Ihnatko: Apple needs to make cheaper iPod, license FairPlay to continue iTunes’ dominance

“Apple doesn’t have a cackling monopoly on the market for digital music, but it’s making jolly progress,” Andy Ihnatko reports for The Chicago Sun-Times. “Now that Microsoft has released the basic tools necessary to sell protected Windows Media-encoded tracks online, it’s time to start looking for thermal exhaust ports in iTunes’ Death Star. If Apple wants to maintain its stranglehold on the hearts and minds of the proletariat, it’s going to have to do two things.”

– Priority One is to make a dirt-cheap RAM-based iPod (not a penny more than $99). Being stuck with just one kind of portable player isn’t a big deal when your only choice is the best available, but Apple needs to have a unit that everybody can afford.

– That’s just a Band-Aid for Priority Two. Apple’s going to have to start licensing FairPlay, its proprietary digital rights management system. It’s easy to succeed when you’re better than all of your competitors as individuals, but when they all start selling music files that can be played on any jukebox app or portable device, you can’t bring a knife to a gunfight.

Full article here.

Related MacDailyNews article:
Time for a decision: how Apple can win the online music war – September 30, 2003


  1. these idiots never cease to amaze me. all they know is cheap…cheap…cheap… If you want something just because it’s cheap, well, that’s just what you’ll get and it won’t be worth a %#*&!

  2. “Still, buying music through the iTunes Store is like passing out drunk and pantsless in a fountain at Caesar’s Palace: What happens in iTunes stays in iTunes.”

    “It really is a remarkable piece of free software. I plug my 15 gigabyte iPod into its dock, and iTunes descends upon it like a NASCAR pit crew, executing all of the automatic Smart Playlists I’ve configured.

    Minutes later, all the worn-out old music has been replaced with fresh meat selected and mixed in just the right proportions. And all I really intended to do was recharge the batteries.”

    That’s funny

    I agree pretty much with this guy.


  3. iTunes = iPod sales.

    iPod sales = Mac sales.

    If FairPlay were licensed, that means other players could play the tunes, and other jukes could sell them. How does that ultimately = Mac sales?

    You have a choice. Rent your music (some months I buy 1 song, some months I buy 30, I refuse to pay the same fee for my down months. If I ever choose to cancel my subscription, welp, no more tunes. Just doesn’t add up.
    It’s like renting an apartment vs owning a home. For all the money you spend on the apartment, you have to give it back when you’re done. Silly.

  4. [I]Priority One is to make a dirt-cheap RAM-based iPod (not a penny more than $99). Being stuck with just one kind of portable player isn’t a big deal when your only choice is the best available, but Apple needs to have a unit that everybody can afford[/I]

    Why is this Priority One? And how is it possible to make a reasonable iPod family device for that money? $99 will get you what? 128MB, 256MB, maybe 512MB at a stretch? So you can put 125 songs into your portable life at most, and at the lowest resolution.

    Actually, the future is to drop the 4GB iPod mini to around $179-$199 to make space for a 6GB (the next 1″ microdrive on Hitachi’s roadmap) model at $225. That then leads to a 2GB iPod mini at around $149, which at least gives you 500 songs at 128kbits.

    Apple would then have minis at 500, 1000 and 1500 songs and iPod maxis at maybe 5000, 7500, and 12500 songs.

  5. Dunno. Don’t read MacWorld. Their subscription department is run by monkeys. Tried three times to renew my subscription, and they still cut me off. All I get now are those annoying “why haven’t you renewed your subscription” letters.

  6. I think this guy has a valid point. It may be smart in the short term to try and squeeze a few competitors out of the market (ie. Napster). However, in the long run an ally is much better than an enemy. What would it hurt if they licensed Fairplay to RealNetworks? The format would gain marketshare and more importantly, mindshare. It would give even more people a reason to buy an iPod and less reasons to even think about Window Media format.

    Likewise, his point about iPod pricing seems valid too. There is a huge market of people that simply would never spend $249 or more on a mp3/aac player. Those people will buy a sony or a rio regardless, and will never be able to use iTunes/AAC/Fairplay. This will drive a lot of people to the Windows format and other download sites, actually increasing their marketshare. By allowing other players to work with iTunes, or at the very least making and entry level player, they would be pulling even more people into the fold making iPod/iTunes/AAC the undisputed champion.

    If they stay their current course, the competition will inevitably reach a critical mass and we will have the Mac vs. PC battle repeated all over again. Just my two cents.

  7. Brian is completely right. Its not about selling iPods. Its the format that matters. open that up to others to use and spread the AAC everywhere. that will help insure Apples survival in music. The iPods account for 2/3s of sales of mp3 players but only 1/3 of units sold. that means there is a large part of the market not being addressed by iPods. Apple needs to enter that market and there the prices are around $100

  8. until apple has caught up w ipod sales.. why the hell license fairplay??@ lmfao

    these guys don’t understand that apple is a promise to the consumer of a pleasant computing experience..

    hanging out w real et al. breaks that promise

  9. 0:

    There’s no way that a 4GB iPod mini costs $50 to make, given that the disk is probably $100-$125 of the current cost when you’re buying in Apple’s volume.

    However, the ability to increase that production by an order of magnitude will have an effect on Apple’s buy-in price given that Apple’s demand by this Xmas will probably be around 800,000 units a quarter out of around 2.5 million units made of all sizes.

    The 6GB iPod mini will make an appearance sometime in 2005, taking the position that the 4GB currently has thanks to being Hitachi’s flagship Microdrive product.

  10. I totally agree with this guy. I have been saying that Apple has to license out Fairplay at some point all along to totally sew up the market. I hope that they lock M$ out of this for years and years so more and more people can love iTunes and come to the Mac Platform.

    As for the cheap player, this is a point I haven’t been making but it does make sense. We all know how cheap Joe Sixpack can be. If they do come out with something like this though, I hope they can really differentiate it from everything else out there. Maybe make it really really tiny – a MP3 player tie-clip? – an MP3 player incorporated into some really nice noise canceling headphones (oh wait, that wouldn’t be cheap, cancel the noise canceling bit)

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