“Apple’s version of the Maginot Line is the integration of the iTunes music store with the iPod and while people sincerely believe they can dethrone Apple from atop the electronic music market by just biding their time or making ever more silly mp3 players they are simply wrong, the only way to beat Apple in the electronic music field is by innovating something completely new and going around Apple’s carefully placed defenses,” Chris Seibold writes for Apple Matters.
“As it stands precious little innovation seems to be coming down the pipe but plenty of folks are sure Apple’s ride is over. Gene Munster, an analyst that usually has only the best things to say about Apple, was quoted by CNN as saying ‘Its inevitable that over time their market share declines.’ The reason Mr. Munster gives for this is that no particular product can dominate the consumer electronics market for more than two or three years. Going by past experience that is seemingly true, consumer electronics rarely hold such a large percentage of the market over such extended periods of time. Yet Mr. Munster forgets that the iPod is much more than just another consumer gadget people can get rid of on a whim. Once you couple the iPod with songs from the iTunes music store you’re stuck (short of EULA violating hacks) using the iPod as your mp3 player until something sufficiently compelling comes along to replace it,” Seibold writes.
Full article here.
Related articles:
Apple’s Japan iTunes Music Store sells one million songs in first four days – August 07, 2005
Study: 32 million U.S. adults plan to buy iPod in next 12 months – July 20, 2005
Needham & Co: Apple ‘iPod Halo Effect’ fueling Mac purchases; predict 43 million iPod sales in 2006 – July 18, 2005
Apple smashes street with record revenue, earnings; shipped 6.155 million iPods – July 13, 2005
Apple cuts iPod prices to grab market share; analyst estimates 35 million iPods shipped by year end – June 29, 2005
Wermacht,
The Maginot line never crumbled it just got circumvented and was Overtaken By Events. Apple’s strategy must therefore be to innovate from one model to the next ( as was the case with PC’s in the early 90’s) fast enough to keep their present customers hooked into iTunes (and
whatever it diversifies into) and to get others to join.
Apple have to date kept the changes coming and the unit price reducing fast enough to retain market dominance and spread from early adopters to those with less spare cash to spend on gadgets( just as MS did against the Mac in the 90’s ). What goes around comes around.
Paul Howland,
My intent is not to attack. I feel you are repeating standard rhetoric regarding a business that dominates a market without looking at the company comparatively. Is Apple perfect? No. However…
“The monopoly inevitable creates higher prices than necessary…”
Yes, please tell Apple to raise their prices to match VZW Tunes (Verizon Wireless ringtones). Now, I’ll be able to pay $2.99 for 1 tune, $5.49 for 2 tunes or $9.99 for 4 tunes. Verizon has competition.
“But from a consumer’s perspective, being locked into a sole source standard can never be a good thing.”
Let’s all stick to opinion here. You have two choices: 1) a single standard and almost flawless function. 2) a variety of options and an wide array incompatibilities. I opted for choice (1) after 18 years of choice (2) and feel it was a step forward.
“What’s good for Apple is not always what’s good for the user.”
I’m no Apple zealot. I only switched to a Mac in July. When I step back, I believe Apple prices fairly based on function, reliability and design. I also believe their practices do not stifle their competitors nor do they hinder technology. It’s not Apple’s fault that their product’s are superior in almost every way. Yes, I believe that.
MDN MW “found” as in: found a better choice in computing.
Wermacht, why don’t actually read the story at AppleMatters
if apple actually allowed other units to connect to itms, many would leave ipods.
I would, in a heartbeat, leave ipods to try other mp3 players, if they could interface with itunes.
Specifically, the Sony players.
As it stands, i have a shuffle, and I’m not impressed.
Apple’s one-size-fits-all reeks like an XXL T-shirt bought at a disneyland kiosk. Great for an obese guy, but we’re not all fat.
We’ve had people bring back iPods which they say aren’t working, we restore them and put them back on the shelf because there is nothing wrong with them! People are too embarrassed to admit they can’t figure it out, and therefore don’t want to be shown.
For instance, after the music is loaded and the shuffle is removed from a USB port it has to be turned on to work. A pretty simple thing but we’ve had returns because people couldn’t figure that out! (turn it over and move the switch to ON)
RTFM people! (read the freakng manual)
MW = theory
as in, that’s my theory, for now anyways.
Mac Jack: Apple’s closed system gives it control over the user experience, which after all is the whole reason for iPod + iTunes’ success.
jfbiii: Once you burn the music out to disc you can import right back into anything.
Letting other stores sell Fairplay so that you can easily transfer to your iPod is a much easier user experience than exporting and importing.
Oh but…
Apple is still in business to make money, just like every other corporation on the planet.i]
Ahh, so Jobs doensn’t care about you at all unless you can somehow line his pockets with cash. Nice.
“Apple’s one-size-fits-all reeks like an XXL T-shirt bought at a disneyland kiosk. Great for an obese guy, but we’re not all fat.”
One-size-fits-all what a stupid comment considering the sizes vary from 512 MB to 60 GB. Do you want to carry around 120 songs or 15,000?
MW= week
too bad it’s not weak like your argument.
