The deal that will put Apple's iTunes music player on Motorola mobile phones could turn Apple into the "Microsoft of music", according to an industry analyst.
Merrill Lynch analyst Steve Milunovich called the deal a "net positive for iPod". He told business magazineThe Street: "iPods are the leading portable music player, iTunes is the leading online music seller, and it appears Apple understands it has to work with others to dominate the space. Apple could become the Microsoft of music."
Commenting on the Motorola link-up, Apple CEO Steve Jobs said the mobile-phone market, which is expected to grow to 1.5 billion global subscribers by the year's end, offers "a phenomenal opportunity to get iTunes in the hands of even more music lovers around the world".
While Milunovich has a buy rating on Apple stock, analyst house Standard-&-Poors recommends Apple shares as "worth holding". A note issued by analyst Megan Graham-Hackett said: "At a price-sales ratio of 1.6, Apple trades above the peer average, but with $12 per share in cash and equivalents, we view the shares as worth holding."
The Street notes that the iPod and iTunes have helped resuscitate Apple shares over the past year. Since the iTunes Music Store opened on April 28, 2003, the stock has risen 126 per cent, from $13.86 to $31.26.
Additionally, Apple's shares have gained 46 per cent year to date, bucking broader tech declines and outperforming companies in Standard-&-Poor's 500-stock index by 49 per cent.
Following the announcement of the deal between Apple and Motorola, Apple stock rose $1.17 – almost 4 per cent – and Motorola stock climbed 6 cents.