in upcoming consumer notebooks.”
transition to Intel-based processors
this year, Deal believes that Apple will spend some time on talking to its existing customers about the move and put to rest any resistance that may be in the market.
“I expect Apple to try to accomplish two things this year, beginning at [Expo]: The company will do its best to assuage concerns and create excitement around the Intel transition. And I expect Apple to discount and upgrade PowerPC-based units in order to maintain strong demand before the switch to Intel processors,” Deal said.
Jobs declared 2005 to be the
year of HD, but outside of a couple of new—albeit
—products, Apple did more in other areas than in HD. While HD may help the company in 2006, both analysts say that Apple needs to look to the living room for the future.
Microsoft’s home entertainment convergence strategy
presents a significant threat to Apple,” Deal said. “Apple needs to gain the same ground in the living room as it has gained on the streets with the iPod. Jobs needs a compelling living room solution or it risks the relegation of Mac computers to the den. With flat-panel display prices dropping steadily, LCD terminals will become a standard feature in most rooms in the house. Microsoft has anticipated the emergence of the home entertainment network. Apple needs to quickly catch up.”
Apple’s lead in the legal music download and MP3 player market with the
is undeniable, but JupiterResearch’s Wilcox cautions that some of the decisions Apple has made may come to haunt the company in 2006.
“Apple’s leadership position in music is phenomenal, but the market for portable devices and digital stores is new and it’s still fairly small,” Wilcox said. “Apple’s leverage is the huge number of iPods sold. But Apple has made lots of enemies because of its success and because of jilted suitors. And most of those potential suitors, such as Real, now use Microsoft technology. The market for digital music players and music stores is looking more like ‘Apple versus everyone else and Microsoft technology.’ The situation means Apple must continue to brilliantly execute, making absolutely no mistakes.”
A JupiterResearch survey shows that consumers 18- to 24-year-olds prefer subscriptions over purchased downloads. While Apple has resisted any type of subscription service, Wilcox says the company may want to rethink its position.
“Right now, music subscriptions are a key differentiator for the Windows Media camp and with a group of consumers that also is a target for selling iPods,” Wilcox said. “Apple would be wise to remove this advantage, this one point of differentiation, which Windows Media competitors can offer over [the] iTunes Music Store. That said, iPod came before the music store and the device continues to sell well. Until some competitor releases a worthy iPod rival, Apple’s risk remains limited. For now.””
Deal believes content is king, and, in 2006, Apple will need to continue the push it started last year by delivering audio and video content to consumers. Apple also needs to watch the large competitors in the market that could rival its content offerings, he adds.
“Apple needs to continue to partner with content providers in order to quickly boost the availability of video and audio content in iTunes,” Deal said. “While Sony has failed to compete against the iPod to date, the company will leverage the success of the PSP and underscore its multifunctional capabilities along with Sony’s massive catalog of content in order to wage war with Apple. The value of the iPod is dependent upon the quantity and quality of content that fuels it. Consumers demand a rich variety of content and will go where they need to obtain it.”