Games and Gadgets

Return to Article

Apple's Championship Season Online

Troy Wolverton

When Apple Computer (AAPL Quote) introduced the flash-memory based iPod nano earlier this year, many analysts quickly dubbed it a "must have" gift for the holiday season.

If Amazon.com (AMZN Quote) customers are any indication, the analysts were correct.

The e-tail giant allows customers to create "wish lists" on their site. Among the 44 most requested products in the company's electronics store are all four iterations of the iPod nano.

But it's not just Apple's nanos that are in demand. Nine different iPod models -- representing all but one device in the company's digital music player lineup -- are listed among Amazon's most requested electronics products.

Another 14 products listed are accessories such as FM transmitters and speakers specifically labeled as being built for the iPod or Apple's iTunes service. Two more products that made the list are noise-canceling headphones that are popular among iPod users.

In other words, well more than half of the in-demand electronics products on Amazon -- one of the hottest areas on the biggest online store in the country -- are iPod or iPod-related.

At least to some degree those wishes seem to be getting fulfilled, too. Amazon last month announced that the iPod nano was the second-bestselling item in its electronics department in the first three weeks of November.

Amazon has yet to update its list of best-selling products for the entire holiday season, but it does give day-by-day updates. On Tuesday, for instance, the top-selling product in the e-tailer's electronic department was the white 30GB iPod video.

On Wednesday, the 512MB iPod shuffle, the black 30GB iPod video and the white 30GB iPod video ranked No. 3, No. 4 and No. 5, respectively, on Amazon's top-selling electronics products list.

And, at least on Amazon, Apple seems to be having success beyond just its iPods. The company's Macintosh computers represent the lion's share of products listed among the most frequently requested computer products on the e-tailer's site, comprising 16 of the 35 products listed.

Another product making the list was a warranty from Apple for its PowerBook computers.

Again, those requests seem to be turning into real sales. A version of Apple's 12" iBook is the top-selling item in Amazon's computer department on Wednesday and Tuesday as well. Among the top 10 selling computers on Amazon's site on Wednesday, six are Apples.

The good news for Apple from Amazon comes amid worries from some investors and analysts about Apple's stock price. Over the last three years, the success of the iPod has helped resurrect Apple's income statements and its share price.

While analysts have praised the company's turnaround, some have questioned recently whether the stock price has gotten ahead of the company's results after rising 44% in just the last three months.

Voicing those concerns, analysts from Bank of America and Bear Stearns downgraded Apple's stock Wednesday, prompting shares to drop $2.94, or 3.9%, to $72.04.

The sales and wish list information from Amazon, however, is by no means definitive. The company does not disclose how many units it has sold of particular items or how many customers have requested particular products, so it's difficult to determine what its sales might mean for Apple.

Moreover, while Amazon is the dominant online retailer, it still represents a small fraction of overall retail sales. What's popular on Amazon may not be popular elsewhere.

Indeed, intermittent analyst reports in recent weeks have suggested that retailers are having difficulty meeting demand for Apple's iPods, particularly the nano. Amazon itself, for instance, is out of stock on all four flavors of the nano, as is Target.com.

BestBuy.com is sold out of all versions of the nano except the white 2GB model. Walmart.com says the devices are available only in its stores.

Even Apple's own Web site lists a two-week delay before shipping the 4GB versions of the iPod nano.

An Apple representative declined to provide a "midquarter" update on the company's iPod sales.

Still, the wish list and sales information from Amazon may be a good indicator of the continuing -- and some might say expanding -- demand for Apple's products. In years past, top-selling items on the e-tailer's site generally reflected larger sales and demand.

Get Jim Cramer's picks for 2006.