Report: Apple-Pepsi deal a winner

IDC has released initial analysis pertaining to the U.S. Apple Computer Inc., PepsiCo Inc. link-up, in which lucky soft drink consumers are winning free tracks from iTunes Music Store.

The report -- 100 million calories and counting -- says: "As the paid music service provider market attempts to garner the attention of a generation bred on free downloading and move them to legal downloads, Apple has found a great strategic partner in engaging this group with Pepsi."

The analysts point to Pepsi's focus on advertising to the young, agreeing that this market's interest can be generated by offering "free stuff". "This will ease the transition between illegal and legal downloading and help develop brand loyalty to Apple and its iTunes service," the analysts write.

Apple's move is good in another way, too -- it will encourage users to download its cross-platform software, so iTunes will be "on the desktops of many more PCs".

The analysts speculate that if half the 100 million tracks available through the Apple/iTunes promotion are redeemed, "it will increase iTunes downloads over 100 percent". This will also increase Apple's market share in comparison to rival vendors.

The report looks at the true strategy behind the store -- increasing iPod sales. As most competing players utilize an incompatible file format, IDC says: "Apple stands to develop a built-in market for the iPod". It agrees that if users use and choose iTunes then they will be more likely to buy Apple's music player in preference to competing products.

The conclusion? "Apple stands to benefit greatly form this promotion and carry its momentum forward".