Will Apple squander its dominance of digital music?

“In the must-have department, Apple’s iPod is the only clear winner in this computer-to-electronics migration. Sure, Dell and HP have bested Apple at a game it dominated before, the PC market,” Sarah Lacy writes for BusinessWeek. “But the iPod’s success might have them thinking: ‘What’s Apple’s secret sauce, and can we steal the recipe?'”

“Analysts agree a mix of ingredients has clicked for Apple. Some of those might spice things up for Dell or HP, but most are pretty unique to Apple — at least for now,” Lacy writes. “For starters, Apple’s music products are truly integrated — the outfit makes the hardware and the iTunes service and software. Other hardware makers are relying on Microsoft and other third parties for software and service, so they can’t control the whole customer experience.”

“That’s one advantage that the Dells and HPs of the world aren’t likely to be able to match. “It’s hard for a bunch of partners to put together something as smooth as that,” says Roger Kay, technology analyst at IDC, a market research firm in Framingham, Mass.,” Lacy writes. “Apple can also afford to advertise and build lush stores because as a seller of premium products, it isn’t in a price war. Sound familiar? It should. Apple had all this going for it in the heyday of its PC business. Then it lost the bulk of that market to systems based on Microsoft’s Windows software. Today, Apple has just 2% share of a business it once dominated.”

Lacy writes, “Jobs & Co.’s reluctance to partner, create a more affordable PC, and generally be more Dell-like — a pattern the outfit seems to be repeating in the digital music business — are the reasons most industry folks say it lost to Windows. So don’t declare Apple the winner quite yet in digital music. The other guys have plenty of time to catch up on quality and undercut Apple on price. After all, it has happened before… Don’t forget, Jobs & Co.’s way hasn’t always won out. Apple skeptics are likely whispering to each other, ‘Just wait.'”

Full article here.

MacDailyNews Take: As with the Mac OS X security through obscurity myth we endured awhile back, it looks like we’ll have to repeat the facts again and again until they sink in: the Macintosh platform required and still requires huge investments by developers to create compatible software. So, when faced with budgetary contraints, they chose and still sometimes choose to go with the most popular platforms. The iPod simply plays music that can be encoded, for very little cost, in any format the “developers” (musicians and labels) desire: AAC, MP3, WMA, etc. The music doesn’t need to be rewritten, recorded, and remastered. It’s like writing Photoshop once and then pressing a button to translate it for use on Mac, Windows, Linux, etc. To draw an analogy between Mac OS licensing and the iPod/iTunes symbiotic relationship simply highlights the writer’s ignorance of the vast differences between the two business situations.

19 Comments

  1. “So, when faced with budgetary contraints, they chose and still sometimes choose to go with the most popular platforms.”

    Even if the situation the writer put forth were true, the iPod, being the most popular platform, would have the greatest advantage anyway.

  2. ” The other guys have plenty of time to catch up on quality and undercut Apple on price.”

    They can say it over and over for all these years and it still doesn’t become any truer.

  3. Apple won’t be the winner in digital music

    sounds much the same as

    Apple’s going to go out of business.

    We all know market leaders do, and should, take flack but why don’t they sometimes just say well done Apple? Not surprising since the writer doesn’t comprehend basic model anyway… what hope hey?!*

  4. “That’s one advantage that the Dells and HPs of the world aren’t likely to be able to match. It’s hard for a bunch of partners to put together something as smooth as that,”

    For an article about why the iPod is dominating, this statement doesn’t seem too relevant looking at the iPod’s current demographics. i.e. mostly Windows users. Apple proved that they could make “something as smooth as that” on both OS X and Windows.

  5. Apple is on a lucky streak, not on sure run. Even MSN stumbled just when it looked untouchable. IBM used to be the only computer company Etc Etc. Although it might be unpleasant to think it, realize that Apple is not at the top and certainly no over the hill but at the beginning of the slope – miles to go before we sleep; Anything can happen.

  6. effwerd.. she’s referrring to economies of scale which mean PC components will always be cheaper than Mac components… there is the proprietary hardware thing coming up again… economies of scale really built the Windows empire.. because Gates and Ballmer knew that IBM’s design would be copied (they didn’t make any royalties off the initial IBM deal.. they just waited until someone ripped them off.. and by that time, they would license the dominant OS, DOS, to them.. it was Compaq, of course..)

  7. Here’s another journalist without a clue. She thinks Apple should be more “Dell-like”. Thank you, no.

    The reason for the iPod’s success is many-fold, but the bottom line is, Apple wants to make the best product, and they have, end of story.

    She obviously doesn’t know her tech history either because Apple never held the bulk of the market with the Mac. The reasons for Apple’s current market share is very complicated but it did not have to do with them not licensing the Mac OS early on.

    Sigh. These people are exhausting. It’s their job to know this stuff, yet 99% of the people posting on these boards are better informed and we’re all doing OTHER jobs!

  8. Competitors should “just wait”?

    Sure! It will just solidify Apple’s position in the MP3 player market. Waiting is what Apple did in the PC business and suffered for it.

    Waiting will get you nowhere.

  9. Hey, this article quotes Rob, so we know it’s off-base:

    “For a long time, Apple’s ads have done something that those by Intel (INTC ), Microsoft, Dell, and HP haven’t, according to Rob Enderle, principal analyst at the Enderle Group in San Jose: They show customers having fun with the product. “It’s a basic marketing skill, and it drives me nuts that the others don’t get it,” he says.”

    He should just say that Apple drives him nuts!!!

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