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HP Licenses Apple's iPod & iTMS
grouchomarxist writes "According to the press release here and this article at Forbes HP is licensing Apple's iPod technology for its own MP3 player and use the iTunes Music Store. 'HP and Apple today announced a strategic alliance to deliver an HP-branded digital music player based on Apple's iPod, the number one digital music player in the world, and Apple's award-winning iTunes digital music jukebox and pioneering online music store to HP's customers.'"
From Apple's point of view, I'm not sure what they gain.
Sure, you get a desktop audience of new HP computers. And that's significant, because many newbies will only get to what's pre-installed and use that (cough*IE*cough). But is that really enough to justify diluting your brand? I can forsee the HP version of the iPod sucking.
But hey, I could be wrong, and we could all be getting $99 hPods next December. And we'll all be happy, right?
PS - Did anyone notice that HPShopping.com's CEO is named Appl? No joke.
Well not licencing MacOS back in the day was obviously one of the major causes of Apple nearly falling off the face of the planet. So if they want to learn from ther (many) historical blunders and licence the iPod while it is at its current peak of popularity, more power to them. Way to go Steve!
over the HDD music market.
apparently, the only thing that will be different about these devices is that they will be HP blue and have HP on the case. the rest of it is unmodified. the iPod firmware will be the same as the firmware that the rest of the product line uses.
I am the Alpha and the Omega-3
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Thoroughly smart move by HP - tie into a strong offering from Apple's growing recognition in the field. Apple wins tremendously by getting the backing of additional hardware distribution and essentially provides nothing (support & specs) to turn a profit on the licensing portion while having another route to their system lends it significantly to their legitimacy (and therefore brand exposure).
Any spoon would be too big.
Yet another reason to Love Carly Fiorina. Apparently HP still knows a thing or two about good engineering; even if its someone else's engineering.
In the future, I would want to not be isolated from my friends in the Space Station.
I wonder how long it will take HP to break the iPod drivers. . .
With the installation of iTunes, Apple has managed to get QT installed on alot of computers without resorting to whining or lawsuits. Congrats Apple.
Apple has much to gain from this. HP is effectivly giving them a bigger audience to the Itunes music store, in a similar fashion that MS Windows has given Aol via putting links to AOL on the desktop of all new PCs. The strategy is tried and tested; more importantly, it works.
HP also gains by getting a neat bit of kit which they can brand, allowing them to compete against Dell's new musical offering. Seeing as almost everyone is getting in on the act these days, it would seem foolish for HP not too; and why not do it with the best thing that there currently is on the market? Who knows, they might even intergrate it better with the PC? They might even bring the price down a bit. Who know- whatever happens, i'm sure it will be good for music lovers.
This is a pretty huge sign that the PC world is impressed with what Apple has done. From a company that clearly has the ability to enter a new market behind other market leaders and have success (iPaq PDAs), they recognize that they can't build something to defeat the iPod (unlike Dell's DJ move) and their best move is to join 'em.
Beter still, HP is preloading apple software on their systems. This will be a boon to Apple as it makes it even easier to access the music store.
With AOL, HP, and Pepsi all endorsing iTMS and the iPod, 2004 is shaping up to be a big year for Apple and On-line Music.
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
Apple tried this with their computer architecture, and they began hemoraging business. The licensed cloners undercut Apple's hardware prices, and Apple itself couldn't compete.
HP will, in all likelyhood, make a "cheaper iPod," and cut into one of Apple's darling moneymakers. Remember, Apple makes no money off of iTunes MS, but uses it as a way of promoting the iPod.
I give this one year, max.
Thomas Galvin
From the first paragraphs at zdnet:
So it sounds like it'll be blue, but other than that be the normal iPod, running the same OS.
My favorite iPod news of the day was Rio putting a note on their site (now removed, apparently) claiming "featured in the Steve Jobs Keynote at MacWorld 2004". True, if you consider "Look how superior the iPod Mini is to this Rio!" to be "featured". Give them points for taking a positive attitude, certainly...
What I'm listening to now on Pandora...
What technology is there to license? It's a portable harddrive. I'm pretty sure HP can build one fo those without needing to license anything from Apple.
It's the design of the iPod that makes it unique, not the technology. That's what HP is licensing.
