The problem is, the PC model doesn’t work in the consumer electronics industry, where you’ve got all these companies and some does one thing and another does another thing. It just doesn’t work. What’s going to happen is that Microsoft is going to have to get into the hardware business of making MP3 players. This year. X-player, or whatever. – Apple CEO Steve Jobs (Newsweek, Jan. 14, 2006)
AppleMatters’ Chris Seibold sees Jobs’ comment “not as a roadmap but as bait. Were Microsoft to jump headlong into the digital audio player market there would be strong incentive to Apple to begin licensing FairPlay. Manufacturers would be forced to choose between two mainstream options: A) go with Microsoft or B) Go with Apple. In the past, the no-brainer has been to go with Microsoft. This time the obvious choice is different.”
“The folks who stick with Microsoft get to fight over, roughly, twenty percent of the market. The folks that go with Apple would be aligning themselves with what has become the industry standard. The players that license FairPlay would have access to the iTunes store, backwards compatibility with the songs consumers have already purchased, and a chance to compete on a perfectly level playing field with the iPod. It doesn’t take a Stanford MBA to deduce that the potential rewards of opting to use FairPlay far outstrip the rewards of going with PlaysForSure,” Seibold writes. “When the vast majority of manufacturers stop supporting PlaysForSure and start supporting FairPlay, as would likely happen, then the battle is over. Microsoft will be relegated to side player in the digital content delivery market. Their DRM, the most coveted part of the deal for Microsoft, will have been shunted to a distant, irrelevant second tier player.”
“Of course, there is a wildcard,” Siebold writes. “What if Microsoft could convert FairPlay tracks so that they would run on players besides the iPod? Would that be enough to drive people away from the iPod? That functionality has been hinted at and, undoubtably, Microsoft believes that is the key to dethroning Apple. In reality, it is simply a tacit admission that competing directly with the iTunes Music Store is too much to ask of even Microsoft. If the plan goes through, the end result will be another round of supposed iPod killers showing up and being quickly forgotten. Nothing lasts forever, certainly some day the iPod/iTunes duo will be challenged and soundly defeated. That day isn’t today and unfortunately, if you’re Microsoft, it isn’t even this year.”
Full article with more, an excellent read, here.
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Related articles:
Apple CEO Steve Jobs on MacBook Pro battery life, MS-branded iPod killers, Mac market share, more – January 16, 2006
MS exec: new Windows portable media center devices will ‘convert and run’ iTunes Music Store tracks – January 09, 2006
This illustrates the idea behind big risk, big reward.
If this is the plan Steve has been working from, he is without a doubt, the most amazing iCEO in existence.
~M
Why do all these pundits assume that the iPod/iTunes combo WILL be beat eventually? What law of the land dictates that this must be so? Isn’t it just as likely that Apple continues to be the dominant player in the market for many years to come?
You don’t see those very same pundits saying the same thing about Microsoft Windows and Office. I wonder why? I’m not saying I believe Apple can never be beat, but these guys talk as though they are waiting for the second coming of Jesus Christ.
like i said this 2006 X-mas season will be the coffin blow to the other ipod-killers. Apple opens 40 more stores, and this time opens them up in overseas markets that don’t really have ways to get the ipod. Hong Kong would be good, same with Bejing, Shanghai (hint hint 2008 olympics, many atheletes with white headphones inbetween their events, like the athen games, free advertisement). When they open those stores say 200K ipods sold each, and apple sets a target of 30 million ipods for the holiday season. Then is is way over for anyone that wants to face the ipod. Lets say apple sold 30 million ipods in 2005, 2006 they hit 60 million, that will be 100 million ipods. By then it will be over. There will have to be something compelling and revolutionary like transitition from walkman to ipod, or vinyl to CD to stop the ipod now.
That is not a wildcard that Microsoft has to play fairplay tracks ala Real Rhapsody (u know the guy that loves the donuts – glaser?) maybe a pair of deuces, but certainly not a wildcard.
Interesting analysis – Apple is powerful here, and they have to keep moving & shaking, there is much at stake here, I hope Apple is not caught flat footed – I like another article read here yesterday about the runway that Apple has versus Dell that is running out of it.
Licensed Fairplay is going to happen, Only will it be on Apple’s terms or a defensive mechanism to something else on the cusp of “Breaking Out”. I will predict 12 mos. Spring 2007 – just before Vista becomes viable.
If M$ wants to make a iPod killer, I got the recipe.
Apple’s iPod is complicated and not as easy to use as it could be.
Most people DON’T have a computer.
Most that DO, have a small laptop with limited space and capabilities.
Of that that have a decent machine, a lot don’t have the technical ability to use it properly. As witnessed by all the PC users who can’t protect their machines from attack.