The writer’s point (which I thought he made quite clearly), was that Germany “defeated” the Maginot Line by doing an end-run through Belgium. Yeah, once it was clear their defenses were now facing the wrong way, the French skedaddled, but the line would have held against a frontal attack from German territory.
Similarly, the only way to defeat iPod+iTunes is to do an end-run by creating something totally different. Pretty astute analogy, actually.
I don’t understand how “realist” and others expect Apple to function like a charity. You want great products that are elegant, well designed, easy to use, that make way for every other product that you buy to function right along side them (an expectation that you don’t, wouldn’t and can’t place on other products that you buy).
You cheer when Apple provides a solution where there isn’t one (iPod+iTunes+iTMS) but boo-hiss that it doesn’t work with every other existing service and player on the market (from companies that clearly could not provide a complete solution).
At the same time, you want once-beleaguered Apple to grow as a business, yet you complain that “Apple is still in business to make money, just like every other corporation on the planet.”
Your expectations are a no-win proposition. Apple should throw in the towel so you can have your Sony Beans, Dell box, WinXP and Napster.
I think Apple is doing the best juggling routine of any business operating on the planet today: great products, great solutions, customer satisfaction, stockholder satisfaction, company growth and profit, an innovation rather than “me too” approach, and relative good will within its industry.
“At the same time, you want once-beleaguered Apple to grow as a business, yet you complain that “Apple is still in business to make money, just like every other corporation on the planet.”
You took that quote totally out of context. I was praising Apple in my post for doing what any other business would do, not complaining about it.
“Ahh, so Jobs doensn’t care about you at all unless you can somehow line his pockets with cash. Nice.”
Ok Realist, name me ONE CEO of ANY corporation that doesn’t operate in that way….we’re waiting….
Nobody is saying that Apple and Steve Jobs totally don’t care about the customer because if they didn’t, they wouldn’t care if their products were any good or not. What we ARE saying is that they are in business to turn a profit and make money for the stockholders, and they are not out there to give away everything to freeloaders with absolutely no business sense like yourself…
EV1,
Actually, I wasn’t quoting you. I was quoting realist’s quote of your quote.
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>To the socialist business experts out there…how exactly would it >actually benefit Apple if they did totally open everything up? Would >their market share increase seeing as how it’s already at 75-80%?
Depends which market share you measure – it’s something like <3% of the music market, 85% of the download market.
Think of the maths a different way – would you rather have 80% of a million or 10% of a billion? OK, you really want 80% of a billion, but the question is whether Apple’s strategy is growing the download market.
(And I buy at least 5 CDs for every single song I buy from iTunes, because CDs are a more compelling offer).
Of course there is a all platform/all player model that will work on all platforms and players and can be tried right now if anyone is brave enough – sell MP3 files cheaper than iTunes – and advertise :
‘You wouldn’t be tied to the same phone company.
Free your music with blah blah blah.
Works with every computer, every player. Including the white one.’
I think I can even see how – one of the highest costs for iTMS will be the fact that credit card processing costs are the same, even if you buy one song, so encourage people to buy more per order by lowering the cost the more you buy.
The problem is that the labels are still stuck in the ‘give us DRM and THEN we will allow downloading’ mentality, but bypassing Fairplay is the best way round the Maginot Line that they have. (It would also give them a pretty watertight moral case against the P2P sharers.
I’m going to sum up the press reaction to iPod since its introduction in 2001.
“Yeah iPod! iPod must die!”
If you buy a Nintendo Gamecube, you can never expect to play a Playstation disc on it. You can play some of the same games, but in all honesty – you don’t have a quarter of the choices. You buy a Gamecube disc and yes – it only plays on a Gamecube.
However, you buy an iPod and it will play any music available in the retail store – buy the CD and rip it. In addition, you can get a few iTMS exclusives, which you can get via Mac or WinPC @ the iTMS. You buy a iTMS song and yes – it only plays on an iPod.
Fact: Gamers quit complaining about “locked-in, sole sources” 20 years ago. Now that a ten year old can accept it, can you?
Inform yourself before you purchase.
MDN MW = “glass” as in: some people really need glass belly-buttons.
because if they didn’t, they wouldn’t care if their products were any good or not
Your deriding my business sense? They obviously care about how good their products are because that will make them more money. The key point that your missing is the motivation factor. Bill Gates obviously wants to make a good product so that he can become even richer.
you want once-beleaguered Apple to grow as a business, yet you complain that “Apple is still in business to make money, just like every other corporation on the planet.
As a consumer, I really don’t care whether Apple has one billion or five billion in the bank or whether stock is selling at $20 or $50 as long as they are able to make really good products.
Remember when Apple enthusiasts were saying they didn’t care about marketshare? Well, they shouldn’t care because regardless of marketshare, Apple still managed to make a good product. Now that they are so engrossed in market domination, they are becoming ego-centric instead of consumer-centric.
they are not out there to give away everything to freeloaders
Um, nobody said anything about giving away stuff. Licensing out Fairplay (which isn’t free) so that people can use them on their new iPods isn’t giving away anything.
boo-hiss that it doesn’t work with every other existing service and player on the market
Who said anything about every existing service? How about just letting one other service license Fairplay?
