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Wal-Mart loses ‘philosophical argument’ with Apple CEO Steve Jobs, gains top-selling iPod
Tuesday, November 29, 2005 - 02:15 PM EST

"Wal-Mart Stores Inc. said its sales on Saturday were slightly weaker than those posted during the post-Thanksgiving 'Black Friday' kickoff to the holiday season," James Covert reports for Dow Jones. "Sales on Saturday were 'OK,' but saw 'a slight drop in the slope' from Friday's levels, Wal-Mart Senior Vice President and Treasurer Jay Fitzsimmons told investors Tuesday at a conference hosted by J.P. Morgan & Co. that was made available by Webcast. But the day-over-day decline partly reflected the fact that last year's Black Friday was disappointing, Fitzsimmons said. Sales for this year's post-Thanksgiving weekend overall were better than in 2004, he said."

"He noted that Apple Computer Inc.'s iPod digital music players were among the items conspicuously absent from Wal-Mart's shelves last year. The reason was that Wal-Mart was in a 'philosophical argument' with Apple Chief Executive Steve Jobs over whether the iPod player should play music from more varied sources, Fitzsimmons said," Covert reports. "'He won, we lost. Now we have Nanos in the stores,' Fitzsimmons said, referring to the latest, smallest version of the iPod."

Full article here.

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MacDailyNews Take: The "philosophical argument" goes like this: iPods can't play music from our Windows-only-Mac-users-be-damned Wal-Mart online music store, so we're not going to sell iPods. We'll sell other brands. Result? Wal-Mart didn't sell much of anything. Virtually nobody bought the also-ran players and since virtually everybody with a portable music player owned an iPod, nobody bought from Wal-Mart's - or any other outfits' - ghettoized online music stores. So, rather than continuing to leave money on the table on both hardware and content, Wal-Mart revised their "philosophy" (back to the familiar "make money hand over fist" mantra) and decided they'd damn well better carry Apple iPods even if their own online music store doesn't sell iPod-compatible music files. Apple's iTunes Music Store, of course, sells iPod-compatible music and serves both Mac and Windows users, which is why it dominates the market so effectively.

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Nov 29, 05 - 02:27 pm Comment from: too bad

Too bad Wal-Mart didn't win that one. It's frustrating when you find an online album that you want to download but can't because Apple won't license FairPlay. iTMS may have the largest catalog, but it doesn't have everything.

Nov 29, 05 - 02:31 pm Comment from: gwm

WalMart! The fscking holy grail of retailing venues!

Sweet Jesus ... I'm shaking like a leaf ...

Nov 29, 05 - 02:33 pm Comment from: monalisa

then burn it to a cd, then rip it into iTunes as mp3's. You take a tiny hit in quality but's almost unoticeable if you rip in at 198kbps

Nov 29, 05 - 02:33 pm Comment from: prut prut

by the same token-- if those INNOCENT record co's would license their material to iTunes this would not be an issue at all-- but whatever, blame apple

Nov 29, 05 - 02:40 pm Comment from: Duck0987

Here is a real solution, apple allows walmart to contract through them similar to the eduction. Walmart gets 5 cents a song, and the number one retailer joins with the number one music etailer.

2nd step profit

There is no third step.

Nov 29, 05 - 02:46 pm Comment from: Ken

If you want an album from an alternate music store then get it, burn it to a cd and then import it into iTunes. Doesn't take genius does it?

Ken

Nov 29, 05 - 02:56 pm Comment from: Jeremiah

If you want an album that isn't on iTunes why not buy the CD? It sounds a lot better, you have a hard copy, and you get all the pretty artwork.

PS monalisa why would you use the mp3 format when AAC is avalible in iTunes. If anything needs to die it's the old mp3 compression.

Nov 29, 05 - 02:56 pm Comment from: Randy

grrr Or buy the physical CD and rip it to iPod.

Nov 29, 05 - 03:00 pm Comment from: Doug

Speaking of iPods and Walmart...

I was in my local Walmart over the weekend, and noticed the nice big iPod display case in their electronics section, with the iPod name on top, and the classic silhouetted dancer theming on the backdrop. But wait, what's that inside the case clearly marked "iPod"? One lonely Shuffle, and five Creative Zen players!!! I fired off an e-mail to Apple; hopefully, they'll "educate" this Walmart.

