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Apple, iTunes and Competition
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Minor correction. About 40% of the player market. The 82% figure that's been advertised is only counting players with hard drives.melgross said:
Well, we'd need to see the raw numbers to be sure, but I suspect that the number of people downloading music is remaining (more or less) constant and that most iPod buyers are using it with pre-existing music collections (mostly ripped from CDs or downloaded through other services.)melgross said:
Given the current pricing atmosphere, download pricing (even iTMS's 99 cents) is very high. When I buy CDs from a record club (like BMG) I pay an average of $8 per disc (including shipping and taxes), which is between 40 and 80 cents per track (between 10 and 20 tracks per disc for typical albums.) When I can pay this price for physical media with uncompressed audio, 99 cents per track for compressed audio with no physical media just seems to expensive.
So you find people (myself included) using iTMS only for buying individual singles or tracks that are unavailable elsewhere, but going to more traditional sources when buying albums.
Buying a lot of music doesn't necessarily mean downloads. It also means buying physical CDs.melgross said:
Call me overly optimistic here, but I think one of the key points about the iPod is the wheel control. And that is patented (and I think it's fairly certain that there will be no licenses of this to other companies.)melgross said:
As for Consumer Reports, I wouldn't put too much faith in them. They've been bashing Macs for many years. (I'll never forget one review where a PowerMac got marked down because it couldn't run the Windows version of MS Office. The article never mentioned that a Mac version exists and supports all the same documents.)
MS is moving in too many directions.
Too many people think that since MS has so much more money than Apple, that they will eventually win.
What you are forgetting is that MS is moving in too many directions and is facing pressure from too many sides to put all its money into competing with Apple.
It's XBox division is losing money, MSN is barely making any, it has had to cut down on its hardware offering, it is having trouble with developing longhorn, losing customers and potential customers to Linux and a boat load of other problems.
Do you really think that MS is going to put all its money in competing with Apple?
Cheers
Arpan
Too many people think that since MS has so much more money than Apple, that they will eventually win.
What you are forgetting is that MS is moving in too many directions and is facing pressure from too many sides to put all its money into competing with Apple.
It's XBox division is losing money, MSN is barely making any, it has had to cut down on its hardware offering, it is having trouble with developing longhorn, losing customers and potential customers to Linux and a boat load of other problems.
Do you really think that MS is going to put all its money in competing with Apple?
Cheers
Arpan
Wow
Wow! I can't believe how paranoid everyone is. I have only been a Mac user for just over a year now. And I understand that you longtime Mac users have had some hard times in the past but could we have a little more positive energy here? Apple has a really good thing going here. They have a product that is introducing people all around the world to their computers. And every person who switches tells everyone they know about how great their new computer works. I know this because I do. Because of how wonderfull my emac/airport basestation/iPod work I have talked at least 3 people into switching to Apple products. I have also directed several more to the itms. This is good news! Could it be better? Yes. But this is good news.
Wow! I can't believe how paranoid everyone is. I have only been a Mac user for just over a year now. And I understand that you longtime Mac users have had some hard times in the past but could we have a little more positive energy here? Apple has a really good thing going here. They have a product that is introducing people all around the world to their computers. And every person who switches tells everyone they know about how great their new computer works. I know this because I do. Because of how wonderfull my emac/airport basestation/iPod work I have talked at least 3 people into switching to Apple products. I have also directed several more to the itms. This is good news! Could it be better? Yes. But this is good news.
I think that the iPod has pretty much reached critical mass, to the point where Apple no longer needs to sustain the symbiotic iTMS/iPod relationship to maintain/drive iPod sales. I mean, M$ is getting into the game with all their financial weight, and here isd Apple making it's own island again. Now is the time for Apple to license FairPlay, let people in, and keep the momentum going.
powermac666 said:
Perhaps in the U.S.
But the UK & the EU are a year or two behind with these things.
In the last 6 months, I've seen a few more people with IPods/minis but that's London: a relatively well-off metropolitan area full of media/creative types.
General brand awareness is building up too. But by the sound of it, there's some catching up to do with the States.
God only knows what it's like in other parts of the world...
Apple didn't single-handedly invent the hard drive-based MP3 player, but they did pretty much define and perfect it with the iPod. More than that, they integrated the hardware with a legal and reasonably priced method of obtaining, playing, burning etc. one's digital music.
