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Apple lock-ins could burst the Ipod bubble
Figures from Jupiter Research indicating that iPod owners buy only five percent of their tracks from Apple's ITunes online store seem on the face of it to provide the company with a good defence against accusations that it is abusing its market position by locking its users into its products.
It is not clear from reports of the research whether the 5 percent figure merely reflects the proportion of new downloads to the average size of users' existing record collections, ripped for use on the Ipod. The Ipod will import unprotected tracks, in formats like MP3 or Wav, but not tracks using rival digital-rights-management systems such as that used by Microsoft Windows Media Audio.
Neither will the iPod work with any online music store other than Itunes, which is rather like a CD player being restricted to playing disks only from the device's manufacturer.
Apple does similar tricks with the impressive iLife package of 'digital lifestyle' applications it gives away with Macs, which can lock users into the company's online services to a degree Microsoft could never get away with. Apple could argue that it does not dominate the market to the extent that Microsoft does, but neither is it a minnow in the fishpond.
There have been moves in Europe, particularly France, to try to force Apple to open the iPod to rival services. But the Jupiter figures could be interpreted as a sign that competition could do this without legislation and that users are getting wiser about the technology.
The iPod bonanza, which has seen Apple sell 1.5 billion tracks online, is not going to last forever. There are countless rival players that do not carry the same restrictions, and Apple has been slow to bring a portable video player or musical phone to market. The company could come badly unstuck if it tries to lock people into its video downloads when there are plenty of other sources available.
Perhaps even more dangerous for Apple is the risk of tarnishing its image as a somehow more virtuous alternative to the Great Satan Microsoft. Defects in iPods, and Apple's unsatisfactory response to them, have already dented its reputation for reliability. If it starts to be perceived generally as being guilty of anti-competitive practices, it could lose some of the momentum it has gained over the past five years.
Apple's biggest, perfectly legitimate, restrictive practice is to prevent other manufacturers from making and selling Mac compatibles. The bean counters might argue about whether the company would benefit from allowing its hardware to go the way of the PC, with Apple making money purely from the software. But the move would cause some fun and games in the PC world, and it would certainly have Microsoft watching its back.



The most common iPod defect was disproved years ago as not a defect at all. See http://www.ipodbatteryfaq.com/
Posted by gopher | September 18, 2006 3:19 PM
troll
Posted by Anonymous | September 18, 2006 3:26 PM
Dont make up stories! People buy the ipod because it is the best and sexyist product on the market, and it just plain works. When hooked up to itunes, there is no equal.
Get a life.
Posted by backadd | September 18, 2006 3:44 PM
This is an area where barriers to entry are very low. Anybody can put up a music store on the net, they can get SanDisk or Toshiba to build them an mp3 player and they can license music formats from MS or Apple (if they can persuabe Apple as Audible and Motorola have done) or they can use the mp3 format.
There is no lock in at all. iPod owners can burn CDs and move their collection or they can buy any number of non iPod players. The fact is they elect to by the iPod, just as they elected to buy MS Windows and give MS a huge market share in OS.
The market place is working as we expect it to.
Posted by Paul | September 18, 2006 4:17 PM
So what's the explanation for why MS is attempting the same model with Zune?
All those "countless rival players", of which many have already been killed off by the iPod, are locked-in to one DRM scheme, WMA and PlaysforSure. And now that MS is turning its attention to the Zune which won't be using that DRM scheme or PlaysforSure, I'd be a bit concerned about who be focused on making it work better. Can you (or any mfr) go somewhere else to get PlaysforSure to work better? I don't think so.
So don't be so dumb as to confuse the MS drivel about store choice or player choice, with the real point of the French, which was DRM choice. (The French made the right point, but tried to prescribe the wrong solution.)
Posted by mark | September 18, 2006 4:21 PM
By the way, if you haven't figured it out, the answer to the first question in the last post is:
that's where the money is.