Nov 29, 05 - 03:02 pm Comment from: MFfan310

"Or buy the physical CD and rip it to iPod."

Unless, of course, the CD is the Sony XCP copy-priotected type...

(Note: Like many here, I'm boycotting Sony products right now with the exception of Sony BMG music...and even then, I won't buy it from any other source except iTMS.)

Nov 29, 05 - 03:09 pm Comment from: dennis

Jobs should have had a "philosophical argument" with Wal-Mart about the crappy way they treat their customers. Apple doesn't need to partner with a company whose employee healthcare plan is called "Medicaid."

Nov 29, 05 - 03:10 pm Comment from: SJR

"Too bad Wal-Mart didn't win that one. It's frustrating when you find an online album that you want to download but can't because Apple won't license FairPlay. iTMS may have the largest catalog, but it doesn't have everything."

Then burn and re-rip it, or better yet, buy the CD and rip that then. Apple won't license FairPlay because there is no business sense in it for them to do so. Just as M$ won't support Macs with their WMA DRM.

Nov 29, 05 - 03:12 pm Comment from: qka

Wal-Mart is a pox upon the world

MW = tax, as in tax payers subsidize Wal-Mart

Nov 29, 05 - 03:15 pm Comment from: stupidme

hey Monalisa et al,

i love it when you people go on about "rip it to CD then to MP3" BS. Have you guys actually done this? and would you keep doing this for ever fcking CD you bought on another online store?

be real. i am no fan of M$. but isn't it time for a standard DRM? and since iTunes has obviously won that war, isn't it time Apple licensed that damn thing?

Nov 29, 05 - 03:24 pm Comment from: caddisfly

...and what track/album did you find at Walmart that you couldn't find at the itunes music store?

Walmart is so main-stream, I can't imagine that there are many

Walmart doesn't care about the other WMA music services only their own, and is not about to carry the water for them in this "you can't play my music" red-herring of a discussion.

Ergo, the end of their "philosophical argument" with Jobs. Money talks and the rest just walk.....

Walmart doesn't care about this nonsense, they just want to make money.

At the end of the day, it wouldn't surprise me if Walmart wasn't the first non-Apple vendor that Jobs licenses the fairplay DRM to and "store fronts" the Walmart download site with itunes infrastructure.

Then let's see the RIAA and companies try to change price points on Apple *and* Walmart. Ho! Ho!

Nov 29, 05 - 03:31 pm Comment from: hammer

Walmart isn't getting another dime of my money, and hasn't for the last 3 years. I don't like the way they do business, therefore, they don't get my cash.

Nov 29, 05 - 03:38 pm Comment from: Macgravy

Hey stupidme and some others:

Why on earth would Apple license their DRM. It works on peecee's and Mac's for downloading music to iPods. It's was designed and put together by Apple Computer....It's theirs....

Why doesn't mafia$oft update their crapy software for the Mac....like WMP and IE with thier proprietary code so web site developers can make the site IE/Windows only...and then there are sites the need ActiveX....Macs don't have ActiveX....but then again, why would any Mac user ever want to put something as badly designed as that, on their computer. I could go on, but you won't get it. You all bitch about Apple having one thing that the raptor from redmond doesn't have...you people bitch about this all the time...GET OVER IT AND GROW UP.

Nov 29, 05 - 03:46 pm Comment from: too bad

Lstart with this...

Even though I have spent over $500 on iTMS, I still prefer buying the phsyical CD when available. But guess what, sometimes I don't want the entire CD, or it's not yet available on CD, such as special remixes and unreleased songs.

And how do you suggest I burn a protected Windows Media Player song to a CD without using Windows? In any case, isn't Apple about making things easy for the user?

And prut prut, I wasn't trying to imply that the record companies are innocent, but I don't feel the artist should be punished for something that for the time being may be out of their control. Sure you could say the artist should just ditch their existing contract, but that's isn't always a viable option.

SJR, obviously your statement about whether licensing is good or bad business for Apple is purely conjectural, so I won't bother to form a reply.

caddisfly, I'm not talking about what's at Wal-mart. There are many other places that sell songs.

