Despite a declining share price, and recent attempts by Sony and Napster to take on Apple's dominance in the digital-music market, two analysts are restating their faith in the company.

Merrill Lynch' Steven Milunovich doesn't believe that the recent challenges by Sony and Napster will have an impact on Apple, and Piper Jaffray analyst Gene Munster has high expectations for Apple in the upcoming quarter.

However, Mulunovich does believe that Sony's new MP3-player will be a "serious competitor," based on the fact that it is similarly priced to Apple's iPod shuffle and has a small LCD screen and 70-hour battery life, writes MacNN.

"We believe these are likely to be solid sellers, but they don't support iTunes and do not have the cache of an iPod.... We view Sony as the most serious competitor, but since Apple will be supply-constrained on shuffle it will be difficult to assess the impact in the near term," he said.

Not big believers

Milunovich doesn't believe that Napster's subscription service will threaten Apple either. Napster CEO Chris Gorog expects Napster to cut into Apple's dominant share of the digital music world with its subscription service, Milunovich points out that should the subscription method be successful there is nothing stopping Apple from taking that same path. But, he adds "we are not big believers in the subscription model where consumers pay indefinitely to listen to their favourite songs".

Merrill Lynch maintained its Buy rating on Apple, despite recent declines in share price.

Exceedingly good

Piper Jaffray analyst Gene Munster is also positive about Apple's position. He expects Apple to exceed Wall Street expectations for the quarter, writes The Mac Observer.

He also found Apple's retail channel to be more positive than it had been in the last three quarters. Over a third of Apple specialist resellers and Apple Stores surveyed had high expectations.

The analysts also found demand for iMac, PowerBook, and Mac mini to be ahead of expectations. Power Mac sales continue to lag, however.

Meeting demand for iPod shuffle continues to be a challenge for the company. However, Munster expects supply concerns to ease in the upcoming June quarter.

Munster maintaining his price target for Apple's stock at $50 per share.