“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
I remember when Microsoft and the PC was launched. The only reason Microsoft was successful and became the de facto standard, instead of the hodge podge of TRS-80, Commodore 64, Sinclair, Atari, or Apple was because of the weight of IBM. IBM was the power of the computer industry at the time. As soon as IBM gave Mircosoft credibility, and forgot to make DOS proprietary, the PC battle was virtually over.
(I remember laughing at early Apples and thinking that as soon as IBM created a PC, they were done.)
Right now, I don’t see any other player out there with the might to single-handedly create a new standard to unseat the iPod/iTunes.
Hey MDM, there is NO brain behind Vista and I don’t hear tick-tock, tick-tock. Instead, I hear ZZZZZZ….zzzzz…zzzz.
A system is “closed” when it doesn’t allow inputs from any source except its own. If MS were less closed I would be able to run a Napster et al subscription set of songs on my Mac.
At least the Apple solution CAN work with other devices, it just takes a few steps extra, but with MS it CANNOT work. I would need a PC first to burn the purchased songs to CD then reimport on the Mac. Until MS provide Mac support, they will trail as an “open” solution.
realist:
And if you’d read the piece accurately also, you’d have noticed it said, “obsolete”, NOT unavailable. It could be argued that vinyl records are ‘obsolete’, but you can still get those too.
The only place you can easily buy material for your iPod, as opposed to stealing it, is the iTunes online store,” Kohler writes.
In Canada, buying it is for suckers. It’s legal here to download music using p2p apps.
And Kohler doesn’t mention the Russian rip-off allTunes, where downloads in the coding of your choice start at nine (count ’em, 9) cents, and $1.50 for albums.
realist said: “Let’s look at it in another way. To load an iPod, you need to download and install the correct software. To load a competing mp3 player, you just need to load an additional piece of software (VPC) if you want to use it on a Mac. It’s an extra step, and it’s not always that convenient, but neither is burning to a CD and re-importing either. But in any case, both types “can” be used on a Mac or Windows computer.”
realist; you forgot one important difference. iTunes is free software. Virtual PC is definitely not. Let’s be realists here.
Closed system that works on over 95% of computer market? Sounds very closed to me.
Apple never had more than 20% of the PC market, and that was before 1984. They lost nothing.
Just a fact: Alan Kohler isn’t even a tech writer. He’s a finance journalist. Usually, his opinions on finance and business are well-respected… but he has been wrong before (and not afraid to admit it).
Another clueless journo…
Gosh, those guys are really dumb!
1. There is no Mobile Phone that will ever achieve the cool factor of an iPod. Ever.
2. Apple will relase a Phone too if that’s his concern…
3. The story of the Mac becoming a niche computer does not apply to an electronic gagdet like a mp3 player because they are diferent devices with different purposes.
I have absolutely no interest in using up my cell phone’s battery life on listening to music. None. Zero. Zilch.
And what if my aunt had balls? She’d be my uncle.
So what if iTunes is cross platform? At only 4% marketshare, the rest of the PC industry can ignore the Mac platform and still become a raging success. Apple needs to license it system NOW while it’s holding all the cards because eventually someone’s going to start eating Apple’s pie and by then it’ll be too late.
And what if Apple leverages… the Apple “iPhone”….the world’s largest ….ultimately stuck with Microsoft…they don’t choose the superior Apple…
What if, then, blah blah. “if they don’t chose the superior Apple solution”
Then what, will we just die if we don’t?
MDN has to be part of Apple’s “evangelical division” formerly run by Guy Kawasaki, I’m almost positive.
Whenever there is some poorly researched Apple article anywhere and MDN hears about it, they send their lemmings to attack.
It’s sick what this site is. Sick, mentally deranged and moronic.
“It won’t be long before CDs and DVDs are obsolete as storage”
Not going to happen anytime soon.
The writer is a little over zealous regarding that statement. Why? Getting FULL HD video over the Internet is going to require fiber to the crub. PERIOD. Even getting full lossless audio (CD quality) has not been seen as a viable means for Apple or any other service. The files are just TOO LARGE to store and pipe to everyone. The ENTIRE infrastructure of the Internet itself is going to have to fundamentally change (again fiber optic) before it becomes viable to deliver the kind of quality people want. It’s going to take some time. I know a guy who has fiber to the curb, and he can download a 200MB file in 20 seconds (and that is with the CURRENT Internet infrastructure). It currently takes me about 5-6 minutes depending on current traffic using copper (cable). When the Internet is entirely fiber based, THEN we will see high quality content at efficient speeds. Until then, we are going to have to live with some sort of lower quality compression. Storage medium for the servers to deliver this content are also going to need a boost by some sort of new technology like this perhaps? – that’s 300GB per disk in it’s INITIAL stages.
Another quick point: Currently with fiber to the curb the guy I know can download 200MB in 20 seconds. So, theoretically he COULD download a full CURRENT (not HD) dual-layer DVD (9GB+/-) in 15 minutes, not too shabby I suppose. But HD is what, like 30GBs? That’s close to an hour – I suppose that’s not too bad either considering it’s HD, BUT, think of the bandwidth the companies supplying this content would have to provide and pay for – BIG BUCKS.
And some DSL providers are starting to clamp down on “heavy” users – i.e. those who download 200, 300, 600 GB in a month. Based on the examples that “©” provided, that could be done in less than half a day.
