Would-be iPod+iTunes rivals strive to imitate Apple’s success

“After years of watching Apple Computer Inc.’s success in digital music, rivals are ripping a page from the company’s playbook,” Nick Wingfield and Robert A. Guth report for The Wall Street Journal.

“RealNetworks Inc. on Monday announced a deal with SanDisk Corp. to sell a digital music device that’s specifically designed to work with RealNetworks’ online music service, Rhapsody. The move follows one made by Microsoft Corp., which will release a digital music player of its own design this holiday season that will be closely coupled with its own online music service. Korea’s Samsung Electronics Co. is working on a similar plan,” Wingfield and Guth report.

Wingfield and Guth report, “The deals are an effort by Apple competitors to improve technological coordination between online song sellers and digital-device makers. Many consumers have been frustrated by hardware and software glitches when they try to download songs sold by one company onto a gadget made by another.”

MacDailyNews Take: Many consumers? Define “many.” Sorry, couldn’t resist.

Wingfield and Guth continue, “In the five years since the Cupertino, Calif., company introduced the iPod, the device has turned into a market share and revenue juggernaut, nabbing more than 75% of U.S. retail sales of new digital music players in the second quarter. More than 60 million iPods have been sold since the product’s introduction. Overall, the device accounted for about a third, or $1.5 billion, of Apple’s total $4.37 billion in revenue in the quarter ended July 1.”

“The iTunes Store and iPods, by contrast, have long worked smoothly because they were both designed from the start by one company, Apple, to operate together… ‘There’s no mystery here that what they’ve done is worth copying and improving on,’ Eli Harari, chief executive of SanDisk, says of Apple’s approach to digital music,” Wingfield and Guth report. “At one point, Redmond, Wash., Microsoft even tried to reassure consumers that music services and hardware from different companies would work well together by stamping such products with the tag line ‘Plays for sure.'”

Wingfield and Guth report, “But incompatibilities between devices and music services persisted, thwarting basic functions that the iPod and iTunes excelled at. For instance, transferring music from Rhapsody to supposedly compatible players could be glacially slow and not work at all in some cases, RealNetworks executives say. Rob Glaser, CEO of RealNetworks, jokes that the Microsoft slogan should be ‘Doesn’t play for sure.’ Microsoft executives acknowledge that some of the music players haven’t worked well with some of the services.”

“Because Rhapsody is a ‘subscription’ music service in which consumers pay a flat monthly fee of $9.99 to $14.99 to effectively rent access to songs, users must attach their digital players to their PC once a month to verify that they’re still paying subscribers to the service. In the past, though, Rhapsody music on some digital players would simply become unplayable without any warning to the user,” Wingfield and Guth report.

Full article here.
If tight integration between music player, jukebox software and online services is the goal – as all seem to finally agree, however late to reality they may be – then Apple remains the only company that can do it all. Microsoft’s underwhelming Zune offers a iPod wannabe made by Toshiba, but Zune’s iTune Store wannabe is done by Microsoft. Ditto for Reals’ music outfit plus SanDisk’s whatcamacallit. Only Apple makes the whole widget.

BTW, that’s another reason why the Mac works so much better than Windows. Tight integration. Only Apple Computer makes the operating system, much of the best-in-class software (iLife, etc.) and the hardware. It’s also why iPod and iTunes just seem to work even better with Macs.


  1. Seriously, what company has music that iTunes doesn’t? Is this some sort of widespread epidemic? Is Beyonce only in WM format? Oh, the humanity, the humanity!

    Oh… wait. She’s not. iPods suck. ” width=”19″ height=”19″ alt=”blank stare” style=”border:0;” />

  2. The problem all competitors to the iPod ecosystem will continue to have is Microsoft.

    In the past Microsoft blamed device makers for their poor device drivers, etc. But the deal is that the underlying problem is Windows. Writing something, that just works, for that abomination is near impossible, as demonstrated by the difficulties iPod competitors are having.

  3. Gregg Thurman: In the past Microsoft blamed device makers for their poor device drivers, etc. But the deal is that the underlying problem is Windows. Writing something, that just works, for that abomination is near impossible, as demonstrated by the difficulties iPod competitors are having.

    True – but still, the majority of iPod/iTunes users are using the Windows version – yes?

  4. “Only Apple Computer makes the operating system, much of the best-in-class software (iLife, etc.) and the hardware.”

    …not to mention the only (so far) development tool to create Universal apps. To this point, if it’s universal, it came from Xcode.

  5. Steve Jobs must be laughing himself to sleep every night. One device+service competitor is competition. Two or more just confuses the consumer. And where do confused consumers run? To the sure thing that works, iPod+iTunes.

  6. I’m a huge Apple/Mac fan, however IMnotsoHO anyone who buys a lot of music and TV shows and movies from iTunes must not have both oars in the water.

    Why even watch most network TV shows at all? They’re insipid. And BUY TV shows?!

    Why buy movies when you can rent them from Netflix?

    Why buy an entire album from iTunes? It’s lower quality and has DRM; neither of which a CD has.

  7. You’ll have to excuse ME. He’s been on a hunting trip and hasn’t heard the news.

    CD’s do have DRM. Just ask Sony.

    There are good TV shows and bad movies.

    Purchase can be cheaper than rental, just ask music subscribers.

    Don’t do what you want, do what I do!

  8. Hey I loaded my computer with iTunes 7 and it asked me if I want to get all my missing cover art. I said yes. Since it contacts Apple iTunes to search for artwork within iTunes I was suprised to see all my Beatles album art show up. Odd since the beatles have not released digital music to online MP3 stores for downloading.
    Is it not suspicious to see Beatles artwork where there is no Beatles music?

    Led Zepplin didn’t find art work at iTunes. (since they don’t sell
    their music )

    RadioHead has no artwork in iTunes (since they don’t sell their music either)

    Something fishy here, are the Beatles coming to iTunes for Xmax?

  9. You’re right MDN. Apple is still the only company that does the “whole widget” (except maybe Sony). Toshiba makes the Zune player, and since the device/service isn’t available yet, it doesn’t really matter either way.

    Additionally, Apple is the only company that does not care if the iTunes Store is a break-even operation, because most of the music-related profit is made from selling the iPods. How can music-service only companies like Real and Napster compete with that? They can’t.

    Additionally, Apple is the only company that can take advantage of volume pricing for parts. Based on the recent bill of materials analysis done by a third party, Apple is making huge margins (some were even at 100% plus) even with the current aggressive pricing. If pressured by Microsoft and the others based on price, Apple could hack more off the price and still make over 25% margin. The other hardware makers can’t compete with that.

    Additionally, Apple has thousands of iPod accessory makers on its side. It’s like with Windows, where the Windows “enthusiasts” always claimed that Mac users do not have a wide selection of software. Well, iPod users can choose from tens of thousands of accessories (including cars), while the competition does not have access to that “ecosystem.”

    In short, Apple is on a roll. All of these so-called “threats” are not relevant when you look at the big picture.

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