Apple Inc (AAPL)

[fmikehugo]

08:11 AAPL Apple: Piper comments on Steve Jobs' "Thoughts On Music" letter (84.15 ) -Update-

Piper Jaffray notes that yesterday, AAPL's Steve Jobs released an open letter, "Thoughts On Music," on Apple's website in response to concerns that have arisen in European countries regarding the DRM (Digital Rights Management) system, FairPlay, that Apple uses to protect music downloaded on the iTunes store.

The firm thinks there is <25% chance that the music industry will license music to online stores without any DRM. Firm notes that if consumers choose a service other than iTunes to download music from is somewhat inconsequential to Apple if iPod sales increase.

They say the reason for this is that iPods are significantly more profitable to Apple than iTunes; iPod (35% of sales) gross margins are in the 30% range while iTunes (5% of sales) gross margins are in the 5%-10% range.