Microsoft’s rumored ‘iPod killer’ poses little threat to Apple’s domination

“Steve Jobs, founder of Apple Computer, first unveiled the iPod to great fanfare in October 2001. Since then there’s been little doubt that the top-selling MP3 player revolutionized the portable music world, reignited Apple’s business and allowed it to tap into lucrative young markets that other companies can only dream of,” Nicole Ridgway writes for SmartMoney.

Ridgway writes, “But now there’s a fear — one I believe to be greatly exaggerated — that the iPod growth machine is sputtering. In late June, one analyst speculated Apple will delay the release of its next-generation of iPod nanos until the end of 2006, months later than originally hoped. Causing further worry are reports that Microsoft will unveil an “iPod killer” MP3 player just in time for the holiday season.”

“Apple controls 75% of the digital-music-player market, according to market research firm NPD Group. That leaves less than a quarter share to a slew of other competitors that has tried and failed to usurp control from Apple. Among them are such behemoths as Dell and Sony, the latter of which controlled the portable music market for decades with its Walkman and later Discman products before Apple came around. ‘There’s just no competitive landscape right now,’ says Needham & Co. analyst Charles Wolf,” Ridgway writes. “Microsoft’s rumored entrance into the market with an MP3 player that’s believed to include 30 gigabytes of storage capacity and WiFi wireless Internet capabilities could be yet another nonevent…”

“‘Microsoft copies really well,’ says Needham’s Wolf, who owns both Apple’s and Microsoft’s shares,” Ridgway reports. “Wolf believes that while Microsoft could offer a quality player it would have an incredibly hard time keeping up with the innovative pace that Apple has set. In fact, Apple is thought to already be working on a WiFi capable player of its own. ‘Apple isn’t a sitting target. It’s a moving target,’ says Wolf. “‘So I’m not concerned at all about the iPod trajectory.'”

Full article here.

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20 Comments

  1. “It will be so nice to have an excellent MP3 player with choice — users can go to virtually any music store and purchase music. No one is stuck paying the Steve Jobs tax at iTunes.”

    You mean like an iRiver?
    … a Sony Bean?
    … a Creative Zen?
    … a Virgin Player?
    … etc

  2. “so nice to have an excellent MP3 player with choice “

    The fallacy is that for Apple to hurt, a single competitor would have to emerge and make a big splash, and take a lot of Apple’s share.

    All those other players have roughly a third of the market (HD and flash players combined) today. While I’m sure they’re not pleased with that share, it’s still, when combined, significant.

    After all Apple has 2% of the worldwide market for PCs and most people here don’t think they’re dead yet.

    If on the back of this, Microsoft and Microsoft compatible players take even 20% of the market from Apple, that would mean a 30% reduction in Apple’s market share.

    Over time, other players (Most of which are more fully featured than the iPod) could gain additional traction.

    It’s the Sony Walkman scenario all over again. Day one Sony is the only significant manufacturer, then others come out, but everyone still wants a “real” Sony, but slowly that brand preference goes away, and finally Walkmans are $9.95-$19.95 in the Best Buy bargain bin.

    There’s no question that over time the likes of Sandisk can take the pricing to that level.

  3. GmJm = Mac Realist = dorks with no friends and a crummy life. Go troll somewhere else or do you REALLY have nothing better to do other than play ‘choke the chicken’ and cruise MDN hidden in your bedrooms?

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