Of that that do, are PC users who steal their music wholesale from P2P networks and bit torrent trading in the hundreds of GB’s.
Then of that that are honest and buy their own music, a small percentage don’t have a lot of money.
So Apple is missing out on a lot of market potential.
What that market potential is and how it can be exploited to kill Apple’s market share with a simple less expensive device (yes a iPod killer) is available from me for a consulting fee and a grand tour of the Redmond campus (in the springtime of course) and I wouldn’t mind a trip of Mr. Gates house and dinner when we succeed.
Any Microsoft bigwigs watching can email me.
Together we will make applesauce.
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http://homepage.mac.com/hogfish
MacDud,
You’re smoking crack.
iPods complicated? Most don’t have a computer? Most people have laptops?
Dud, what planet are you on? How much easier can an iPod get? Those who don’t have computers, don’t have iPods Duh! and there are many more pople with desktops then laptops……
Microsoft bigwigs…this guy is a top candidate, you better hire him.
This link says it all
http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewAlbum?playlistId=2321957&s=143441&i=2321899
MDN Word “clearly” I can see clearly now the reality distortion field is gone… Carley Simon
Yeah! Why doesn’t anyone talk about the forecasted doom of Office and WORD. Has it already been stated by the heavens that Office will be endowed with eternal favor?
Also, why must Apple/iTunes/iPod be dethroned? The key is innovation and understanding the consumer – two things Apple is extremely good at. Sony and the Walkman was dethroned because they lost touch with the consumer and never really was on the pulse of the next generation.
Sony was all hardware and without hard media concepts they had noting to offer the consumer. Apple is the only technology company that 100% understand the hardware and the software. I knew way back when they first introduced iTunes that this was the first major software company that understood the next generation of content users.
Where was Microsoft? They didn’t and still don’t have a clue. Everyone else poo-poo’s the idea – who needs another music player? Look I have Windows and I have WinAmp. Ewwwwwwwwwwwww?
I say that yes, iTunes/iPod will not live forever, but it will doe at the hands of true innovators that will fully understand the consumer and the world. Go Apple.
Ha, funny,
Bet you didn’t know, the overwhelming amount of computer users listen to rock.
Country isn’t even a blip on the radar, but in the REAL world, Country music is the largest selling genre and Walfart has got it all locked up.
Country people don’t like dem fancy computers, you know.
See, you think I don’t know squat, but I do.
1-Per Unit prices for iPods sold are steadily dropping.
2-Profit per player is steadily dropping.
3-Life Cycle per design, affecting ability to recoup design/manufacturing costs is shrinking.
4-40 Million iPods are out in the market.
As the iPod phenomenon continues, Apple will soon be able to make as much money from licensing FairPlay as they do now from designing, making and selling iPods. It is rapidly becoming a commodity item. By bundling QuickTime to FairPlay in a licensing arrangement, Apple can make a ton of money by just maintaining the software/codec.
It is coming. The only question is when.
iPod/iTunes will fade away so will windows office and everything else the only question is when
People talk of Apple licensing FairPlay, but there are two different aspects.
Licensing FairPlay to create an alternative to iTMS seems unlikely. What’s in it for Apple ? The only way I could see that happening would be if a rival persuaded Apple that it could offer something that didn’t compete with Apple, or might even be of benefit to Apple.
Simply selling the same selections of songs as Apple is pointless, but a store specialising in new artists could be a good idea. The service would take on the role of a label, with the artist getting a good proportion of the fees. Any artist who started to become successful could sign to iTMS as well, for greater exposure. The original arrangements for fees could continue, so the new music store would continue to receive an income, but without having to sell the tracks. That is the only sort of scenario that I can imagine where a new service could add something for Apple – the opportunity to gain new talent without having the hassle of dealing with thousands of unknown performers.
But I mentioned two aspects. The other one is licensing it for hardware. I see that as inevitable at some point. It would enable other manufacturers to make products that were iTMS compatible, but addressing a need that iPods currently don’t. There are obvious examples, such as in-car audio, an iPod that records audio, home HiFi styled units and limited-run special designs in the manner of Swatch watches.
None of those products would be a rival to iPods and indeed would enhance the brand by keeping customers using iTMS, rather than defecting to a rival.
It’s amazing to me that the rise of iPod/ITMS has always been accompanied by this chorus of death knells about FairPlay. It was this very licensing scheme that, in part, that put the iPod so far ahead. Apple is not about to boost its sorry competition into the profits tree here, especially when some of the best electronics companies in the world look like novices trying to compete.
It would be horribly silly to change a business model that has taken iPod from obscurity to ubiquity in about 5 years. Better to endure the occaisional rants of hack tech journalists in slept-in clothes who are upset that out of the many ways to put music on a iPod, one of them is not buying it from Wal-Mart.
