Tech writer: Apple’s iPod+iTunes ‘closed’ system will move into a niche like Macintosh computers

“Apple Inc’s iTunes music store seems to be rapidly becoming one of the most powerful retailers in the history of the world. Never before have we seen global domination by one retailer in a product category. Apple is also possibly the most secretive retailer on Earth,” Alan Kohler writes for The Age. “What is happening is fascinating and scary, and anyone in the entertainment business anywhere in the world — nowhere more than in Australia — needs to understand it. Unfortunately Apple will not talk, so the profit margins and the process of deciding who gets to sell through the iTunes store is a mystery.”

“Here is what we know: music and video are going entirely digital. It won’t be long before CDs and DVDs are obsolete as storage. The new device of choice is the iPod, which is in the midst of an incredible global boom that is enriching Apple and its shareholders. The only place you can easily buy material for your iPod, as opposed to stealing it, is the iTunes online store,” Kohler writes. “With iPods and iTunes, Steve Jobs and his team at Apple have created a beautifully functional closed system for selling and consuming digital music and video that looks to be heading for total dominance [but] there is a good chance the whole thing will end up like the Macintosh computer: early dominance through its beautifully designed integrated package of hardware and operating system, but later obliterated by Microsoft Windows, which was licensed to any manufacturer.”

“The shock troops for Microsoft’s victory over Apple in personal computers in the 1980s were Intel, Compaq, IBM, Dell, Toshiba and so on — that is the chip manufacturer and the cheap PC makers that licensed the Windows operating system,” Kohler writes. “With digital music and video it will be Nokia, Samsung, Motorola and Sony Ericsson — the mobile phone manufacturers. This year they will start releasing phones with the same storage as iPods — up to 30 gigabytes. iPods themselves will have to become phones. Microsoft’s software will power the new generation of phone/music players, and the business of selling digital songs and TV shows will open up. Google will probably run the most popular online store, but there will be thousands. The iPod/iTunes system will move into a niche with Macintosh computers because Steve Jobs has again stuck with closed architecture and total control. This will happen quickly because mobile phones are being turned over about every year… We will witness the creation and destruction of a market dominance in the time it used to take to work up a business plan.”

Full article here.

[Thanks to MacDailyNews Reader “Phil K” for the heads up.]
And what if Apple leverages the powerful iPod brand to create the Apple “iPhone” line that works with the powerful iTunes brand and also, unlike Microsoft’s WMA, works on both Macs and Windows PCs? Then what happens? iTunes has the world’s largest library of music, videos, and TV shows. Tens of millions have iPods and iTunes-purchased media already. If you think Steve Jobs doesn’t have a long-term plan, Think Different. And why is Apple’s offering “closed,” but shackling everyone to Microsoft’s software is “open?” That’s illusory; one company is still in control either way. Just like Windows vs. Mac where people say they like choice, but are nevertheless ultimately stuck with Microsoft if they don’t choose the superior Apple solution.

Once again, as we, and others such as Daring Fireball’s John Gruber, explained long ago, 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 in various formats. Music 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.

Apple should and most probably will license their Fairplay DRM if any competing music store and/or portable digital music player company actually starts competing and taking enough share.

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Related articles:
Report: Apple Computer may soon launch its own music ‘iPhone’ – March 31, 2006
San Francisco Chronicle: Apple at risk of making the same mistake twice – March 26, 2006
Analyst: Unlike Microsoft, Apple has the advantage by not licensing their technology – October 13, 2005
Tech pundit Enderle incorrectly compares Apple’s Mac OS to iPod licensing – September 01, 2005
Another day, another ‘iPod may go the way of the Mac’ article – August 16, 2004
The iPod is not the Mac, so stop trying to compare them – August 13, 2004
Could Apple be Microsoft today if only had they licensed the Mac OS? – August 09, 2004


  1. Apple’s system is “closed” because they control both ends: the content via iTunes, and the hardward via iPod. Nothing else works with iTunes except the iPod. Nothing else works with the iPod except iTunes. Therefore, it’s closed.

    It’s the Apple way and by controlling both ends, they’ve made it a very easy process to sync between both. Works very well…

  2. At our house, there are Macs and there are PCs. At our house, there are no iPods, yet. Soon, perhaps. Regardless .. at our house, iTunes is the default media player and primary music manager on both types of computers. At our house, the system is not closed. Nor is it proprietary.

