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Munster Answers 14 Questions No One Was Asking

Good old Gene Munster. He’s just obsessed with Apple (s aapl), ain’t he? In a note yesterday to clients, and reported by AppleInsider, Munster answers 14 “questions” about Apple that cover such topics as its iPhones, iPods, Apple TV, Retail Stores, AT&T (s att) partnership and more.

In short, it’s nothing we haven’t heard from him before, but just in case you haven’t been keeping up with Piper Jaffray’s Senior Analyst this year, here are the highlights.


Munster predicts AT&T’s exclusive deal with Apple will end next year, allowing the iPhone to be sold by other carriers. He cites the end of Apple’s exclusive deal with French carrier Orange. “For various reasons the company moved from an exclusive relationship with French wireless carrier Orange to a multi-carrier model,” he says. Well, I wouldn’t exactly describe it as “various reasons,” Gene, the reason was made quite clear. The Competition Council in France deemed the five year exclusivity deal unfair and cut it (and all similar future deals between carriers and hardware manufacturers) to a more competition-friendly three months.

But hey, “various reasons” sounds more knowledgeable, I suppose. Don’t forget, he’s a Senior Analyst.

No Cheap iPhone

Munster predicts there won’t be a sub-$99 iPhone 3G offering from Apple any day soon because the company is not interested in competing with the $10 basic cell phones that dominate markets like India. Call me an old cynic, but did we really need an analyst to tell us this? Here, try this: I predict that Apple isn’t interested in offering a sub-$500 MacBook because the market is swamped with $299 offerings from manufacturers of small form-factor PC notebooks. There. That sounded good, can I be an Analyst, please?

Television on iTunes

From AppleInsider’s article:

In his report, Munster also believes that Apple is dissatisfied with the current status of video content offered in iTunes. Specifically, he said the video store is lacking HBO and is often tied to limited movie availability periods.

“We believe Apple is unhappy with the current status of video on the iTunes Store and is working to change it,” Munster said. “These changes, however, will take time, in the form of lengthy negotiations, in order to bring the rights for TV and movies up to speed in a digital world.”

Really, if you look at Apple’s track history with the iTunes store, this is hardly a clever or enlightened insight. Apple has, over the years, struggled to provide a decent selection of TV shows in the iTunes store. It’s a struggle that perfectly mirrors the same difficult journey Apple took getting music from the major record companies into the store in high quality, without the crippling DRM limitations the labels stubbornly clung-to.

In 2008 during his keynote at Apple’s September 9 “Special Event,” Steve Jobs declared that NBC shows were “back in iTunes.” They’d been absent for almost a year, since, the previous December, NBC pulled its content from iTunes over a pricing dispute.

It was obvious there had been a lot of wrangling between Apple and the broadcaster. It’s just as clear today that, as the television industry continues its relentless descent into death, and Apple continues to push for more content to be made available in iTunes, such wrangling will continue. Broadcasters still don’t “get” the Internet. The same way record labels didn’t.

Again, we didn’t need Gene to spell this out. But he did it anyway. He’s generous like that.

Subscription TV Services

I covered this fiction prediction earlier in the month, but it’s fun to see Gene’s still pushing his pet theory about Apple’s planned subscription television model. He believes it will be such a rewarding and complete service, customers will have no need to pay for cable television. It’s natural to ponder how, without a cable account and the broadband services it includes, customers will go about streaming bandwidth-intensive HD television over the Internet. But surely that’s a technical question for engineers, not something a Senior Analyst needs to worry about.

Munster says:

“…we believe Apple has wisely avoided a subscription music model, as music listeners prefer to listen to their own music, and listen to it frequently. Movie watchers, on the other hand, prefer to rent, and typically only want to see a movie once or twice. Likewise, TV viewers are not accustomed to purchasing TV shows on an a-la-carte basis, and a subscription TV service would likely be more appealing.”

I guess this is one of those times when we just have to trust Munster knows what he’s talking about. For the record, I completely disagree with his assertion that customers only want to watch a movie “once or twice.” I treat movies and television shows in exactly the same way I treat the music I own. I buy them so I can enjoy them again and again. But that’s just a matter of opinion, and I have to assume Munster’s claims are backed up with solid market research.

I’m being critical, but it’s fair criticism. Munster (and analysts like him) are paid to make predictions about companies, market trends and the like. But I can’t help feeling these guys are graduates from The School of Stating the Bloody Obvious. We can all do it, and many people do so in their blogs and podcasts without getting paid for the pleasure. They certainly don’t have their ruminations disseminated in the world’s press.