When the vast majority of manufacturers stop supporting PlaysForSure and start supporting FairPlay, as would likely happen, then the battle is over. Microsoft will be relegated to side player in the digital content delivery market. Their DRM, the most coveted part of the deal for Microsoft, will have been shunted to a distant, irrelevant second tier player.”
—-
um, this has already happened. you make it sound like a real kick in the ass to MS. they are getting killed in the mp3 market, and have given up competing with iPod. They will embrace and extend using Xbox, and the MSN Messenger lines, to try and win back support for Windows tech.
The only iPod killer out there is the lowly hammer.
Mafiasoft’s business model relies on drones, ah, I mean “partners” to actually assemble hardware and used Mafiasoft’s software to provide product to end users.
Whenever Mafiasoft has tried to do the design and assembly of both hardware and software, at best the results are hit and miss.
The Steve is just trying to create some fear in the hearts of the various Mafiasoft drones, damn it, I mean “partners”.
Rock on Steve
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You guys just don’t get it.
There is no challenge to Microsoft from Apple.
I can be coerced to give my secrets with nothing more than a bj and some merlot.
Rock is super duper, what is the problem. There are no challengers yet to ipod but their will be soon … and I will have the last laugh.
Now all retards put away the crayons and corn.
MacDud,
I Can See Clearly Now — Johnny Nash (or the excellent cover by Jimmy Cliff)
“Nothing lasts forever, certainly some day the iPod/iTunes duo will be challenged and soundly defeated.” – Quote from article…….
Consequently, NOBODY lasts forever either and will someday cease to exist.
“Everything is gonna burn, we’ll all take turns, I’ll get mine too……” – Black Francis
“Bet you didn’t know, the overwhelming amount of computer users listen to rock.”
Nothing new. Anyone who’s been employed in a working environment that uses computers to any extent, knows this. Pop/rock seems to be the corporate background music of choice in most offices.
“Country isn’t even a blip on the radar, but in the REAL world, Country music is the largest selling genre and Walfart has got it all locked up.”
This comparison is flawed in the same way that Mac vs. PC marketshare is because it’s based only on sales figures. Some “country music” sells really well only because “some” country music/performers have cross-over appeal.
“Country people don’t like dem fancy computers, you know.”
If you’re talking about farmers and other such “salt-of-the-earth” types, you’d be making a wrong presumption that they don’t like (let alone using) computers. And if you’re talking about people who just like country music, you’re still wrong. I know quite a number of country music-loving, urban living professionals that use computers everyday and have one (or two) at home.
Your points about country music sales and country people might have some correlation if “country people” outnumbered everyone else, but they don’t. Millions more people live in urban/suburban settings than live in the “country.”
“See, you think I don’t know squat, but I do.”
Time will tell. Or not.
MacDude: So your killer idea is a NASCAR-branded MP3 player with big “3” painted on it, preloaded with Toby Keith?
MacDude
I have had the last two things that you require to give your idea to Bill and I’ll tell you, they are not worth it buddy. The dude is dull and other than the amazing orange juice they serve you at his house on the lake, the rest is so so ( PC like) so what I’m saying is ask for something of value.
As for me, I’m working on a “hat” device, you tip it forward it advances to the next track, backward…. you raise it to say “howdy maam! and it switches tracks and at night when you set it down in his hanger it calls Nashville and uploads the latest country.
you’ll read about it soon
Commenting on the pop/rock vs. country sub-discussion: Interestingly, graphic design professionals are a major buying group of Apple computers. And according to surveys done by Adobe (I think) the majority of graphic design users listen to classical or jazz at work. Not sure how that affects anything. Just a curious fact.
Legality??
“What if Microsoft could convert FairPlay tracks so that they would run on players besides the iPod? “
Look, I’m from the UK and can’t claim to have a complete grip on your crazy US laws, but isn’t reverse-engineering DRM explicitly made illegal by the DMCA? Didn’t they try and lock some bloke up for writing software that allowed people to save DVDs onto their computers?
Oh, and something else that’s not been mentioned: M$ has worked around being unable to install their own version of iTunes on Windows Vista by teaming up with MTV. So EVERY copy of Vista sold (which will be in the 100s of millions) will have access to a PlaysForSure music store right from the desktop. Sound like competition to me (albeit an arguably illegal one)…
I have another take on this…
I think Steve wants MS to waste their time making an MP3 player which will inevitably copy the iPod to a fair extent. Then Apple releases something that totally surpasses / replaces the iPod so that nobody has any desire for just another common MP3 player. Steve basically issued a challenge for MS to copy them, knowing that they will fail if they even dare to try. I’m sure he had a good laugh about it too.