Apple Inc (AAPL)

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07:59 AAPL Apple Computer: Comments on INTC transition, iPod & iPhone from European customer base; music phones more widely available - Piper Jaffray (74.65 )

Piper Jaffray notes that less than half of AAPL's most loyal European Customers have upgraded to an INTC-based Mac. Of the 50 European AAPL customers firm spoke with, only 44% have upgraded to an INTC Mac. Of the 56% that have not made the transition, firm says half expect to upgrade in the next 6 months. Firm had expected that a higher percentage of these loyal customers would have already made the move to an INTC Mac and they see this as a sign that APPL has so far just scraped the surface of the Mac transition opportunity. Firm notes AAPL's most loyal European Customers have, on Avg, owned 1.6 iPods over the last 5 Years. Firm believes iPod/iTunes is still in early growth stage in Europe, similar to the U.S. iPod market 4-6 quarters ago.

Firm asked European APPL customers if they would be interested in an iPhone that holds 1,000 songs and found that 74% would be highly likely to buy such a product. Firm says APPL must price an iPhone in the $300 range to gain significant traction with the product. Firm says while there are more music enabled phones in the market than they had expected to see, firm believes the hype related to this market has yet to begin. Firm believes APPL will launch an iPhone in the next 3-6 months, which will likely draw more attention to this market and contribute the significant growth expectations implied in industry analyst market forecasts.