September 3, 2002 8:16 AM PDT

iPod to reach the masses

Best Buy will begin selling Apple Computer's iPod later this month, in a move that analysts say could be instrumental in igniting sales of the digital music player.

Starting Sept. 15, Best Buy will carry two Windows models and a Mac iPod in more than 500 retail stores, adding to the 35 Apple retail stores and 225 CompUSAs selling the digital music player.

The move comes soon after the first Windows-compatible iPods started selling at Apple retail stores, CompUSAs and independent Mac dealers.

In October, Apple unveiled the iPod, a shirt-pocket-sized digital music player built around a 5GB hard drive. The company unveiled in March a 10GB iPod with a 2,000-song capacity. Neither model would sync with Windows PCs because Apple's iTunes software works only with Macs.

Apple unveiled a Windows version of iPod in July, but the company only started selling the new models at the end of August. Instead of releasing a Windows version of its iTunes digital music software, Apple released separate Windows iPod models with syncing software from MusicMatch.

Opening up sales channels for the Windows version of iPod could be very important for Cupertino, Calif.-based Apple.

"That's sensational news," Needham analyst Charles Wolf said. "I'm predicting that in the (fourth calendar) quarter, Apple will sell a half million units, assuming consumers keep spending. To put that in perspective, a year earlier the Mac community bought 125,000 units. Best Buy is hugely important because of their presence and electronics. It is one of the main places people go to buy digital music players."

Wolf made his predictions largely based on the huge impact the release of a Windows iPod could have on sales.

"IDC estimates 12 million shipments worldwide of portable music player shipments this year and 25 million next year," Wolf said. "At the current price points, based on my assessments, Apple could acquire 15 percent or 20 percent of the market--somewhere in that neighborhood."

Apple is openly enthusiastic about the move into Best Buy stores.

"We're thrilled to be working with Best Buy to bring the iPod to even more customers," Tim Cook, Apple's executive vice president of worldwide sales, said in a statement.

Before Apple released the Windows iPod, many Windows users looked to third-party software for syncing with the digital music player. In late June, for example, MediaFour released XPlay, Windows software for syncing with the Mac iPod. Earlier in June, software developers TrentSoft and DataViz released syncing software with similar capabilities.

Even Linux users are joining the iPod foray. In July, for example, San Francisco-based Tex9 released a beta, or testing, version of a iPod plug-in for its Xtunes player. On Monday, Tex9, changed the name of Xtunes to Sumi at the request of Apple.

Best Buy will carry the 10GB and 20GB Windows iPods, for $399 and $499, respectively. The retailer also will sell the 10GB Mac iPod for $399.

"By adding Apple's iPod to our portable MP3 player selection, we're providing a new level of style and usability that's a perfect fit for Best Buy's techno-savvy shoppers," said Mike London, the company's executive vice president.

The sales arrangement with Best Buy marks Apple's return to the Minneapolis, Minn.-based retailer. In February 1998, Apple exited sales arrangements with Best Buy, Computer City, Office Max and other retailers.

Analysts did note that the sales arrangement, while good for iPod, is not an indication that Apple plans to expand the number of major retailers carrying Mac computers. Looking to Apple's failed relationship with retailers and the Apple's own expanding store strategy, the deal with Best Buy is likely a cautious move designed solely to increase the sales of one potentially popular product.

Apple has had mixed success selling in retail stores that carry Windows products, say analysts. So far, only at CompUSA shops, where there is an Apple store within the store, has the Mac maker had any real success. In February, Apple stopped selling Macs at Circuit City, ending an arrangement made in July 2000. In March 2001, Apple pulled out of Sears, Roebuck, which had been selling the original iMac.

 

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