Nov 29, 05 - 03:49 pm Comment from: hold on

too bad/stupid me: I agree with your concern. Even though there are workarounds, it is a pain in the ass. Does anyone really want DRM? Fair enough complaint.

However, I disagree with your thought that Apple has won the war. Downloads are around 5% of total music sold. I suspect that the iPod, while clearly the dominant player, is anywhere close to 25% saturation of what the digital music player market. Apple has won the opening set of battles, but at this point, if they let everything go on the iPod or let everyone use Fairplay, their lead couple easily be lost.

When downloads are in the neighborhood of 30% + of downloads and the digital music player market is 50%+ saturated, then Apple can afford to let everyone else in.

Nov 29, 05 - 03:51 pm Comment from: too bad

Macgravy,
"Why on earth would Apple license their DRM. It works on peecee's and Mac's for downloading music to iPods."
- Um, you do know that there are many other reasons to license FairPlay than that, right?

- Oh, and I love you're whole "MS doesn't do it so why should Apple" argument. It makes so much sense and it's so convincing.

- Oh, and how would it exactly hurt you if Apple licensed FairPlay?

Nov 29, 05 - 03:56 pm Comment from: Mac4lfe

IMHO Apple is only one company in many that has its own solution to digital music download so if you don't like their solution, Don't support any part of it and then complain about the rest. As I said, there are other companies you can choose from.

I for one supports Apple's effort in every way.

Nov 29, 05 - 03:57 pm Comment from: too bad

Hold On,
"Apple has won the opening set of battles, but at this point, if they...let everyone use Fairplay, their lead couple easily be lost. "

- I don't see it that way. If anything, it would encourage iPod sales, and that's where the money is. Sure, it might weaken iTMS sales, but I doubt it. iTMS is clearly the best solution, right? So what's there to worry about? The people will choose with their pocketbooks right?

Nov 29, 05 - 04:01 pm Comment from: too bad

Mac4life,
So if I don't like the visualizations in iTunes, I should just get rid of my iPod, iTunes software, and everything else by Apple? I think you're missing one very important option, the one where you can use the good parts of the system and try to get Apple to improve the weak parts. Or do you suggest that Apple doesn't ever need to improve their products at all and everything is perfect right from version 1?

Nov 29, 05 - 04:01 pm Comment from: critic

"I was in my local Walmart over the weekend, and noticed the nice big iPod display case in their electronics section, with the iPod name on top, and the classic silhouetted dancer theming on the backdrop. But wait, what's that inside the case clearly marked "iPod"? One lonely Shuffle, and five Creative Zen players!!!"

That wasn't WalMart's fault. Those Zen players were put there by people who picked them up by mistake, then put them down when they found the iPods.

Nov 29, 05 - 04:20 pm Comment from: justin

im pretty sure, "critic", that customers cannot open a display case. After all, thats why its in a display case so the ipods wont be stolen easily. So your hypothesis doesnt make sense at all. if any thing, its igonorant wal mart employees who do this, not customers

Nov 29, 05 - 04:22 pm Comment from: monalisa

Jeremiah, mp3 == !DRM;

Nov 29, 05 - 04:23 pm Comment from: iDon't

I hate Wal-Mart!!! They paved over my Pappy's grave!!!

Nov 29, 05 - 04:30 pm Comment from: Synthmeister

Maybe they sold out of iPods and just didn't want an empty case sitting there. My local Walmart has the same case and it was empty a couple weeks ago—except for an obsolete iPod mini—but now has been filled.

I think it is pretty amazing that Walmarts even have a case dedicated to iPods. How often does Walmart lose an argument with a supplier?!

Nov 29, 05 - 04:37 pm Comment from: caddisfly

...right now, short term and limited vision, its about ipods.

...but long term, this DRM issue and which format to use is about a whole lot more than some soon-to-be-forgotten device and where I can play my music.

It is about who is going to control all network-based content and its delivery into the home via the next generation of devices. And the revenue from that delivery which, if some have their way, will be "re-charged" for every end device you want to play it on. Cell phone, ipod, TV, PSP, computer, etc.

