Apple’s iPod mini sold out in many locations; Analyst: Microsoft could threaten iPod

“It’s a mini-world after all. Apple’s new iPod Mini was a strong seller in its first full week in circulation, even though Mac faithfuls earlier complained it was overpriced. The 4-gigabyte digital music player, which can hold a thousand songs in a device the size of a fat credit card, began retailing Jan. 20. By Wednesday, hundreds of units were sold-out at multiple city retailers, including the Apple Store in SoHo and Tekserve in Chelsea,” Nancy Dillon reports for The New York Daily News.

“‘I had it in my hands, and then I lost it,’ said a frustrated Steve Perry, 40, managing director at Kirkland Investors in Manhattan. He missed buying the SoHo store’s last iPod Mini by a matter of minutes,” Dillon reports. “‘I went downstairs to ask some questions, and someone snapped it up. I should have done the New York thing and paid first, asked questions later,’ he said.”

“‘We’re turning away a hundred people a day,’ said Tekserve owner Dick Demenus. ‘We’re hoping to get a new shipment [this week]. I heard there’s a component shortage.’ Apple is still the market share leader, but a war over the format for downloadable music could change this, analysts said. Apple’s iTunes site sells songs in a format that iPods alone can play,’ Dillon reports. “Most other services, including the new legal version of Napster, sell songs in a Microsoft format that Apple iPods can’t play.”

“Microsoft also is reportedly building an online music store. ‘Microsoft could really be a threat to the iPod,’ said Danielle Levitas at research firm IDC. ‘Windows is the dominant PC platform. And there are still lots of consumers who don’t quite get that you can use an iPod with your Windows PC,'” Dillon reports.

Full article here.

38 Comments

  1. Okay, of *course* Microsoft is a threat. It’s the biggest threat out there by far. Their software is on the vast majority of computers in this country, which gives them tremendous leverage. Yeah, they probably won’t have as slick a solution as iTMS and iPod, but counting them out is not wise. They’re too big, and they have too much influence. Apple is, no doubt, spending a lot of time figuring out what they will do if MS gets in the game.

  2. I never said they couldn’t become a player in the market, I was only saying that just because M$ decides to enter a market that doesn’t mean they’re going to dominate it. The Xbox was a very recent example of that, much more recent than your Windows 3.1 example which was 12 years ago now. Times are far different now than they were back then, so it’s not a lock for M$ anymore that they can just throw some money at something and dominate in it like they could a decade ago.

  3. allgood, I totally hear you on that one. I HATE how people believe such a silly thing like “macs can’t burn CDs.” I mean, are you SERIOUS? I’m not sure, but I wouldn’t be surprised if macs did that before PCs. It’s too bad, but just keep working against the wrong information!

  4. These analysts should now start looking at Apple and M$ in a new light.

    All along they have been complaining that the iPod does not do WMA.

    Now with the marketshare that the iPods command, they should be criticizing Napster et al that they do not do iPod!

  5. Why don’t the analyst just give up. Each week one person say’s that Microsoft will break apart the ipod and itunes mania and each week Apple keeps selling more songs and more ipods. One question to analyst why haven’t Microsoft debut a music device?
    Answer: because they know Apple’s lead isn’t reachable and why not just ignore that section of the market and go after another portion of the market like the portable movie player.

  6. 100,000 pre-sold and NYC approaching sold-out.

    Good – if Apple is buying all of Hitachi’s output of microdrives, then no-one else can buy them. Which means they all have to rely on Cornice for anything similar.

    What always confuses me about press reports is how no-one seems to be able to see the whole picture.

    MS can sell its music for $0.45 for all I care: it doesn’t play on an iPod and that’s the hot player for the foreseeable future. Apple might very well ship 5 million players globally during 2004, either directly or through the HP deal which could easily lead to Apple shipping 20M tracks per month in 2005.

    MS in comparison has nothing: no mind share, no fashionista status, no media hype. The WMA player market is a mess: too many players with either poor specs, poor interfaces, poor looks and – more than anything – poor value.

    HP’s involvement will help to address MS disinformation in a way that Apple on its own could not hope to achieve.

    Here’s a view of 2004:

    1G iPod minis from Apple, reducing to $200 by October.
    3G iPod maxis from HP from July: costs drop by around 10% when compared to current Apple prices.
    4G iPod maxis from Apple (only) around July: larger disks, colour displays and better headphones as standard. About 5-10% more expensive than current model range.

    I also wouldn’t be surprised to see another ‘licensee’ deal by the autumn with a company completely outside the classic IT space – I’m thinking fashion (DKNY, Gap) and/or sporting (Adidas), but it could be a deal to resell through a classic telecoms supplier or an AOL or whatever.