The true test that Apple faces is how well their package of iPod, iTunes and iTMS holds up to competition. You have to look at them as a whole. Was it a good idea for Apple to restrict iTMS to Apple hardware? I think so, since it is designed to function together, but only time will tell.
Microsoft has many advantages over Apple that it can bring to bear if it truly wants to reduce Apple's presence in the market.
Oh, and, like someone said above, Consumer Reports is quite biased, I tend not to listen too hard to their reviews.
The true test that Apple faces is how well their package of iPod, iTunes and iTMS holds up to competition. You have to look at them as a whole. Was it a good idea for Apple to restrict iTMS to Apple hardware? I think so, since it is designed to function together, but only time will tell.
Microsoft has many advantages over Apple that it can bring to bear if it truly wants to reduce Apple's presence in the market.
Oh, and, like someone said above, Consumer Reports is quite biased, I tend not to listen too hard to their reviews.
download quality
In regards to the idea of moving the music from one format to another, we have to remember the problem of decreasing quality. AAC-CD-MP3 means recompression.
I haven't yet bought any music from iTunes, even though I have an iPod, because of the quality of the compression.
I know that it is perfectly fine for those who listen through ear buds, or computer speakers, or even the car audio system. What is is not prefectly fine for is listening through a fairly good home audio system. For a really good system, can be terrible.
Recompressing it to turn it into Mp3's makes it even worse.
I would like to see Apple have higher download quality. I would be willing to pay a dime more for 256k variable bit-rate encoding. As most of their costs have nothing to do with the cost of their storage or downloading, the extra dime would be at least half profit.
This would pull in most of those not satisfied with the current product. It would only require Apple to have two download buttons. High Quality, and Highest Quality.
In regards to the idea of moving the music from one format to another, we have to remember the problem of decreasing quality. AAC-CD-MP3 means recompression.
I haven't yet bought any music from iTunes, even though I have an iPod, because of the quality of the compression.
I know that it is perfectly fine for those who listen through ear buds, or computer speakers, or even the car audio system. What is is not prefectly fine for is listening through a fairly good home audio system. For a really good system, can be terrible.
Recompressing it to turn it into Mp3's makes it even worse.
I would like to see Apple have higher download quality. I would be willing to pay a dime more for 256k variable bit-rate encoding. As most of their costs have nothing to do with the cost of their storage or downloading, the extra dime would be at least half profit.
This would pull in most of those not satisfied with the current product. It would only require Apple to have two download buttons. High Quality, and Highest Quality.
2A Batterie said:
I have to disagree here. There are plenty of other music stores out there online (what, last count 12?). Unlike Microsoft, Apple has a strong lead due to its innovative way of running the online store.
I think the iTMS is just a good product that everyone can easily use.
shamino said:
Consumer Reports is good for some things, and not good for others. They are very good for household goods, and autos, but not good for cameras, computers, and audio.
But you are missing the point. It doesn't matter what a few think about CU, it's what the masses think. And they think highly of it. CU was only an example. I'm finding good reviews of other players everywhere now.
It is a cause for concern. Don't live in fairyland and ignore facts. That's why Apple never made their market share go up.
And don't say that they didn't want to. They came to my user group many times over the years with planes how they would capture market share, but they never were able to follow through.
Sorry, I screwed up the quote, and my answers. My part is as follows:
According to the NYTimes, Apple's share of the entire player market, including flash players is 62%.
I'm not talking about CD's etc. I'm comparing online downloads only. Those are the fiqures quoted by everyone, and are the only ones of concern.
Again CD sales have nothing to do with what we are talking about here. I buy CD's . I haven't bought a download. I just posted why.
According to the NYTimes, Apple's share of the entire player market, including flash players is 62%.
I'm not talking about CD's etc. I'm comparing online downloads only. Those are the fiqures quoted by everyone, and are the only ones of concern.
Again CD sales have nothing to do with what we are talking about here. I buy CD's . I haven't bought a download. I just posted why.
melgross said:
I don't know how much Apple has to pay for storage or badwidth but I would guess it would be more than a dime per song would cover after having to increase both by 200%.
jxyama said:
I repeat that anyone who believes I'm being too extreme should ask IBM how it feels about OS/2 and the treatment it was given by Microsoft, who were active partners in its development and actually stood to gain money from its existence. Instead, they annihilated it through back-room manipulation and special deals they were uniquely positioned to make, cutting out any possible support for the newer operating system with economics, threats, and bribes of the more sinister kind.
