Microsoft manager: people will get frustrated with ‘closed ecosystem’ of Apple iTunes

“Though Apple has been the undisputed leader in the market–and has done better than some would have thought a year ago–online downloads still represent a small part of how people get their music. File-swapping services continue to be popular, and CD sales have started to show some signs of life. Apple itself had predicted it would distribute 100 million songs by the time the one-year anniversary rolled around, a goal the company seems likely to miss,” John Borland and Ina Fried report for CNET News.

“To date, rivals like Napster and Musicmatch have fallen far short of Apple’s sales. According to the NPD Group, Walmart.com’s cut-rate pricing has come closest, drawing about half the number of customers seen by iTunes in March,” Borland and Fried report. “Analysts say that although many of the new entrants to the market could pose strong competition, Apple will continue to benefit from the fact it has sold so many iPods–devices that work only with Apple’s service. Last quarter Apple sold 800,000 of the portable music players, with rivals such as Dell and Samsung selling only a fraction of that total.”

“‘Apple set the bar incredibly high,’ said Mike McGuire, an analyst with GartnerG2, a division of the Gartner research group. But some rivals said they expect Apple’s dominance will be temporary. ‘Apple is probably still riding the wave of their initial launch,’ said Jason Reindorp, a group manager in Microsoft’s Windows digital media unit. ‘They have spent an inordinate amount of money to generate awareness around their closed ecosystem. (But) as people get more sophisticated in this area they are going to be getting more frustrated with a closed ecosystem. I think the market will kind of self-correct as things get more mainstream,'” Borland and Fried report.

Full article here.

MacDailyNews Take: Microsoft and Real are now using the same “talking points” memo. Will it work?

Related MacDailyNews article:
Real’s CEO Glaser: Apple’s iPod/iTunes combo ‘threatens to turn off consumers’ – April 20, 2004