I'm sure that HP computers will have a pretty good chance at having Quicktime and iTunes preinstalled to support the 'hPods'
not only will this add to the QT base but will ad potential customers to the iTunes music store..
I think this is a really good move for Apple.
Comment removed based on user account deletion
The scary thing is how many Slashdotters will agree with you, while many will be the same people who just excoriated HP (only four stories ago!) for exporting tech jobs overseas.
"HP is fscking over American IT employees because we let them. Our government won't even.... Ooooh, iPods!"
Found here, props go out to guet for posting the link over on macslash
Nope:
There are several things to license:
Why do you think we don't see lots and lots of 20 30 and 40 GB hard drive players? Apple co creates/researches with Toshiba and apparently now with Hitachi.
The iPod OS is very slick and even though there are close to similar copies - none are as easy - no other player has the games that I'm aware of either
Lastly, they license the implementation of Quicktime AAC - while AAC is open itself - the secure component of it Apple owns.
+ Apple licenses out the firewire name
Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
how the hell do you respond to this? HP is the largest PC manufacturer behind Dell, correct? And Dell has its plans to do its own Music Store, correct?
So Apple, who has already made great inroads to the PC market, is going to make it in even deeper. I think this bodes well for Apple, and I don't know how even MS could fight this off, at least not without doing something that would violate the rulings or what not from the monopoly trial.
Of course, if they did do something that might violate it, and it wouldn't surprise me if they did and it went unnoticed, this time Apple might get into it...
Anyways, the only bad thing I can see coming out of this for Apple is the fact that it might stop people from switching to Apple computers, since, unless the marketing is done well, newbies might not realize this is an Apple product, not an HP product.
BTW, I didn't RTFA so feel free to flame me, but how will Apple keep the supply up? Is HP going to help manufacturing etc.?
Blake
Apple gains an enormous amount from this- they will further solidify their proprietary audio codec as the standard for internet music distribution. We can be sure that HP won't be the only licensee. Apple has done this exactly right- create the most seamless integration in the industry, then graciously allow what would otherwise be their competition to join the party...
It's the vaxPod! Oh the irony.
What if it is just turtles all the way down?
First in line:
hiPod - Comes with a free dime-bag, too.
Where's yours?
According to ZD NET's Article and reported by Mac Rumors, the devices will come in an exclusive "HP Blue" color and be compatible will all 3rd generation iPod accessories.
/. icon for this story.
If you don't know what color "HP Blue" is, look at the
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
While I applaud your apparent patriotism and support for American jobs, I can't help but snicker at this. I am reminded of a friend I used to know who was a VERY staunch vegetarian, she wouldn't even eat food that had been prepared on the same grill or in the same pan as a meat product. And yet she wore LEATHER shoes.
So yes, you have a God given right to buy from whom you like. So I will assume that you only buy "American made" products from companies in the United States?
Do you drive a car or truck? Was it made in America? That's a loaded question since there really is no such thing anymore, I can't think of an automobile company that doesn't assemble vehicles from parts made or assembled in another country. Your vehicle may indeed have been put together here in the U.S. but a large portion of the parts are assembled or manufactured in other countries, essentially "outsourced".
Don't get me wrong, I hate outsourcing as much as the next guy, I work in tech and worry about the job prospects, but this is natural market evolution. It happened in manufacturing a couple (a few?) decades ago. Now it's happening to tech. The country adjusted back then, it will adjust now. Will the process be painful? I think it already is. But I have hope that the outcome will be positive.
So while I applaud your sentiment, I think we need to be realistic and consistent.
With the iPod, iTMS, and now HP-branded iPods, Apple is working hard to keep WMA from controlling online music. That also makes it more difficult for MS to dominate in the video playback market as well, because one of the supposed advantages of WMP is that it acts as a playback mechanism for a wide variety of media, all delivered in Windows Media formats.
Read the EFF's Fair Use FAQ
Before you get moderated too far up by people who want a Mac clone and have wanted it despite that it would kill Apple, let's look at what this deal actually entails.
The HP_iPod will be the same as a 3rd gen iPod in terms of hardware. That is, AFAIK, the extent of the hardware side of this "cloning." Apple probably gets a percentage of the profit from this (I don't see them as the type to go for a one-time fee).
