Apple expected to get deeper into mobile play

Visiongain believes that the years 2006 and 2007 will see Apple's product offerings accelerate as it focuses on convergence technologies. This is one of the findings of visiongain's latest report, "Apple in Wireless: Strategic options in a converged marketplace."

Apple shipped over 14 million iPods during fiscal Q1 2006 ended December 2005, representing 207% growth over the year-ago quarter, and visiongain estimates total shipments of over 40 million iPods. Thanks to close synergies and integration with the iPod, meanwhile, over one billion tracks have been downloaded from the iTunes Music Store since it launched on Windows in October 2003.

Apple acknowledges the threat mobile handsets pose to portable MP3 players in the long term. As such, it has begun to make a mobile play - initially, via the failed Motorola partnership that resulted in the poorly received ROKR handset, a lowest common denominator product that compromised all of Apple's strengths.

However, Apple will embrace mobile more fully and pose a greater threat to the mobile phone industry itself - as an MVNO challenging carriers and a cellphone brand challenging handset makers. Upcoming US MVNO Helio presents a good entry strategy for Apple's iPhone, an own-brand Apple mobile phone that is likely to be launched by the company. Indeed, the release of which is both logical and inevitable, argues visiongain.

The move towards digital entertainment and entertainment convergence has created a powerful opportunity for companies such as Apple. In 2006, visiongain expects over 40% of all cars sold in the US in 2006 to offer iPod connectivity - not MP3 player connectivity, but iPod only.

"The iPod capitalised on and redefined the emerging digital content market that has thus far proven elusive to other industries and iPod competitors," says visiongain analyst and the report's lead author, Pam Duffey.

"iPod's story, however counter-intuitive it may appear, does prove innovation is key to seizing the lion's share of the market. The incredibly simplistic user interface encourages greater usage, and has been Apple's greatest gift to the computing masses," adds Duffey.

"Beyond solid pricing strategy, Apple is expanding its distribution methods and network to grab and maintain leading market share," concludes Duffey.

This report analyses Apple's core products and competencies, the company's strengths and weaknesses, the opportunities that exist for its entry into mobile wireless - on the handset and service sides, and the impact of this move on Apple and the cellular industry. It also discusses the possibility of the iPod getting VoIP functionality and what the implications would be.