    The author is nuts.

  3. iTunes is not a closed system. In fact it is the only system that both windows and Macs can use right now. And you can download music from other vendors and it works perfectly on the iPod. Besides since 80% of the market is the iTunes/iPod niche, I don’t think that’s so bad. Let the other 10 online stores fight it out for the last 20% of the market.

  4. This is pure FUD and wishful thinking. These dumb ass writers who work for M$ trying to spread FUD don’t realize consumers don’t care about the “openness” of the iPod. It just works and that’s why iPod and iTunes will continue to dominate the market. Beside, average Joe Blow don’t read tech crap writing like this and people with higher intelligence will not buy into this kind of FUD at all. That why this kind of consorted propaganda effort by M& and other competetors will not work. To quote M$’s own propaganda for Windoze, the iPod is the “Standard” in download music!!!! BTY, Windoze is a “closed “system too, big time!!! FI (f#$king idiot) writers!!!

  5. “The only place you can easily buy material for your iPod, as opposed to stealing it, is the iTunes online store.”

    I suppose that means I can’t buy any physical CD, rip it to .mp3 and play it on my iPods?

    Totally inaccurate. “Easily buy” should read as “legally purchase digital downloadable music online”.

    You can easily buy material for your iPod as long as it’s on a physical CD, and rip it, DRM-less, to any audio quality that you like. (And play it on any .mp3 player as well, that is, if anyone really wants to play it on something that’s not an iPod).

  6. In Apples former life their products were closed and rediculously expensive.

    The iPod difference is, it’s only partway a closed system and they’re very competitively priced which makes it extremely difficult for a competitor to break in starting from scratch.

    Obviously the author of this piece doesn’t know shit.

  7. MDN Take: ” And why is Apple’s offering “closed,” but shackling everyone to Microsoft’s software is “open?” That’s illusory; one company is still in control either way. Just like Windows vs. Mac where people say they like choice, but are nevertheless ultimately stuck with Microsoft if they don’t choose the superior Apple solution.”

    – Both are closed systems, but Apple is more closed.

    David Miller: “I suppose that means I can’t buy any physical CD, rip it to .mp3 and play it on my iPods?”

    – read a couple sentences before that. “It won’t be long before CDs and DVDs are obsolete as storage.” When that happens, then yes, you will not be able to buy any physical CD, rip it to .mp3 and play in on your iPods.

  8. What is with the folks Down Undah these days? Is the government down there huge Microshit investors? Are those people so tied into the Microshit propaganda that they cannot reason for themselves?

    With this “conspiracy”-filled article, along with the recent Smarthouse Apple-bashing, it seems that the Aussies have an issue with apple that goes beyond mere contempt. It borders on psychosis. All Australia needs now is one more Apple basher and they will have their own Enderle-Dvorak-Thurrott Axis of Evil.

    MW: “members”- oh, never mind.

  9. What is this author talking about? Any single MP3, AAC, WAV, or AIFF file on the Internet can be played on the iPod. The iPod is totally open. What he is probably referring to is the iTunes FairPlay DRM. That is closed. So if you want to buy “big label” music for the iPod digitally, you can only use iTunes.

    Solution: big labels sell AAC files without DRM. Works on the iPod and any other device. Problem solved.

    Moral of the story: who’s closed? Apple or big labels? I say the latter. Apple is just providing a service people want, that’s all.


  10. Realist —

    How, exactly, is Apple “more closed” than Microsoft?

    As for your obsolete media assertion – I still have LPs that I have ripped onto my computer, imported into iTunes and then loaded onto my iPod. When was the last time any major label released an LP in wide distribution? Yes, LPs may be “obsolete” and CDs may soon be, too (when it comes to first-release music) but that doesn’t mean either medium won’t ever be completely useless as a storage mechanism.

    And, if you hadn’t noticed, there are hundreds of millions of CDs out there in the world with every kind of imaginable music already on them. Are they all just going to magically become unusable at some point? That’s quite the absolute view of how things are going to turn out. As long as there are CDs out there, there will be someone who will try to make some money by selling a means to listen to the music on those CDs. It’s going to take a LONG TIME (way beyond either of our lifetimes) for CDs to completely go away, if they ever do. And then it won’t matter to us, will it?

    And what about burning music you’ve purchased onto a CD? Will that go away, too?

    There are so many factors you’ve overlooked here.

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