    Once Apple has wide distribution and a wide range of product options, MS can go and boil its head in a bag. This round of the game is close (two years) to being lost from MS’s perspective, with WMA no further forward in real market approval.

  7. steve m.:
    I don’t think Apple was the first to introduce CD-burning (Steve Jobs mentioned that they missed that around the time of the original iMac). But I do believe they are the first company to introduce the CD-burner as standard (instead of an add-on option).

  8. IMHO, the best way for Microsoft to beat Apple (with respect to WMA) is to come up with an iTunes/iTMS knockoff that works with iPod. They could sell WMA songs for 45 cents, and their jukebox would convert everything to WMA for storage. Downloading to iPod would convert to AAC on the fly.

    Their jukebox would work with several online music sellers, because M$ doesn’t care about selling music, only selling WMA as a format. After this jukebox system became fairly popular (and it would because it’s cheap and pre-installed), they would break iTunes with a service pack. They would make the WMA/AAC conversion just a little more unstable to feed the opinion that buying WMA music is better for the consumer.

    M$ has no chance at beating the iPod, but I don’t think they care. What they want is to make WMA ubiquitous. After a few years of following the plan above, pressure for Apple to license WMA for iPod would be much more intense than it is now.

    BTW, I’m not saying it’s possible, just that M$ may try it ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

  9. Due to antitrust laws i doubt MS could sell songs at such a low price because its a clear indication that they are trying to enter another market and use their cash reserve as a pillow against the losses they will make. Apple and other will kick up no end of fuss.

  10. Microsoft pumped money into Napcrap, and that seems to be the limit to their interest in online music. What disturbs me is an article I read that stated that Microsoft DRM is going into new DVDs. I would hate to have that crap on my movies, even more so that Apple might have to add microcrap to our DVD software.

  11. Guys,

    Unfortunatley you overlook a fairly critical point. The key to the computer industry are the Complementary products … What good would a computer be if it did not have complementary products like software, printers etc. This is where Apple has gone wrong in the past with its closed standard. As good as the iTMS is and as cool as the iPods are people sooner or later are going to want to download their music to other devices (whether they be inferior, cheaper MP3 players, mobile phones or whatever the next gizmo is) … If the industry does not adopt m4a format soon we will be where we were 20 or so years ago … a great machine that can’t talk to anyone. This is the real threat, not that someone will come out with a better MP3 player (not possible!!). Unfortunately it is compatability not quality that matters.

    Solution? Push the m4a as an open standard that the industry adopts and push compatability with other manufacturers.

    Lets see how it plays out

  12. Guys,

    Unfortunatley you overlook a fairly critical point. The key to the computer industry are the Complementary products … What good would a computer be if it did not have complementary products like software, printers etc. This is where Apple has gone wrong in the past with its closed standard. As good as the iTMS is and as cool as the iPods are people sooner or later are going to want to download their music to other devices (whether they be inferior, cheaper MP3 players, mobile phones or whatever the next gizmo is) … If the industry does not adopt m4a format soon we will be where we were 20 or so years ago … a great machine that can’t talk to anyone. This is the real threat, not that someone will come out with a better MP3 player (not possible!!). Unfortunately it is compatability not quality that matters.

    Solution? Push the m4a as an open standard that the industry adopts and push compatability with other manufacturers.

    Lets see how it plays out

  13. Just about the time back-to-school rolls around Sony is going to announce that it has added AAC with Fairplay DRM support to it’s MiniDisc units, Flash Players, etc. They, like HP are becoming very wary of the ever encroaching monster that is Microsoft.
    Even as this discussion is ongoing, M$ is coming dangerously close to getting Windows Media 9 Video onto every High-Definition DVD out there. Otherwise they will get a drag off of everybody’s media, regardless who makes it. This would also require Apple to add WMV support to Final Cut and DVD Studio in order to support the new ‘standard”.
    Sony knows a thing or two about Pro Video and the entertainment industry and finally sees what Bill and Ballmer are up to. They are not happy campers and just like HP will break ranks with the Wintel Cartel.

  14. As Cringley (or was it Mosberg?) said, MS fails to dominate any market that is not connected to Windows, which is true. Thus, people here make a good point if WMP is a stand alone product. Xbox is a bad example in this discussion because it is a separate product.

    But, given that WMP is bundled with Windows, MS could very well grab a certain piece of the market and then wedge itself more to open the door. Microsoft certainly has the time and money and the media behind them to make an impact. It is proven over and over that people are willing to give MS the benefit of a doubt even when at the end, they get screwed. However, Apple, OTOH, has a near perfect set up: you want an iPod, you get music from iTMS. You get music from iTMS, you can play it only (so far) on the iPod. They strengthen each other. As the market shows, Apple has a strong foothold (which is why it’s a mistake to license WMA for iPod). The more people buy iPod/iTMS songs, the less likely they will buy anything from MS.

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