SOURCE: Pike & Fischer

January 19, 2007 13:47 ET

Apple May Need to Consider Cross-Platform Ads, Report Says

SILVER SPRING, MD -- (MARKET WIRE) -- January 19, 2007 -- Apple Inc. should consider supporting new forms of cross-platform advertising if it ends up having to lower the price of its new devices, particularly the forthcoming iPhone, market research firm Pike & Fischer concludes in a new report.

Apple in early January introduced the iPhone, which combines the functions of an iPod digital media player and a WiFi-enabled smartphone, and Apple TV, a set-top box that enables consumers to wirelessly transfer PC-based video to their television sets. The price of an iPhone will start at $499, while an Apple TV box costs $299. Both are considerably costlier than standard cell phones and set-top boxes.

Currently, Apple's iTunes media store allows consumers to buy and download ad-free music, TV shows and movies to iPods, desktop computers and other devices. But the ability to support new forms of advertising may prove important for Apple to hit its sales goals for its devices, according to the Pike & Fischer analysis. While Apple's pricing power is stronger than that of any of its peers, the company in the past has acknowledged the potential barriers to selling a super-premium wireless device, Pike & Fischer says. The report recommends that Apple, its partners and the advertising industry look carefully at the opportunities enabled by tight integration between the iPhone, the Macintosh personal computer, the iTunes digital media store, and Apple TV.

"While customers who are able and willing to spend $500 on a cell phone aren't likely to accept advertising being included in downloaded or even streamed content, those users and many others would be more likely to put up with that advertising if it meant the equipment costs could be reduced significantly," says Tim McElgunn, Chief Analyst for Pike & Fischer's Broadband Advisory Services.

Apple needs to add some other key functions to its services and new devices in order to ensure success, according to Pike & Fischer Senior Analyst Tim Deal. "Those include wireless content downloads to the iPhone, expanded on-demand and premium content on iTunes, and the capability to transmit high-definition video over Apple TV," Deal said.

Pike & Fischer, a BNA Company, offers a host of legal and business information products covering the telecommunications industry. "Broadband Business Analysis: Apple, the iPhone and Apple TV" is priced at $399 and can be purchased at www.broadbandadvisoryservices.com. For analyst commentary or an executive summary, contact Scott Sleek at 301-562-1530, x 291 / ssleek@pf.com.

For more information about Pike & Fischer's Broadband Advisory Services, visit www.broadbandadvisoryservices.com, or contact Jonathan Wentworth Ping at 212-576-8741 / jping@pf.com.

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