This either doesn't undercut Apple at all or barely does so. If HP produces them on top of that (haven't read the article yet) it just provides additional iPods when Apple already has trouble meeting demand.
As a plus, HP is also going to install iTunes all HP systems. That's of tremendous value to Apple, since then nobody will need to download them.
This is not cloning, is not vaguely related to cloning (more like Apple licenses the right to produce a specific model of Apple computer with rebranding), and Apple is not going to be undercut or suffer cannibalization of sales as a result of this.
Integrate Keynote and LaTeX
Sounds like Apple is going for mass-mass production of the iPod/iPod mini players to get per-unit costs down. Having a guaranteed buyer for a significant portion of them allows Apple to produce that many units without having to worry about excess inventory on their end.
Look for Apple to either make more per iPod on the ones that they sell, plus the revenue on units that they wholesale to HP. Also, I'd expect the recent shortages of iPods to be a thing of the past once manufacturing is ramped up. This is great news for 3rd party equipment manufacturers (like Belkin, and th replacement battery sellers) as they get to sell more product, at possibly lower prices.
Plus, Apple gets more clout with record distributors when negotiating future rates (or trying to get hard-to-license songs) since the available pool of iTunes/iPod users will grow.
This is win-win-win, for Apple, Apple partners, and iPod/iTunes buyers/users. The only people this would be bad news for are Microsoft and the other WMA player folks.
Not trying to start a flame but please, please don't start the Ogg Vorbis conversation. This is an APPLE device...APPLE is committed to AAC+Fairplay. Apple knows about Ogg, as do all the other WMA music sites and music device manufaturers.
As hard as it is to swallow, Apple has decided AGAINST supporting Ogg Vorbis in current devices. So have all but ONE music device manufacturer. The market isn't there because as bad as you want Ogg, you will settle for AAC and buy an iPod because it is a more complete package. And if you won't, then you are a market minority so small that Apple doesn't have the time and money to spend reaching you.
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
PodPaqer?
Or is that too Risque?
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
The mac clones were not produced by Apple for the cloners, they were licensed the OS and the chips they needed to run them and were responsible for the components and specs of the devices themselves.
Not comparing apples to Apples
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
> so that it's not just an iPod with an HP logo on it instead
>of an Apple.
That's *exactly* what it is.
A blue iPod that says "HP" on it.
Apple even manufactures it.
In the terms of Phil Schiller: ""The way we look at it, HP will be reselling an iPod device,"
(From the CNet article on the topic).
Integrate Keynote and LaTeX
I wonder. It's long been speculated that Apple may some day bring OS X to the x86 platform. It's technically feasible and has most likely already been proven so. OS X is now at a stage where it's stable and reached a point where even the die-hard OS 9 users can't avoid it any longer - and has essentially become what OS X should've been in the first place. They are however still selling product to the converted - and this is where iTunes comes in. It all starts with introducing iTunes to Windows users. Windows users use iTunes and soon realise that Apple can write some fantastic software. It's free, without ads and it works famously. Apple then decides to partner with HP to sell an HP branded iPod to those Windows users who still can't get themselves to buy an Apple branded iPod even though it will work with Windows. An HP iPod on the other hand will be easier for them to swallow - it's all about establishing a comfort factor. Once the HP pod starts getting more glowing reviews and iTunes becomes even more prevelent on Windows desktops, Apple and HP would be in a great position to produce HP branded computers (x86?) running OS X - as by that time they'd have established their market. HP has the manufacturing and cabibility to pull this off whereas it's doubtful that Apple does, esp with a potentially different platform.
www.brownsauce.org
Let me be the first one to tell you that vegetarians don't eat meat for variety of reasons, which does not necessarily involve ethical ideology. Vegetarians in most part, avoid animal foods for health concerns, and you would find many, who often consume eggs and milk. Humane animal treatment comes in distant second.
The group you're trying to lump her into is called veganism. They don't eat meat, and at the same time avoid (to most extent) purchasing products derived from animals (i.e. leather, oil, fur, etc). Vegans rank animal rights, environmentalism, and ethics ahead of health.
Now that the news has sunk in a few minutes, I am not so certain HP had a lot of better options.