If you read TheAppleBlog regularly you know that, when it comes to a company as secretive as Apple, we often have no choice but to make predictions and deliberate on the probably, possible and preposterous. I just wish Munster’s predictions were not so inclined to swing wildly between utterly banal (‘predicting’ Apple will release ‘something new’ in the next year) and the entirely unlikely (predicting Apple will release an actual television next year that will replace customer’s monthly cable bills).

Why not try your hand at being a Senior Analyst and share your predictions with us in the comments below! Go on, it’s fun!

14 Responses to “Munster Answers 14 Questions No One Was Asking”

  1. Really fun to make fun of Gene Munster isn’t it?

    Interestingly enough, if you’ve been following AAPL he is the analyst who is most often correct about all things AAPL. Nearly every product he predicts actually comes to pass and he has been consistently bullish on the stock.

    Now you have cherry-picked certain “d’uh” obvious statements and questioned a couple other of his ideas by either plucking them out of context or just simply disagreeing with him.

    Regarding the iPhone launching on multiple carriers in the same country, the part of his report you didn’t include described how dramatically the iPhone sales went up when it was offered on more than one carrier. Apparently Apple is looking at doing multiple carriers in China as well. This is a shift in strategy but if Apple wants major growth and market share gains they will need to get on multiple carriers.

    Additionally, you can disagree with his idea that Apple is going to move towards subscription options for video programming. An “OPTION” — if you want to buy your programs and movies then go right ahead. But look at the popularity of Netflix — if Apple doesn’t let people rent videos monthly they will be left behind.

    Finally, I wanted to say that Munster actually has connections and sources with Apple. You imagining him as a blowhard who is just making things up. He runs certain things by management and they can give him hints as to what might be happening. People are trading stock on this info — if, for instance, he hears a tablet might be coming, he wants confirmation of this from Apple. It works for Apple, it works for the analyst.

    If you really want to hear some uninformed analysis, look to some of the other AAPL analysts out there — they really have no idea what they are talking about

  2. Hey Ted, thanks for your comment. I’m almost entirely certain you’re making fun of me, and I’m smiling, sir :-)

    But it raises an important point I think bolsters what I say in my article. If you are a reader who truly is out of the loop and likely to accept what you read in the tech press, surely Munster’s wildly-imaginative predictions (all too commonly reported in the press as “Apple’s Next Big Thing”) are unfairly misleading?

    I don’t believe your false modesty, Ted, your comment betrays your intellect! But what about those who don’t have your knowledge and expertise in Apple matters? Or mine? Or, for that matter, the knowledge and expertise of 99% of the other TAB readers?

    Analysts can do great work. But they can also deeply mislead the public and misrepresent Apple in the process. And I think that’s worth some discussion, hence my article above :-)

    Just food for thought :-)

  3. Ted carsten

    Surprise! Unlike you, I do not know all these things that munster says so I’m quite happy to read his report. Please let mr gene go, I’m sure there are many more stupid people like me our here than you can imagine. You just don’t think of us because we don’t have our own blogs. Considering our level of idiocy, I’m sure you’re happy we don’t!

  4. designer26

    One of the biggest things in my opinion that gets missed when discussing being able top drop your cable for downloadable content is sports. Granted this doesn’t apply to everyone, but there is a very large group of people whose primary reason for having cable is for their sports shows. Sports are something most people want live, not available the next day when they already know what happened. They also want to be able to watch it on their big TV’s, not small pixelated streaming content online.

    For many people, having their favorite shows available to download is reason enough to give up cable. But for many many others, there is a glaring omission that nobody has even come close to fixing yet.

  5. Just my wild-butt guess here, but I’m willing to say that many, many people HATE their cable provider. If Apple – or anyone else – can figure out a way to provide al a carte service, I’d be very interested. For me, I have no problem watching The Office or 24 the following day on the web sites. The only live programming I really have a need to see is pro and college football. I’d be happy to pay a nominal fee to watch individual games. A subscription service would seem to be much cheaper for someone w/ my viewing profile.

    I hope Apple can figure out a way to do this. I’d pay for such a service.

    • George Fulton

      “I’m willing to say that many, many people HATE their cable provider.”

      I think you are likely correct. For one thing many people would probably like more customizability in their ‘basic’ channels. We don’t really get to pick and choose our basic channels. Drop Fox, pick up AMC or whatever. Ideally our cable provider would allow us ‘x’ number of channels and let us customize those, THEN charge us extra for premium channels as needed.