DRM is required because:
1. You don't own it
2. You will steal it if it is not nailed down

This is the latest, maybe last, chance to break the MS strangle hold over all things digital. The internet was the first and the monopoly power of MS allowed them to recover pretty quickly. Google is the only one still engaging them directly on that front.

Even Apple can't rely on making the hottest, coolest devices everytime. There is always going to be a better mousetrap, You need to take advantage and leverage while you can.

In the digital content delivery area, if Apple opens up too soon and/or without a dominant partner, the MS monopoly and its cash reserves will crack it like an egg....just like they did to Lotus, Netscape, Sun, IBM, Novell, etc, etc.

ponder this....if a martian came to earth and was given the task of picking the OS for all of the universe and reps from MS, Apple and Linux were asked to present their case without regard to who had what percent of the market. Without the monopoly card and given what you have to go thru everyday to safely use a windows OS, is there any conceivable way MS would even be considered? I don't think so. But yet, in our "real" world they win almost every time.

...so for Apple, milk it as long as necessary.

Nov 29, 05 - 04:55 pm Comment from: too bad

caddisfly,

"...but long term, this DRM issue and which format to use is about a whole lot more than some soon-to-be-forgotten device and where I can play my music.

It is about who is going to control all network-based content and its delivery into the home via the next generation of devices."


-and how would allowing other companies to use FairPlay threaten the adoption of FairPlay as a standard?


"Even Apple can't rely on making the hottest, coolest devices everytime. There is always going to be a better mousetrap"
...which we will be locked out of

Nov 29, 05 - 04:59 pm Comment from: choc

If Apple licensed their DRM to other stores, it would require them to license it to other manufacturers also. Why do they want to allow anyone else to sell iTMS compatible players? That is the issue at this point. At some point iPods will be *really* cheap and become a commodity, like TVs, CD/DVD players. Then it will make sense for Apple to license FairPlay.

MW="note" Do I detect a note of jealousy in your voice?

Nov 29, 05 - 05:07 pm Comment from: alan smalan

I don't like apple wanting to be bff's with walmart because they are a pretty aweful company. Aweful to their employees, their customers, and to the communities they infect. I think apple making a deal with walmart is like making a deal with the devil.

Nov 29, 05 - 05:11 pm Comment from: too bad

"If Apple licensed their DRM to other stores, it would require them to license it to other manufacturers also"

- Why would they have to license it to manufacturers as well?


Was the jealousy question directed at me, because it makes no sense, or was that supposed to be merely a clever usage of your magic word that had no real application to anything in this thread?

Nov 29, 05 - 06:10 pm Comment from: caddisfly

actually, I think FairPlay is the defacto standard now. At least that is what the market numbers/shares are showing. Whether that remains, is another story.

I don't think MS has any interest in licensing fairplay from Apple or using the AAC format any more than Apple has in interest in supporting WMA on ipods or using the MS DRM.

I hypothesize that the universe of people who own an ipod, buy and download digital music, and who don't use the itunes music store for their downloads is pretty darn small.

I would also like to see a venn diagram of tracks in itunes, tracks in napster, tracks in digital store A, B, C, etc and see how much is missing or already covered by itunes.

....and then plot that against sales for those missing tracks by folks who own ipods. Probably not a huge number and probably mostly in niche markets. those folks have a couple options: buy the CD or petition the artist to release their stuff on the itunes store or don't listen to that artist.

how does it feel to be part of the sub-%5 dynamic? wink

those of us on the Apple side have gotten used to it, but at least we had a better product with which to assuage our frustrations! wink

Nov 29, 05 - 06:26 pm Comment from: progeny

"...a pretty aweful company. Aweful to their employees, their customers, and to the communities they infect..."

Yeah! I have no idea why hundreds of thousands of people remain employed there - much less why communities beg for a Wal-Mart presence to give them some alternative place to shop than Mom n' Pop's Screw -em store! Or why people shop there every day in droves! I mean, just because you can find it there and buy it for less doesn't mean... well... wait a minute...

Nov 29, 05 - 06:32 pm Comment from: Peter

Actually, I still think there's an easier way to do it: Support protected WMA, Real, Ogg Vorbis, and every other format that Apple can cram into an iPod.

When you buy your iPod, you still get iTunes and the iTunes Music Store. But if you want to use Napster, Wal-Mart, Rhapsody, or whatever, you can do that, too.