They are already
(1) fighting off loosing market share to Dell
(2) managing a HUGE merger with Compaq (these things take years to work themselves out)
(3) spending tons in R&D with the iPaq
When HP sat down, they had a few options
The WMA way:
(1) Go with the WMA music store everyone else has and try to differentiate, knowing that at $0.99, the service is basically break even
(2) Build a player in house - a huge R&D expense (and risk) should the solution not work out when they launch head to head with Dell that isn't going through restructuring, has a huge market share, and doesn't have the iPaq taking R&D dollars.
The Apple way:
(1) recognize no one is teamed up with the market leader and WHY THE HECK SHOULDN'T WE!
(2) instead of trying to improve on what 31% of the entire MP3 market has already said they wanted by purchasing an iPod, just rebrand the damn thing like IBM did with the Palm III and be done with it.
The Apple way is less risk (and less money in HP's pocket) but if it turns out to be a fad, then haven't spend tens of millions in R&D and they can walk away. If it works out great, then five years from now, they can build their own in-house if they think they can do it better than Apple.
This is a HUGE win for HP and I bet it has Michael Dell slappin' his head sayin "I could'a had a V8!"
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
Wait and watch how iMacs and such won't be licensed out. Jobs is probably taking medication to avoid exploding while HP makes stuff based on Apple technology.
Licensing out the technology for iPods and iTMS makes a tremendous amount of sense because they are dangerously close to being commodity products. There already are competing and very similar products for both services, many of which are of at least acceptable quality. Apple probably has the better products right now (hence their price premium) but there is little reason to believe that their current technology advantage is sustainable. They are the first movers, but our good friends at Microsoft have proven time and again how little that really means. Apples computers are different enough to avoid much of the direct competition but I would propose that the iPod and iTMS do not share this advantage.
So what can Apple do to combat this inevitable erosion of marketshare due to competition? Either they have to keep some form of value advantage (such as features not available elsewhere), have network effects which make switching other services less attractive or they have to scale the business to gain cost efficiencies from economies of scale/scope.
Apple appears to be doing a little of all three. They keep improving the iPod and iTMS which gives them a technology advantage for now. I do not believe this is sustainable in the long run (lots of other smart engineers out there) but it gives them good margins and a big head start. They've got a better mousetrap but that is only useful to a point.
By producing a Windows iPod, making it work with iTMS and licensing it to HP they are trying to build up network effects that make them the platform of choice. It's the same reason everyone chooses Microsoft Office; not because it is great, but because everyone else has it. Again I'm not conviced that the network effects here are the strongest, but if "everyone" buys iPods, that will make iTMS more attractive and vice versa. HP will undoubtable sell more so we might see people buying iPods and using iTMS because their family and friends use them. Not clear, but possible.
The other advantage of licensing to HP is they gain some economies of scale/scope. HP will sell more, making Apple's per-unit costs better, meaning they can fight low cost competition more effectively. The scariest opponent for Apple here is Microsoft because they can bundle with Windows and gain instant economies of scale and they have a much bigger war chest than Apple. If apple can sign up a few of the major OEMs (Dell, Toshiba, IBM, etc) to the same deal as HP, then Apple will be less vulnerable to Microsoft, though it would still be a problem.
In short, licensing iPods and iTMS makes a lot of sense. They don't need/want to do it for their computers because they are not easily duplicated and have significant strategic protection beyond simply the hardware and software. iPods and iTMS are much more vulnerable to competition and need to be treated as the different business it is.
I submitted a similar article earlier today, but I guess I didn't beat the person who posted this article. However, one point that I made in my submission, and that nobody has made here: Check the press release. Notice something? Apple is claiming that the "Allowance" feature of the iTunes Music Store is patent pending. This smacks of the One Click patent that Amazon.com secured. Obligatory call for prior art examples goes here. :-)
QuickTime. This is a huge win for QT preloaded on HP consumer computers as well.
In a classic HBR (Harvard Business Review) article back in the early 90s, the domination of the computer industry by Microsoft and Intel was predicted.
The foundation of this article was the position that control of a lower layer in the stack allowed you to extract significnatly more revenue higher up in the stack. Microsoft by controlling the OS could extract revenue for applications; Intel by controlling the processor could extract revenue for support chips and logic boards.
