Steve Jobs plays high-stakes poker with greedy record labels

“In a parallel world, Steve Jobs could have been a poker player with a reputation as a cool hand. After three decades at the top table of technology, all the required skills are there: patience, self-belief, bravado — and, most importantly, the ability to ride a streak of luck,” Bobbie Johnson reports for The Mail & Guardian. “‘Some people thought we got really lucky with the iPod, and we did,’ says Jobs. But, he adds, real winners don’t just enjoy the breaks, they exploit them. It is necessary to stay on top, especially when everybody’s out to get you. As he puts it: ‘We have world-class competitors trying to kill us.'”

Johnson reports, “So far, the competition is not doing a great job. Apple’s hand in the home computer market might be weak, but it holds all the cards in digital music. Thanks to phenomenal sales of the iPod over the past few years, the company is at an all-time high and its dominance of music downloading is almost total. More than six million iPods were shipped in the past three months, underpinned by a pervasive marketing campaign and growing consumer awareness. No wonder, then, that Jobs is in confident mood.”

Johnson reports, “Dressed in the regulation outfit of a Californian intellectual — black, black and more black — he is upbeat about the future of Apple, the company he founded almost 30 years ago in his parents’ garage. He believes that central to the company’s success is Apple’s vision — his vision — of making technology simple. ‘There’s a very strong DNA within Apple, and that’s about taking state-of-the-art technology and making it easy for people,’ he says. Jobs’s targets are busy, modern consumers; ‘people who don’t want to read manuals, people who live very busy lives.'”

“There are certainly a large number who buy into that concept. But while many are drawn in by the slick advertising and fashionable branding, those who stick around are often motivated by the man himself. On stage, and with an audience to play with, Jobs is the ultimate salesman. His speeches are famous for generating the “reality distortion field”, a sense of devotion to the cause that most rival technology bosses would kill for. Some fans will go wild for each new product that Jobs delivers, and his enthusiasm and charisma pour out across the stage,” Johnson reports.

“It’s clear that ownership is important to Jobs. He might not own Apple, but as the public face of the company he does lay claim to the firm’s image, and understands the necessity of being seen as ‘the good guy.’ For instance, when it is suggested that record labels might look to increase their income by bumping up the price of iTunes downloads, he brings in the spectre of illegal downloading,” Johnson reports. ‘Music companies make more money when they sell a song on iTunes than when they sell a CD,’ Jobs says. ‘If they want to raise prices, it’s because they’re greedy. If the price goes up, people turn back to piracy — and everybody loses.’ This is how things work: with a swift shuffle, he asserts Apple’s ownership of the music download market, and distances it from the messy decisions.”

Full article here.
Apple’s hand in the home computer market is not as “weak” as some might think. Anywhere from 8 – 16% of personal computer users own and use Apple Macs. See related articles. Besides that quibble, this is an excellent article that focuses on Apple CEO Steve Jobs’ ability to sell Apple products and Apple the company.

Related articles:Apple continues to grow worldwide Macintosh market share – July 25, 2005
Gartner: Apple grows shipments 31 percent in Q2 2005, moves from 5th to 4th in U.S. market share – July 18, 2005
IDC: Apple gains U.S. market share at double overall market rate, up to 4.5 percent for Q2 2005 – July 18, 2005
16-percent of computer users are unaffected by viruses, malware because they use Apple Macs – June 15, 2005
Survey shows Apple Macs owned by nearly 10 percent of US small and medium-sized businesses – February 17, 2005
More people use Apple Macs than you think; 8-12 percent of homes use Macs – March 31, 2004
10 percent of computer users use a Mac; 3 percent is Mac’s approximate quarterly market share – February 10, 2004
Syracuse Post-Standard: 3 percent is a false stat; Mac holds ’10 to 12 percent of the market for PCs – August 27, 2003

Record labels accuse Apple CEO Jobs of ‘double standard’ as they seek to force iTunes price increase – September 21, 2005
Apple CEO Steve Jobs to repel ‘greedy’ record companies’ demands for higher iTunes prices – September 21, 2005
Apple CEO Steve Jobs vows to stand firm in face of ‘greedy’ record companies – September 20, 2005
NYT’s Pogue to record companies: it’d be idiotic to mess with Apple iTunes Music Store prices – August 31, 2005
Apple CEO Steve Jobs prepares for pivotal fight on digital music prices – August 28, 2005
Record labels to push Apple for higher iTunes Music Store prices in 2006? – August 05, 2005
Record labels look to raise iTunes wholesale prices, music industry fears Apple’s market domination – March 05, 2005
Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads – February 28, 2005
Report: Music labels delay Euro iTunes Music Store fearing Apple domination – May 05, 2004
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? – April 22, 2004

18 Comments

  1. Ahhh no zupchuck not quite a double standard.

    The mp3 player market is not nearly as fragmented (yet) as the PC builder market.

    Also when one player has 60-70% market share (worldwide-US) and the others share the rest this means 8% is an also ran.

    When the largest market share is 16% and you have 4-8% then this is not an “also ran” position.

    Now you could look at Mac OS X and say “also ran”, but there are far less “major” OS’s than mp3 player let alone PC manufacturers, so you it MAY be possible to say this is a different situation.

    Sure you could say “also ran” for all of these just using a raw figure, but the reference to being an also ran has to be taken in context of the market environment.

    Luke

  2. “Strange, Apple has 8-16% of the home market, and it’s weakness is a quibble. Yet Creative has similar market percentages in the MP3 player market and it is derided as being also-ran, weak, and <insert derogatory comment here> by same folks…

    Double standard?”

    No, the difference here is that the MP3 player market is an emerging market, this is the stage when the final players are sorted out and those that fail to gain and hold sufficient market share to survive, go under.

    The computer market is a mature market, the sorting out has already happen, so companies like Packard-Bell, Osbourne, Commodore, Sinclair, Tandy, etc, have already disappeared.

    Apple has a healthy INSTALLED BASE of aproximately 16% in the home market, but in professional niche markets like video, or graphics the number is in the 80 percentile, give or take a few percent. So Apple ain’t going nowhere, she’s here to stay!

    MW = early
    as in, early bird get da worm, great if you like worms!

  3. me says: “If you are going to print stuff like that, PRINT THE NUMBERS BEHIND THE CLAIM, or else, just print “We love Macs and we guess the numbers are more like…” The same thing with the 50M iPods sold in 2006 quote from yesterday.”

    Me – weren’t the Related articles links up there when you posted? MDN HAS given you the original articles with all the original numbers for Mac usage that they base their claims on, and the titles clearly distinguish what each claim is saying. I’m actually pretty impressed with how well they’ve done it.

    As for their claim yesterday that Apple would sell 50M iPods next year, I agree that it would be nice to show the basis of the projection. I’ve been watching iPod sales for the past few years, and based on a simple extrapolation, Apple will easily beat 40M in sales, and I’d say (based on the trends) up to 100M. Now, I believe once you start talking 50M-100M, you have to start considering whether they are reaching market saturation, and so a lot of judgment has to be thrown in about what the dampening factors might be. I think 50M is a nice conservative number for MDN to have chosen, but the analysts want to be even more conservative, which is also fair. Any *specific* estimate made when they are reaching a saturation point would be highly speculative, so asking for MDN to back it up with hard numbers is a disingenuous expectation in my opinion.

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