Apple iTunes Subscriptions Rumored

Merrill Lynch analyst speculates on the potential for Apple to add another feature to iTunes in response to Yahoo Music.

Apple could flip a switch and be in the digital music subscription service, according to analyst Steve Milunovich at Merrill Lynch in a research note released to clients on Friday.

But Apple would first have to see actual impact on its sales on iTunes first.

Mr. Milunovich further remarked on unused icons in Tiger that seem to support other music formats, as discovered by columnist Robert Cringely. Also noted was support for the video H.264 codec, which could mean a future iTunes video store or even a video iPod.

Support for music formats like Windows Media Audio may signal a future where, if iPod sales decrease, Apple could rely more on software-driven profits and less on hardware, according to Mr. Cringely.

Mr. Milunovich remains a fan of Apple stock, giving it a “buy” rating. “Although we think the iPod franchise is safe for at least the next year, the driver of the stock increasingly will be Mac sales,” said Mr. Milunovich.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.