“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