Posted by mark | September 18, 2006 4:24 PM
"Neither will the iPod work with any online music store other than Itunes, which is rather like a CD player being restricted to playing disks only from the device's manufacturer."
This is absolutely false. iPods work just fine with the eMusic store which is second in market share after iTunes.
Posted by Ted T. | September 18, 2006 4:29 PM
You really ought to do some research and put a little thought before putting down a random series of thoughts down on paer - mostly based on incorrect data, incorrect presumptiond and incorrect conclusions.
The ipod plays back 8 DIFFERENT formats - you as a consumer can choose which is best for you. If you choose, you can buy tracks from the itunes store - if not, you can buy from at least 15 online stores out there PLUS another 10 WMA stores. As someone else mention, emusic is now #2 but there are at least a dozen other choices if you'd bothered to look.
If anything, the CD is retricted, it only plays back ONE format. If you do not buy or make your own CD-R, you are out of luck while the ipod again offers you EIGHT choices.
It is BECAUSE of the 8 choices that consumers do not have to buy all their music from the itunes store.
Quite honestly, this column is surprisingly way off base from a company built on collecting data. You take someone elses data and admit you don't know what to make of it but then you random insert several statements and conclusions that are only quasi related to a data set you admit you have NO IDEA how to interpret them!
Posted by jbelkin | September 18, 2006 5:25 PM
"The iPod bonanza, which has seen Apple sell 1.5 billion tracks online, is not going to last forever."
The British press has been saying this for years as Apple continues to grow market share in both players and downloads. Remember the Virgin records iPod killer? Remember the Dell iPod killer? Both have withdrawn from the market as have many others who were unable to compete. Face it, Apple has simply built a better mousetrap and has also offered a far superior system for purchasing tunes than anyone else. The numbers show that to be true.
Posted by Bill Bird | September 18, 2006 5:31 PM
I am curious if the author actually owns an iPod? Your comments about its operation appear to be ignorant of the realities of owning an iPod.
With iTunes (not the iTunes Store) you have access to many different formats (all open and without DRM). You have the ability to burn your DRM songs to a CD which affectively gives you an unprotected copy that can be moved to any other type of player.
I will say nothing about WMA since I have never used it. From a technical (not legal) standpoint, Apple does very little to prevent consumers from accessing their music in the way they prefer. By not promoting these methods they maintain the privelage of being a distributor for the record industry.
Seems like a fair business solution to a difficult copywright situation.
I have to say that this article is so badly written as to be laughable. The arguments are retreads from others. No new information for the arguments was presented and the opinions almost sound like a prophecy of the world ending. Not very credible.
Posted by Vince | September 18, 2006 5:51 PM
All the other online music stores use Windows Media DRM- which does not work on Macs. iTunes is cross-platform.
Since there is no money in online music sales why should Apple license a codec from the only other company that could put you out of business.
Posted by Anonymous | September 18, 2006 6:18 PM
"Apple does similar tricks with the impressive iLife package of 'digital lifestyle' applications it gives away with Macs, which can lock users into the company's online services to a degree Microsoft could never get away with."
Whoa, this is a case of calling the kettle black. PC's have included software that could not be run on a Mac for years. Apple has always included much software as a package to Mac buyers. They produce both the hardware and the software and it works together. I cannot run Windows XP on my mac without buying the operating system from Microsoft first. Is that some sort of "trick?"
I cannot use my VHS movie tape on my CD player either. The tricks these manufactures play are unfair!
Posted by Anonymous | September 18, 2006 7:49 PM
"Neither will the iPod work with any online music store other than Itunes, which is rather like a CD player being restricted to playing disks only from the device's manufacturer."
Hogwash. In the first place, the iPod doesn't "work with" any store (although I guess it's a tribute to the seamlessness of iPod-iTunes integration that you confuse the one with the other). In fact, the iPod can play any of eight different audio formats - pretty much anything except other companies' proprietary formats such as WMA.
