You've got to hand it to Carly.
Nearly everything else in this story makes it sound like HP took a look at the last quarter's stats and decided to fold up its tent and get on the iPod/iTMS bandwagon, and then she somehow manages to make it seem like it was Apple that came to them wanting to do the deal.
I concede that HP have done a fair amount of innovation over the decades, but the idea of Apple being impressed with HP's record of innovation in the consumer marketplace seems like a woman desperately trying to make lemonade out of lemons to me.
Still think it's a great deal though, and think the finished units will look a lot better than the spray-painted half-assed unit she holds up in the video.
Now onto the positives:
If HP really have 110,000 outlets to pump this through, it's highly conceivable that HP could move 3 million units annually. Assuming Apple are giving HP some room to make $25 a unit, HP could make $75 million annually as a guarantee.
This compares quite favourably with how much HP would have paid to develop and, more importantly, market its own player and store, both of which could have landed up being loss-leaders.
$75 million income as opposed to $25-$50 million burnt seems like a smart move from HP, and Apple do quite nicely out of it as well.
Like one of those cute Russian dolls, the first thing that looks like a Trojan Horse is the iPod; but then you realise that it might be iTMS; however you dig a little deeper and you begin to think it might be QuickTime and then - ultimately - it might be the fact that - through iTunes - Apple is getting WebCore or whatever its called onto Windows.
That's just the intangible benefit; but at 3 million units a year and 15% gross, Apple may well generate around $900M in revenue for iPod and over $135M in profit. If half of these 3 million units generate 5 iTMS downloads a month, that's 90 million downloads/annum.
Over three years, Apple could download some 540 million tracks to HP's customers, generating a minimum of $27M in profit to go with $405M in profit from iPod sales.
Seems like a deal to me! Sneak your software onto your arch-rival's OS, shift even more of your hot product thus increasing economies of scale and reducing unit costs, earn a shed load of cash. Oh, and stick a knife into the opposing music formats at the same time. It's like the gift that keeps on giving.
As for WMA support - why should Apple legitimise or dignify WMA and its DRM! If WMA music stores go down the tubes, then Apple should let their subscribers swing in the breeze simply to reinforce the message that not everthing MS is or indeed should be successful. Rescuing people who made bad purchasing decisions whilst giving money to your arch-enemy is just misguided. Let Gates, Ballmer and their cheerleaders explain to their customers that WMA is a dead-end format, whilst sane reasonable people use a quality solution.