And the providers aren’t going to be all that eager to offer that level of bandwidth cheap any time soon.
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Hey, Art
Why can’t MDN point out inaccuracies and poor research and downright blatant ignorance amidst all the FUD that is thrown around by ill-informed “journalists” and “analysts” and other “…ists”? Is that bad? Is that wrong?
Are you trying to protect someone? Something? Some “other” operating system’s status quo, perhaps?
And why, if you’re so upset, did you even bother taking some of your precious time to let us all know that this site is “sick, mentally deranged and moronic”? Didn’t you just join that club by posting? I think you did! Hey, everyone – look at “Art” – he’s just as “sick, mentally deranged and moronic” like all the rest of us!
Welcome to the club, Art.
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An OS is an OS is an OS. It’s apps that do the work and pay the bills.
Bull honk! That’s about the lamest thing I have ever heard from a PeeCee weenie of new. An OS is an OS is an OS if it’s the same OS, but when it’s different, it’s different, plain and simple! Just like a car; yeah, they all come with gas pedals, steering wheels and a your choice of automatic of stick shift, but you surely are not going to say a Kia is a BMW is a Kia is a BMW, which is what you’re trying to say, which is a bunch of bull honk! An operating system clearly defines the computer user experience from end to end. And there is surely a difference between Mac, Windows and Linux (name your DE flavor: KDE or Gnome?)!
If you’re clueless about computers, then maybe an OS is an OS is an OS!!!
load an iPod, you need to download and install the correct software.
Actually that’s incorrect, there are numerous iPod friendly music players out there that will load an iPod without the requirement of iTunes, I have several examples loaded on my Linux box (gtkPod, Rhythmbox, etc…)!
So that leaves us with online stores. Which solution allows you to work with more different stores? Obviously the competition does.
The only competition that has any chance is the non DRM stores (MP3 and OGG savvy) because anything else that requires a Windows box and some fly by night ‘PlaysForSure’ slap happy portable media player (wannabe iPod) that has you locked ball and chain to the Windows-only experience is certainly not going to cut it.
You have two choices…
1- FairPlay on Mac and Windows with iPod+iTunes+iTMS.
—OR—
2- PlaysForSure on Windows-only by half baked Napster, Rhapsody and MSN Music locking consumers into a half baked computer experience via Windows-only.
My choice of computer platform FAR outweighs the so called choice of $50-$300 portable media players (that all look and feel about the same and are lacking) that don’t stack up to the iPod and the great user experience it provides is definitely not enough to warrant the preference or requirement to choose and use Windows by any sort of magnitude!
Buried Caesar wrote: How, exactly, is Apple “more closed” than Microsoft?
The easiest one to point out:
If you buy an iPod and possibly some iTMS songs, you are locked into buying another iPod. The lock is that you cannot easilly take your purchased songs with you if you decide to go with another player. Apple created the frameworks *and* the player, using iTMS present sales to lock customers into iPod current and future sales.
You buy from iTMS and can only play on an iPod, unless you hack the process which of course is what many Apple fanatics reason is being open. Of course that is a ridiculous thing to say and is illegal.
With the Microsoft model, MS created the frameworks and licenses it out to anyone who wants to use it – Sony, Samsung, Creative, Dell, etc. You can purchase and download from multiple services.
So in that sense, Apple is more closed!
I’ve got three iPods and I know for a fact Apple is more closed!
MPC Guy – Mac & PC Guy
At the end of the day… it boils down to this.
If I buy an iPod and I purchase and download music to work on it – my only option is iTMS – then I will be forced to buy another iPod, with whatever features of lack of features and trim Apple offers.
Clever little Apple found a neat mechanism – it looks like copyright protection, but it’s actually a anti-competitive lock.
So buying an iPod now means buying an iPod in the future.
With the Microsoft model, MS created the frameworks and licenses it out to anyone who wants to use it – Sony, Samsung, Creative, Dell, etc. You can purchase and download from multiple services.
As long as it’s Windows technology. Just like Ford, you can have any color you want as long as it’s black. And you can download from multiple services as long as you have a Windows PC. Microsoft is just as closed as Apple, but on the opposite end of the technology string!
The only real OPEN choice is buying non DRM music (legally of course) usually found in the MP3 (or OGG) format that doesn’t lock you into anything. Which brings me to this point, since the iPod is MP3 savvy, you can buy songs in the MP3 format and use whatever software on Mac, Windows and Linux to sync to the iPod.
Don’t knock Australia – Apple entered the online music market late here – and they blinked in their negotiations with SONY – thanks a lot – so we have a diminished iTunes store – New Zealand doesn’t even have an iTunes store … Why there can’t just be ONE worldwide iTunes store is beyond me – music has no boundaries – people create boundaries – like DRM …
DRM sucks and so does TRUSTED COMPUTING … The future looks bleak – content is traded but never owned – licenses expire, content disappears – documents cannot be deciphered without the appropriate keys – knowledge is power and knowledge will be kept by the elite and the wealthy … Your documents reside on a “secure” server – your programs reside on a “secure” server – just one more way for governments around the world to keep tabs on their citizens …
Treat people like criminals and they will behave like criminals … DRM is the scab and TRUSTED COMPUTING is the cancer.