The point is that Apple doesn’t have to license out Fairplay because they don’t financially need to, but they should if they cared more about the consumer instead of marketshare.
And when/if they finally are finally forced to license out Fairplay, you guys will be talking about how no other company cares about its consumers as much as Apple. I don’t blame you though. It really is much easier to let Steve Jobs tell you what your opinions are instead of actually making them yourself.
And that is the reason why Steve Jobs has not licensed Fairplay for use by these other online stores
Licensing out Fairplay to other online stores and services is very different than licensing it to other manufacturers. Licensing it to stores means that the user still has to transfer it to their iPod if they want to use them, they just aren’t limited as to where they can buy the songs.
And as Tommy Lee Jones’ character in “Min In Black” said of an alien audio technology:
“Damn! Now I’ll have to buy another copy of the ‘White Album!'”
iTMS will lock you in until something much more compelling comes along.
(Can you say vinyl LPs, 8-tracks, cassettes, CDs? I knew you could)
“Remember when Apple enthusiasts were saying they didn’t care about marketshare?” (This would be your stupid comment, because there was never a time that Apple enthusiasts didn’t care about marketshare.)
“As a consumer, I really don’t care whether Apple has one billion or five billion in the bank or whether stock is selling at $20 or $50 as long as they are able to make really good products.” (This would be your selfish comment, because I think their stock holders — who are ALSO their customers — would care.)
“It really is much easier to let Steve Jobs tell you what your opinions are instead of actually making them yourself.” (This would be your bitchy, lash-out comment.)
I’m just not seeing the Fairplay thing as being a huge issue. Music is way to accessible to feel like you’re restricted in how you can buy it. I think you just like to bitch.
This is all BS. Apple is being consumer-centric. They are making money, as they should, but on i-Pods, not songs. They have a great product and they are keeping the music industry in check with their 99-cent per song pricing. As long as Apple has the marketshare advantage, the labels can’t raise prices, something they’d love to do. All the others are just along for the whine. Equalize the playing field and see how consumer-centric the music industry will be. Can you say $3.99 per song?
“This would be your stupid comment, because there was never a time that Apple enthusiasts didn’t care about marketshare.”
Try a year ago.
“This would be your selfish comment, because I think their stock holders — who are ALSO their customers — would care.
Yeah, I’ll agree it’s a selfish comment. But consumers are usually pretty selfish when they are spending their own money. It’s reflective of the working class individual. Let’s put it this way, I’d rather support the common man by pushing for the best product possible (different idea than best product available) instead of handing my money over to a greedy corporation for a product that I know can be better if only they cared a little more for the consumer. You’ll understand better when you’re out of school.
“This would be your bitchy, lash-out comment.”
Sorry, I’ll try to make the truth a little more palatable next time.
“I’m just not seeing the Fairplay thing as being a huge issue. Music is way to accessible to feel like you’re restricted in how you can buy it. I think you just like to bitch.”
It’s about the principal and about the future. And because iTMS itself is performing way beneath its potential. Competing stores would change that.
They are making money, as they should, but on i-Pods, not songs”
Exactly. So it wouldn’t hurt them to license Fairplay to other stores if you still have to play them on an iPod.
“Yeah, I’ll agree it’s a selfish comment. But consumers are usually pretty selfish when they are spending their own money. It’s reflective of the working class individual. Let’s put it this way, I’d rather support the common man by pushing for the best product possible (different idea than best product available) instead of handing my money over to a greedy corporation for a product that I know can be better if only they cared a little more for the consumer. You’ll understand better when you’re out of school.”
This is the stupidest yet. Trying to mix “support the common man” with consumer products (the best products possible)? Besides, there are plenty of “common” people working for that greedy corporation. You’ll understand better when you move out of your mother’s house.
You sound like a button-pushing, whiny, titty baby with no real points to make. Don’t expect any further discussion, because I’m done with you, kid.
no problem by me if there is no further discussion. Considering you haven’t even made any points anyway (beyond insulting, hollow, and ignorant retorts), I was beginning to wonder if there even was a discussion to begin with.
Realist,
Why in gods name would Apple give/license/sell the DRM to a COMPETITOR ?
It would only serve to aid that competitor in their quest to unseat Apple and iTunes.
Apple showed the world how to do downloads legally with the iPod+iTunes.
Maybe one day they would license FairPlay to another service but it would be a BUSINESS decision not some altruistic “Gee this would be good for our customers but bad for us” motivation.
Their motivations still has to be to make a profit and NOT licensing FairPlay aids that effort whether we like it as customers or not.
Though it’s been argued that iTMS is performing below its potential (which is absolute farce considering that iTMS was intended to be a loss-leader for iPod, and has instead turned out to be a healthy revenue stream), licensing Fairplay could bring a few non-iPod users to iTMS. But the intent of the other download services is to get iPod users to their sites. And the intent of the other player makers is to move in on iPod turf.
It doesn’t make sense to push your own customers (iPod users) into the arms of the competitors, or erode your ability to sell your hallmark product (iPod).