What in the world makes you think that a government that's largely given a free pass to Enron, Worldcom, Unocal, and other corporate criminals - not least of which is Microsoft - in its tenure would chance its mind now, when there's all kinds of lucrative reasons not to. All it takes is enough bent politicians, and Microsoft has been pouring money into both of the major parties at all levels (local to the federal). They have contracts with the DoD and other government subsections, and they're promising the kind of control of media and information that would make the Patriot Act look like a passing breeze rather than the draconian measure that it is. Look, and I do mean look, into the truth of Trusted Computing (nee Palladium) and you can see an operating system that's two steps from putting DRM on anything that is created on hardware that runs it, with a system-level stamp of serial number and identity on all documents, transactions, communications, and other uses to which the machine might be put.
It's a selling point for major businesses, and has been ever since the idea was first floated as being truly possible. Meanwhile, Intel, AMD, IBM, Via, and the others responsible for chips and motherboard chipsets have signed on to provide the TCI framework. There is no shelter, there is no escape, and this is the future of computing if we don't start speaking out against it right now. Why? The same people who use Windows because it's what they know from the office will blithely walk right into this, too, and they'll bring the market with them.
Oh, but there's more...
M$ can't really "break" AAC. it's in iTunes. to break AAC at an OS level would mean M$ must disable MPEG2 - DVD format. good luck selling such an OS.
You sound like you think it's unlikely they'd do that, when they're also maneuvering to make WMA/WMV and the Microsoft DRM solution - tied to Palladium - into the world standard for viewing any kind of entertainment. If you think that Fairplay is limiting, just wait until Microsoft gets some more of the media groups in its corner and really starts to leverage the format that will really, truly allow the companies to control how their media is experienced and used. It doesn't mean a thing to them that you won't be able to watch MPEG2, if you're dull enough to "buy" the media license they're going to start pushing once the new chipsets roll out and Longhorn/Palladium is pushed out the door.
The day is coming. Intel's announced TCI hardware in their mobile chipsets for Q2 2005, which will be required to use the newer Pentium M chips that are being released at the same time. Our supposed savior, IBM, is rolling out a desktop line with TCI built in as we discuss this.
How can Apple stand against it, if even the chip supplier we rely on (and Freescale, too, if you were thinking they were different) has signed onto the TCI group?
People only have as much choice as the market gives them, and the manufacturers would be more than happy to jump on alongside Microsoft if there could be some guarantee of forced upgrades. With the measures in TCI in place, it would be ridiculously easy to just break a given format every few years and then require new purchases all around - OS, hardware, media, and anything else they wanted. This is something that OEMs and device manufacturers are keenly interested in, because we are rapidly reaching a point where the tradition of bloat and eye-candy can only push the hardware so far, and people feel more and more comfortable with slowing the pace of buying computers.
This way, the update cycle is mandated by the corporations, not the people.
You're thinking small time. Microsoft is in it for the long haul and the big picture, and they want to own information distribution in general. Music is just a tiny - but lucrative - part of it.
shamino said:
All it takes is undocumented shifts in the APIs, a few malicious bits of code here and there, and the application of the "signed code" aspect of Longhorn/Palladium to block out any application that Microsoft doesn't want to have running. The attack is two-pronged, and pretty clever. First, you get hardware manufacturers on your side as I just outlined above, and then you make all your products incompatible with the older hardware so that people who want to be able to use anything worthwhile and current (not to mention updated and security patched) will have to shell out. Once they've moved, you basically own them, thanks to the new system and its uniquely Microsoft-ish "security" model.
Who owns the "Trusted" servers? Here's a hint: It starts with an 'M' and ends in 'soft.'
Do you really trust Microsoft to tell you what you should and shouldn't be allowed to run on your computer?
You mean the Clipper Chip that was never defeated, right?
In the style of Starship Troopers, I'll ask...
Would you like to know more?
Good men, the last wave by, crying how bright
Their frail deeds might have danced in a green bay,
Rage, rage against the dying of the light.