This has turned out to be a "law" and has worked to the advantage of both these companies.
It now looks like Apple is working to grab the "Music Sales and Distribution" layer, and it looks like this will allow them to extract revenues they previously were not able to get.
Interesting...gives hope for Apple down the road...
Yours,
Jordan
PS. Love my iPod!
Sorry, but Real's music store won't support iPods. Read the article: "For example, both RealNetworks and iTunes will distribute songs encoded in the AAC format, but Apple's iPod will not be able to play Helix-wrapped songs unless Apple licenses that technology."
Such irE
A couple of things: when the outsourced labor sucks (because of the reasons you state) that causes you to lose money / customers / reputation you stop doing it. For instance Dell. They just brought some of their call center work back to the states.
When I was forced into bankruptcy by the dot-com implosion, and couldn't find decent steady work for over a year, only to eventually find a job that required me to do more work for about a third of the money that I used to make, even a $99 iPod would have been too expensive.
Which means you were probably overpaid in the first place. That was one of the MAJOR problem of the dot.com boom: Labor squeeze, which begat wage inflation. Don't get me wrong, I enjoyed some nice paydays as well, but let me ask you this: Did you save anything you made during the boom? Did you rent/buy the best you could afford, buy/lease a phat ride? Did you have all the latest toys (PS, state of the art computer, PDA, the entire Think Geek catalogue)? Did you party every night like you were Prince?
Considering you went bankrupt, unless you owned a house who's value plummeted or had an uninsured medical catastrophe, I suspect it was due to some wicked credit card debt.
Sorry, but the gravy train never lasts forever, and the world doesn't own anyone shit. Just because the cricket partied his ass off doesn't mean he gets to eat the ant's grain.
That's not marketshare, that's percentage of new machines sold.
It's almost impossible to determine marketshare accurately. However, the service life for a Mac is, on average, thrice that of a PC - making attempts at calculating marketshare based on pure sales numbers a joke at best, and fraudulent at worst.
Despite the real gains it has made in OS improvements, Apple's cachet remains largely in its sexy, elite image. The schizophrenia that's marked its retail relationship with Target and other vendors - iPods for sale one day, then not, then back on again - points to the problems of dealing with the unexpected success of having a mass consumer hit on its hands.
And when is it ever a problem to dominate a mass consumer market? Well, it's a problem when you need to protect the refined sensibilities of your loyal base when at the same time you want to get a little, uh, action with consumers on the other side of the tracks. Put another way: how do you retain the people who don't shrink in horror at declarations that your product is "lickable" while reaching out to guys who dwell at Wal-Mart? They're mutually exclusive markets. You can't exactly make the ickyPod, now, can you? (Or can you? Look at the colors on those miniPods, jeezus!)
So this is Apple's challenge, then: continue selling iPods as avatars of youthful upmarket hipness, while growing the business by shifting product to another market segment via a ho-hum go-between. Enter HP with plenty of succesful experience in being ho-hum...
"Darwin, yes. Any other part of the OS, no."
When I said that Rhapsody ran on x86, I was _not_ referring to Darwin; I was referring to the complete "Rhapsody" operating system, which I used to run on off-the-shelf PC's. Rhapsody was the code name for MacOS X before it shipped to end users. The whole thing ran, all the way up to the Display Postscript rendered UI, except for "yellow box". So you could (and I did) compile any Cocoa app as a "far binary" and it ran fine on either PPC or x86. What's what I'm saying Apple is still making sure runs on the x86, in order to keep their options open.
Enable 3D printed prosthetics!
Apple has the #1 Video Editing App
Apple has the #1 DVD Creation App
Apple has one of the best high-end Compositing Apps
Apple has one of the best high-end Digital Audio Apps
The only other high profile content creation area they do not have a foothold in is 3D animation.
To me the logical next step would be to buy Maya.
Only problems with this are
1) There are already several good 3D apps for the OS.
2) SGI will only sell for a ridiculous amount
Most high end 3D animation is done on PCs & UNIX workstations. That won't change until Maya's high-end stuff is available for the Mac OS. Currently only their low end stuff is available for the Mac.
If Apple buys Maya, ports the good stuff and sells it cheaper for the Mac OS then we will see thousands of animators switch.