Seeing an End to the iPod's Hegemony 17 comments
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While everyone is watching Google's (GOOG) Chrome, Apple today invited media to an event on September 9 in San Francisco entitled "Let's Rock." Since Apple (AAPL), as usual, didn't reveal what it will announce at the event, rumors and speculation are flying. The most prominent gossip says that Apple will bring out new iPods, probably with some lower price points.
Now, there's a lot going on in this portable music space. Just a few years ago, iPods sold like candy and claimed up to 90% of the digital player market. Since iPods only work with iTunes, this funneled consumers to iTunes' music store, which in turn helped Apple get content for the store and build the most successful music download retailer. And since the iTunes downloads were all encoded with Apple's DRM, which could only play on iPods, consumers who bought a lot of stuff from iTunes have wound up stuck in the iPod universe, whether or not something better comes along.
But in technology, more than any market, no dominance lasts long. Microsoft (MSFT) has been hammering at Apple's door with Zune, and you can bet Microsoft won't give up anytime soon. Dell (DELL) this month said it will make an MP3 player (again!), and analyst Rob Enderle outlines how Dell could do better than previous competitors. Sandisk (SNDK) bought MusicGremlin and has been chasing the idea of a Wi-Fi music player that never needs to go through your laptop to download songs.
Amid all this, iPod sales have essentially leveled out. For the past couple of years, Apple has sold about 10 million to 11 million iPods per quarter, with a boost to about 22 million around Christmas. Make no mistake -- the iPod/iTunes combo still dominates, and it dominates because right now it is the best, most complete solution for most consumers. But iPod's growth has stalled, and competitors aren't banging at the door because they're stupid -- they're banging because they think they can have an impact on the market.
Will the competitors succeed? Eventually, one will -- because that's the way the tech world works. How? My guess -- and Enderle's -- is that it will have something to do with the cloud and subscription music. Apple is all about owning your music on your hard drive. At some point, that model won't make sense anymore. When wireless broadband (Wi-Max, 3G, satellite, whatever) covers the earth (and is in planes and trains), you could carry around a player hooked to a subscription service like Rhapsody and listen to anything you want at any time. Doesn't that ultimately seem better than listening to a music library limited by what you've bought song by song?
Yes, true, if that's the way music shifts, Apple may in fact get there first. The iPhone is already completely capable of becoming a cloud music player -- just look at the success of Pandora on the iPhone. But chances are Apple will try to protect its closed iPod/iTunes model, leaving an opening for a competitor -- perhaps a start-up still in someone's garage -- to do things a whole new way and give Apple something to worry about.
Unless Apple's announcement next week is that it's coming out with an iTunes cloud subscription service for the Wi-Fi enabled iTouch. That's one of the rumors. Then all bets are off.
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This article has 17 comments:
I don't know if you care, but MSFT sold 2 million Zunes compared to Apple's 150+ million. You call that "hammering at the door"?
I don't know if you remember, but Apple replaced the iPod mini, the then best-selling player in the world, with the iPod nano which quickly became best-selling player. You think Zune, one of the most spectacular CE flops of all time, is going to challenge Apple?
Do you care to cite a single instance of a digital subscription business as remotely popular and lucrative as the iTunes business?
Do you care at all that you cited Mr. Enderle as an "analyst" on Dell without disclosing the fact that he's paid by Dell as a consultant on this very project?
Finally, do you really have anything new to say?
shopping for clicks, click, clicks
shopping for cleeeeeeeeeeeeecks
shopping for clicks, click, clicks
(to the tune of the Blue Danube by Strauss)
=====================
If this is really what you believe, please do NOT invest in the stock market. You WILL lose everything.
You are dangerous to your own wellbeing.
Please seek counseling immediately!
"Yes, true, if that's the way music shifts, Apple may in fact get there first. The iPhone is already completely capable of becoming a cloud music player -- just look at the success of Pandora on the iPhone. But chances are Apple will try to protect its closed iPod/iTunes model, leaving an opening for a competitor -- perhaps a start-up still in someone's garage -- to do things a whole new way and give Apple something to worry about."
So, Kevin. Do you really think Jobs would "leave an opening" when all he would need to do was 'invent' subscription music?
Come on. You're better than this. (Hope your mama doesn't read this column.)
(Anyway, thanks for the laugh.)
Quite incredible.
Complete rubbish written by a incomplete simpleton.
Kevin, please go back to your job at the mall.
this article just doesn't add up.
"Amid all this, iPod sales have essentially leveled out. For the past couple of years, Apple has sold about 10 million to 11 million iPods per quarter, with a boost to about 22 million around Christmas. Make no mistake -- the iPod/iTunes combo still dominates, and it dominates because right now it is the best, most complete solution for most consumers. But iPod's growth has stalled, and competitors aren't banging at the door because they're stupid -- they're banging because they think they can have an impact on the market."
The market for iPod users will eventually level off. That's why Apple continually tweaks the software and changes hardware that appeal to buyers (including those with iPods.) And that is why others are continually chasing the leader.
Your article would have been far more interesting if you had applied your thoughts to "Seeing an End to Internet Explorer's Hegemony".
I also wanted to point out some factual errors. You said, " And since the iTunes downloads were all encoded with Apple's DRM". Uhm, not "all" iTunes downloads are DRM encoded, just something like a little over a half, and that's only because some of the labels are trying to steer business to Amazon.
You say MS is "hammering the door" with the Zune. Everyone knows that that is laughable. Zune has 2% of the market at best. Dell is a failed player in the MP3 player market, and quoting Enderle only undermines your argument, since he has a conflict of interest, having consulted on the effort. And, Sandisk's wifi music player? You do realize that iPhones and iPod Touches can download over wifi from the iTunes Music Store, right, without going thru a computer.
The reason why MS and Dell are in the market isn't because they think they'll have an impact on iPods or iTunes, it's because they need a full media product offering. It's not just about music, but about all types of digital media, and giving up on music, will potentially cede the video download and video device market to Apple as well. That's the fear at MS and Dell. That's why they have to get into markets they don't look likely to win. They have to play in the last battleground, in order to have a chance to win in the next battleground.
And, thinking the subscription battle is where Apple will lose is just silly. Apple can turn on subscriptions in a New York minute. There's NO meaningful barrier to entry. Besides, there's more out there than just Pandora that already work on my iPhone. There's AOL Radio, where you can choose from hundreds of radio stations. There's rumors that Sirius is coming to the iPhone. There's a FREE app from SimplifyMedia which allows me to serve my whole music library from my home PC to my iPhone wherever I am. I don't even need my music on my iPhone any more. I can just stream it. Do you think Zune or Sandisk have those capabilities in their devices? The other players in the market are just getting further and further behind, because Apple has already created a large enough ecosystem that all the innovation is being driven for iPods and iPhones. The other players are too small to attract any development. Sure I know, it's much like Apple Computers were just 10 years ago, but it took extraordinary talent to take Apple from where it was 10 years ago to where it is today. It will take another extraordinary talent for it to happen again. So far, you haven't identified anyone or any company or any idea that would be that talent.