In the second place, while it's true that iTunes only works directly with the iTunes store, I don't see an alternative; to the best of my knowledge there is no open standard for online music stores - nor, at least as importantly, for DRM. If your suggested alternative is Apple licensing and adopting Microsoft's proprietary standard, what's the point? If not, what would you propose?
Posted by Rick | September 18, 2006 8:16 PM
I read the article and felt
mildly stimulated; then I read
the comments and was blown away by REAL informed opinion
and cogency!
I would like to see the author, with humility, learn as I have and consider publishing a retraction...
Posted by bruuno | September 18, 2006 9:55 PM
Microsoft has been slow to bring Vista to market. If they continue this delay they _might_ lose even more momentum in the market and they _could_ fall from their position of dominance and their stock _possibly_ could lose half its value and _maybe_ stockholders would be outraged and storm the MS campus with torches and pitchforks. Or perhaps not.
Posted by JohnK | September 18, 2006 11:01 PM
"There are countless rival players that do not carry the same restrictions"
How do you sleep at night after telling such baldfaced lies?
Posted by Can't stop laughing at this article | September 18, 2006 11:35 PM
Dear Editor,
Wake up, get out of bed, and do what you are supposed to do. This story is so weak and filled with factual inaccuracies that it is like listening to Fox News. You would be better off the next time if you could hire someone who can tell their body parts apart.
Posted by The Hedgehog | September 19, 2006 12:08 AM
'The most common iPod defect was disproved years ago as not a defect at all.'
You're right - it was a corporate defect. It proved Apple are a bunch of crass cynical bastards who don't give a flying F about their customers.
'Dont make up stories! People buy the ipod because it is the best and sexyist product on the market, and it just plain works. When hooked up to itunes, there is no equal. Get a life.'
Ah, a fanboy. Always a fanboy. Fanboys can never spell. Not only are they pests, they're ignorant pests. 'Sexyist'? That's funny. If Steve Jobs had a new product called iDick, you'd suck it.
Posted by The Hedgehog | September 19, 2006 3:42 AM
This story has been running in Europe for months because of various moves - including legislation in the French parliament - to act against what is perceived to be a restrictive practice by Apple. There is more sensitivity on the issue in Europe, particularly in France, because of a visceral fear of what is sometimes caricatured as US cultural and economic imperialism... that is, domination by non-military means.
I do not share these fears but I understand them. Microsoft came to dominate the personal-computer market not because of any superiority in its original products but because the IT world needed a standard platform and coalesced around the PC.
This was bad enough for Apple, but it killed off several innovative designs including some (like Acorn's Archimedes) in Britain. No-one planned this, and it was a good thing in the long term, but it shows how a powerful company in the world's biggest economy can by pursuing its own legitimate interests devastate local economies in far-off lands.
Apple is a very big company by European standards and there are fears about it squeezing out vendors of services and content here. As I said in my original posting, it seems to me that competition will be sufficient to regulate the download market and that Apple will have to watch its back if is not to suffer. (As it happens I do not think competition in online sales alone will end the iPod bonanza but I won't go into that one now).
A global DRM standard would level the playing field and free people from the need to do a technology check when they buy a track of music. But as DRM security is a moving target (any copy protection will eventually be cracked) this is perhaps not practicable.
On the more general point of Apple using its desktop to hook people into its services, I write from the perspective of someone who has covered anti-trust complaints against Microsoft for more than a decade. Many of these complaints were about Microsoft doing exactly what Apple does. One of the first, for instance, ended with Microsoft being obliged to offer links to rival online-service providers on the Windows 95 desktop.
Arguably it was right for Microsoft to be treated differently, because of its overwhelming dominance. But Apple will face these issues increasingly if it gains market share.
Apple has its best chance in two decades to do that, with the move to the Intel platform and the delay of the consumer version of Microsoft's new Vista operating system until after the Christmas buying spree. The competition is good for both platforms but Apple cannot expect forever to be afforded the licence of the underdog.
Posted by clive akass | September 19, 2006 3:23 PM