"We think when looking back several years from now that the iTunes Movie Rentals announcement will likely end up being a landmark event and potential game-changer. We think movies will ultimately help in driving more users to the Apple platform (iTunes, iPod, iPhone, Mac, Apple TV). In fact, this announcement reminds us of the launch of the iTunes Music Store back in late April 2003 which helped ignite a multi-year 'digital music cycle'," said Wu on Wednesday.
"We believe we may be at the beginning of a 'digital video cycle' where there is a fundamental paradigm shift to online video from physical DVDs. In our view, Apple is well-positioned to become a key destination for movies much like it is for music, music videos, and TV shows," he said.
The analyst confessed to being impressed by MacBook Air, but unsure that it would drive incremental purchases. Wu observed that the MacBook Air may have too much overlap with Apple's existing laptops.
Wu also notes the higher price of the flash memory equipped model of the new Mac, noting the price of that version to be "higher than we would have expected", and noting that current prices for flash memory units of this size "leave plenty of room for flash pricing to decline if the flash vendors want a legitimate shot at replacing HDDs like they have in MP3 players."
Returning to price, Wu observed: "We believe Blu-ray drive pricing may still be too high for Apple to incorporate as standard equipment. We still believe Apple will announce support for Blu-ray sometime in 2008."
Wu maintained his buy assessment on Apple stock with a US$210 price target. This is in light of Apple selling 20 million songs on Christmas day - a new record - as well as the announcement that Apple has sold four million iPhones, five million copies of Leopard, seven million movies, 125 million TV shows, and four billion songs to date.
This story, "Analyst: iTunes Movie Rentals a 'Game-Changer'" was originally published by Macworld U.K..