      Moreover, there tends to be a lot of resentment to subscription models in general, of which cable television is one. (Not that there’s any getting around that for cable). But there is getting around that for the internet because there’s not that degree of bandwidth delivery infrastructure for most web services.

      But the subscription models for movies might work in the same way that it works for NetFlix. ‘x’ dollars for ‘x’ movies a month.

      Thusly, I disagree with the author of this article regarding movies in general when he states” For the record, I completely disagree with his assertion that customers only want to watch a movie “once or twice.”

      I think that NetFlix and VideoBlockbuster’s competing subscription program bear me out. NetFlix is just about the ONLY subscription based model I know of that people rarely complain about and seems to have a high level of customer satisfaction and success. Commit to a ‘x’ number of videos a month and then return them. This has been a highly successful model.

      I could see iTunes giving NetFlix a major run for it’s money, provided the technical hurdles are overcome, as the author astutely points out. One note here is that many people tend to like to watch movies together, rather than solo. My point here is that the technical hurdle is an important one, in my opinion. Subscribing to movies for your laptop or iPhone alone, which are generally solo viewing devices aren’t as likely to cut into the NetFlix market as viewing them via AppleTV.

  6. “I treat movies and television shows in exactly the same way I treat the music I own. I buy them so I can enjoy them again and again.”

    I would agree, with certain variations.

    There are TV shows that I enjoy but I probably wouldn’t watch over-and-over again.

    In regards to music, for example, I have my favorite music which I own. But I would be willing to “rent” music in order to determine whether it will become my favorite. I believe that it’s much the same with video–I might rent a movie, watch it, like it, and buy it. I might rent a movie, watch it, and decide that I didn’t like it–or like it that much.

    So, yes, I believe there’s a place for a subscription service for music and video.

  7. I have to agree whole-heartedly with HobbesDoo. It is clear that the point of your post was more to defame Gene Munster than to inform your readership on any particular topic. It’s obvious that you don’t care for Munster or other analysts like him, but it’s also clear that you are utterly misinformed on his job description. His purpose is not to garner inside information and use it to support the Apple rumor mill (to which I am hopelessly addicted). His job is to provide analysis on a company to a community of investors who do not spend their days completely immersed in all things Apple.
    I would agree that Gene Munster is in the lime light more than most other analysts and probably personally enjoys his bit of name recognition. But, if you are dissappointed because his published statements aren’t more informing about the future strategic moves of the company he is covering, I think that that is the wrong perspective.

    Statements like: “Here, try this: I predict that Apple isn’t interested in offering a sub-$500 MacBook because the market is swamped with $299 offerings from manufacturers of small form-factor PC notebooks. There. That sounded good, can I be an Analyst, please?” sound more like the rantings of a high school kid and make me question the source I use to get my hourly Apple-fix.

    • Hi Adam, thanks for your comment. I’m sorry I made you think of abandoning TAB – not sure whether that should make me sad or proud my writing has such an impact? ;-)

      Seriously though; I made my point already. I don’t mind Analysts’ having their predictions disseminated far-and-wide but I DO mind if they are “predicting” what everyone else has been thinking and discussing endlessly for a long time already.

      The alternative, though, is not wildly imaginative fiction.

      I’d love to see Munster find a happy middleground between those two extremes. I am trying to draw attention to that with an article that entertains and inspires thought… and comments.

      So far, it’s working ;-)

  8. I’ve survived just fine without any TV service for 18 months. Pretty much everything I need is available through Hulu. With that being said, I may be interested in a TV subscription service, (if the price is right). I’m assuming these TV shows would be viewable on any Apple device I own.

  9. HobbesDoo

    “It’s natural to ponder how, without a cable account and the broadband services it includes, customers will go about streaming bandwidth-intensive HD television over the Internet.”

    The statement above is utterly wrong, why can’t you have cable Internet without cable TV? I do and I’m happy with it. There is also ADSL.

    I also don’t see the point of this article. What’s the reason behind criticizing someone else’s article when there is nothing wrong with it in the first place?

    In the Apple “news” world everything is made up of rumours and opinions. Facts only come after Apple tells the world about them.

    • Hi HobbesDoo, thanks for reading and commenting.

      The “point” is to have some fun with Munster’s predictions, and to point-out that it’s something we ALL can do with just the same degrees of banality and wild-abandon Munster commits on a regular basis.

      But what you say in your last sentence agrees with my original point so I guess I can only reiterate; it’s fun to “do a Munster” and share predictions. :-)