Wild men who caught and sang the sun in flight,
And learn, too late, they grieved it on its way,
Do not go gentle into that good night.
jxyama said:
MS won't make the hardware. They will supply the store and possibly the OS. They will leave the hardware up to their OEM's and in the case of those OEM's they will prob go to foreign designers (example: HP went to HTC to design their iPaq's.) to create and manufacturer their devices. Remember that MSs' biggest strength is patients and an @$$ load of cash. It took 4 years but they are about to overtake Palm in sales on the Pocket PC front.
Arpan said:
Depends. Where does MS, or more accurately Gates, think profits are for MS in the future? If they see a future in consumer products they will go there and will take on Apple head on. If not they might play the same game they did with the Pocket PC. Longhorn is obviously bleeding money like a cow in a great white feeding frenzy but even then you do comprehend how much 4 billion in the bank will last them right? That isn't the money of a company that is going to go belly up anytime soon.
As for the Linux threat. Everyone keeps talking about that but I'm seeing no real materialization of Linux on the desktop. (And yes I'm aware there is a definite thrust into the heart of Windows land in the server side of things.) When I see a Linux movement as big as something like FireFox then I will be a believer. Until then smoke and mirrors. Smoke and mirrors.
Blue Velvet said:Is that what they're calling Windows users nowadays?
LOL! No. Those are called screaming lemmings. Screaming because some of us want to jump ship but can't.
thatwendigo said:
if windows would do something as ridiculous as disabling MPEG2 (DVD) playback, or any other "de facto" multimedia codecs, consumers will not stand up against it. windows isn't a choice for most right now because it does most things consumers expect it to and does it reasonably well. once M$ steps over the bounds of what's acceptable, consumers will switch to a better alternative. windows isn't popular because people feel some loyalty to it. as soon as people find out their windows PC can't play back DVD (because MPEG2 is disabled), dell support will be flooded with questions about why such is the case and a lot of angry customers will say no more windows.
same thing with music formats. M$ WMA can't also be "forced" upon people. there are always people ready to address the masses if what M$ offers become unsatisfactory.
lastly, M$ is mostly about leveraging their monopoly and financial strength to overtake existing and proven profitable market. such a company never have a "big picture" - their big picture is being innovated by other companies and they are just waiting to see if it becomes profittable. if any company is thinking "small time" by basically repeating "wait until profittable then take over" tactic, it's M$.
I'm not so sure... once the market is at a huge huge level (in about 2 years if you beleive ANALists), and apple's market share has stayed the same or gone up and made BILLIONS off of this thing, I would exepect them to let the lock off of Fairplay.. but not until thier dominant market posion is pretty much guaranteed... its not now, so they are more conservative with licencing. I'd say in about 2 years expect apple to liberalize Fairplay.powermac666 said:
coconn06 said:
Fair enough.... so take the iTunes music store out of the equation.
now... if we limit the subject to just portable music players.... everything still holds true. (Perhaps more so since iTunes is much more than a music store, but also a very polished interface to manage your music collection)
If a large company comes out with a portable music player that is almost (but not quite) as good as the iPod but significantly less, then it will all be over for iPod dominance.
Epically if that company has a stronger marketing position (Read Wal Mart or M$)
Kirtus said:I don't know how much Apple has to pay for storage or badwidth but I would guess it would be more than a dime per song would cover after having to increase both by 200%.
I don't agree. Apple charges $0.99. Out of that, they pay about $0.75 royalties and other fees. That leaves $0.24 cents left over for all of Apple's costs and profits.
This includes programmers, artists, and other staff to keep the site continually updated with new songs, books, freebie stuff, etc.
Legal costs involved with negotiations with artists, record labels, etc.
Rent on facilities. Taxes, fees, and other costs of doing business.
Costs of bandwidth, servers, cooling systems, etc.
It also includes a good deal for advertising, which has to pay for itself through sales of the iPod and iTunes.
After all of this (plus other miscellaneous expenses), Apple makes about a nickel per song.
Increasing the storage space will cost, but only a very small percentage of those total costs of $0.19. The same for the extra bandwidth, the costs are slight, and will be handily paid for with the extra charge. Remember Real, and MS already offer slightly higher bandwidth, at the same price.
SiliconAddict said:
Why on earth do you think that MS won't make hardware?
Unless you are part of the MS executive team that makes such decisions and have some inside information... I think it is safe to say that M$ will make hardware if they think they can make a profit with it.
X-box is hardware.