HMV to launch Apple iTunes Music Store killer, stop selling Apple iPods

HMV Group Plc, the U.K. operator of HMV music stores, said it is joining forces with Microsoft Corp. to open an online music store that will challenge Apple Computer Inc.’s iTunes downloading service and iPod music players. Maidenhead, England-based HMV will invest 10 million pounds ($19.2 million) in the digital downloading service, which will start in the second half of 2005, Paul Barker, head of corporate communications, said.

MacDailyNews Take: 19.2 million? Dollars?! That’s it? Apple’s annual toilet paper budget is higher.

“HMV is to develop a digital downloading service with software giant Microsoft, tapping into demand for online music. The applications, which the music store chain hopes to launch in the second half of next year, include a customised ‘jukebox’ where customers can find, download and buy music online at home and through terminals in HMV stores,” Reuters reports.

“Shares in HMV leapt 3.7 percent to 255 pence, valuing the company at around 1.3 billion pounds. HMV customers will be able to listen to the digital downloads on over 75 portable players currently in the market, like the Philip’s MP3 player, the firm said,” Reuters reports. “However, the software is not compatible with Apple’s iPod, and when the service is launched next year, HMV stores will stop selling iPods, a spokeswoman for HMV said.”

Full article here.

“‘IPods are not compatible with Windows Media at the moment,’ an HMV spokeswoman said. ‘However, while Apple has been incredibly successful, products based around Windows are going to push up their market share. It is going to be important that the service is compatible with Microsoft.’ The initiative will be developed by a joint team ‘combining the industry knowledge of HMV with the software development product expertise and consulting skills of Microsoft,’ Alistair Baker the managing director of Microsoft UK, said. Alan Giles, the HMV chief executive, said this morning that the company was ‘delighted’ to be working with Microsoft. ‘We have a unique opportunity to leverage the HMV brand…to establish a strong position in the newly emerging market for paid-for downloads,'” Mike Verdin reports for The Times Online.

MacDailyNews Take: The “consulting skills of Microsoft.” Oh, so that’s what MS does well, consulting. MS consulted HMV right into a format that won’t play on the player with over 90% of the market. The player that’s sold somewhere between 3-6 million unit, depending who you ask, in the past 90 days. Or 3-6 million more non-HMV customers. Sheesh, we almost feel badly for HMV. Almost.

Perhaps there is logic to this move: HMV must not want the hassles of selling music online and digital music players in their stores.

49 Comments

  1. HMV is an overpriced excuse for a music store. Outrageous prices for stuff. This is not a smart move. His Masters Voice should be changed to His Microsoft Voice, and it’s not very clear.

  2. yawn, I do not care. As well as the other millions iPodders around.

    How does HMV think is going to be able to sell music online to people NOT having their player supported. Could all these people be that idiot or simply the CEOs are getting fat cheques from Microsoft? That is the only consultant power leverage that I could see from M$ to convince HMV to not support the most common player in the market, the iPod, in their music store.

    So they are targeting the 20% to 10% not iPod user base and believe they are going to make money? Like selling 100k tunes per week/month?

    NEXT!

  3. If HMV want to lose out on the retailer’s share of iPod sales, let them go ahead. I have yet to see a WM based device that comes close to an iPod. At this rate, decent MS based music players will come out just in time for the market to disappear to the mobile phone manufacturers.

  4. Hasn’t any of these guys ever watch the A-Team? No matter how many bad guys pile together (Real, HMV, Sony etc.) under one real evil guy (MS) and try to take over, the small band of heros (Apple) will still wipe the floor with them using really creative ideas (iTunes-iPod).

    I love it when a plan comes together!

  5. Maybe some young gal will wrrite a post that lets us know just which financial investment instrument we use to make money in a case like this, where we’re pretty sure a company’s stock value is going to fall.

  6. About HMV here…
    http://www2.hmv.co.uk/hmvweb/navigate.do?pPageID=1083

    “His Master’s Voice” is very same as the old RCA logo of a dog in front of a Victrola, with audio quality so good, the dog is unable to distinguish the recoding of his master’s voice with that of the master himself.

    Originally, the “His Master’s Voice” trademark was owned by EMI in the UK (& Empire?) but by RCA Victor in the USA. Presumably the artist sold the rights separately.

  7. “Maybe some young gal will wrrite a post that lets us know just which financial investment instrument we use to make money in a case like this, where we’re pretty sure a company’s stock value is going to fall.”

    I’m not a gal, but here goes.

    Go “short” on the stock. You borrow the stock to sell now (from your broker), under the assumption the value will fall. When it does. you buy the stock back, at the lower price, and give the shares back to the broker. You pocket the difference.

    If the stock goes up, you’re screwed.

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