iTunes could outstrip success of iPod business, predicts ABI

Apple's iTunes service has the potential to outstrip its iPod business and could be a Trojan horse, allowing the firm to enter the home audio and video markets ahead of its competitors, market watchers have predicted.

ABI Research director Vamsi Sistla said: "The battle for portable devices has already been won by iPod (unless Microsoft's strategy for its Zune platform succeeds), but in the home and mobile markets the prize is still up for grabs. iTunes could be a 'Trojan Horse' through which Apple can enter the home market sooner than the competition."

According to a new report from ABI Research, the key to this opportunity is consumers' growing interest in digital media connectivity in the home. "I think we will soon see more line-powered consumer audio devices – high-end audio devices with AV receivers, and multi-room audio systems – adding support for iTunes to their current support for iPod," Sistla added.

The study, Home and Portable Audio Device Markets, notes that Apple released its latest earnings statements last week, and surprised the markets with the continuing depth of its iPod penetration, which exceeded most analysts' expectations. Sales of iPod accessories, both from Apple and from third parties such as Bose and JVC, are booming as well, including high-quality home 'docking station' systems.

With over a billion files downloaded from iTunes so far, computers all over the world are brimming with music, speech and video, often organised by iTunes client software into playlists and catalogues. Leveraging all that content, which users have already paid for and want to hear on a good home audio system or watch on a digital-ready TV, creates a "huge opening" for consumer electronics vendors, ABI stated.

Sistla said: "The field is wide open for PC manufacturers and other vendors of home CE systems to capitalise on what should be a large and dynamic market."