Remember, at Apple it's about the music. It shouldn't be about the format. Thus, the iPod plays "every" format: AAC, FairPlay, Apple Lossless, MP3, WMA, protected WMA, PlaysForSure WMA, protected Real, Ogg Vorbis, WAV, and a couple of other ones I can't think of. This helps make the iPod "better" than those other players that only play MP3 and protected WMA.

Now, sure, when you buy your iPod, it comes with iTunes and the iTunes Music Store. iTMS still distributes music with FairPlay DRM.

What would happen? Probably a good 75% of the people buying iPods would continue to use iTMS exclusively. You doubt? Consider that at least 90% of PC users use Internet Explorer, when there are other better options available. Most people don't buy software--they use the stuff that came on their computer. I'd also argue that most people use the software that came with the device they purchased--at least in the PC world. So I'm pretty sure that they would keep using iTMS.

Nov 29, 05 - 06:38 pm Comment from: blacklist

Progeny,

Look at it this way:

Wal-Mart is the Microsoft of retail.

Enough said.

Nov 29, 05 - 06:39 pm Comment from: MacDude

Steve Jobs slays Walfart, something even Billy Goat is unable to do.

Nov 29, 05 - 07:01 pm Comment from: blacklist

gwm wrote:

"WalMart! The fscking holy grail of retailing venues!"

F WALMART! They're an f-ing something all right, and it's no holy grail.

Why oh why did Steve J do this? Why is he commoditizing one of Apple's crown jewels, and the Apple brand itself? What happened to "If you want Apple, you buy from an Apple Store"?

How warm it is to think the iPod now sits alongside $19 DVD players and bottom-end Windows PC's. What happens when Wal-Mart demands price cuts from Apple?

I don't give a damn how much volume or exposure Wal-Mart has, if I were Steve I'd gleefully tell them to go to hell. Cupertino doesn't need Bentonville.

Nov 29, 05 - 07:53 pm Comment from: Big Al

Let's have less union bullshit about Walmart. They are keeping millions of Chinese fed, clothed and a roof over their heads. They are giving millions of North Americans lower priced alternatives.

It's called Globalization, get used to it.

Nov 29, 05 - 09:10 pm Comment from: KenC

My WM has a freestanding display case, and it had about five 30G white iPods last week. On Friday, it was empty, and the other mp3 player section was full of stock, but no one was standing there.

Given WalMart's well-known intransigence in dealing with their suppliers, I have to say well-done on Steve for sticking to his guns. I saw a documentary on WM and Rubbermaid, and how Rubbermaid sales got killed when it didn't succumb to WM's heavyhandedness. This may be the first publically documented case where a vendor got the upper hand on WM.


MW: "used" as WM was so "used"!

Nov 29, 05 - 09:39 pm Comment from: DudeMac

be real. i am no fan of M$. but isn't it time for a standard DRM? and since iTunes has obviously won that war, isn't it time Apple licensed that damn thing?

A standard shall come forth soon in a DReaM...

http://www.openmediacommons.org/

Nov 29, 05 - 10:07 pm Comment from: mike

Yeah! I have no idea why hundreds of thousands of people remain employed there - much less why communities beg for a Wal-Mart presence

---

a) yeah, I wonder why people work ANYWHERE.. i mean work is so annoying.. oh yea..money.

b)WalMart's strategy early on, was to move into a small town and become the monopoly. this is the key to their success. once they move into a dinky town, no competitor can afford to come in.. splitting up the market would not be profitable for the 'incoming' firm. so WM stays and gets the whole thing.

They did this is all the small towns. If you live in one of these towns and.. gee.. need money (see a).. it's likely that you know someone who works at walmart. and hates it.

as for towns begging for a walmart.. that is not the case. the way walmart treats its employees is precisely why towns beg the city to NOT let wal mart in.

it's not that they're a bad company.. it's just that the pinnacle of capitalism shits on its employees, shaving their benefits and pocketing govt subsidy (while taking some of that and passing it off the customer, who keeps the whole nightmare going)

Sep 23, 06 - 07:36 pm Comment from: tony

Its a shame Walmart gave in :(_

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