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HP Dumped Napster for Apple
Pieter Townshend writes "Found on GMSV: 'In the days leading up to Napster's re-launch last October, a deal that would have put Napster links on millions of Hewlett-Packard computers went bad. HP withdrew from the agreement at the last minute, its reasons for doing so becoming clear three months later when it announced a surprise partnership with Apple to feature the iTunes Music store on HP computers and sell Hewlett-Packard branded iPod music players.'"
Based on the last line of the article "But he expects the business will mature as users realize it's cheaper to pay a flat fee for access to 500,000 tracks than to pay $1 a song."
The problem with the $15 a month is, I don't want to have to pay if I don't use it for a month. As it is I have spent less then $10 a month on iTunes store (and this month I might not spend anything), for me it has been cheaper. So if I look at it I have saved about $25 by not going with Napster. And since I am the only one in my circle at work that uses it, but every one here drinks Pepsi, I am getting free songs from my co-works (that or they would just trash the winning caps), but that is just a non-issue in the long run. With the iTunes store there is great integration into OS X and my iPod.
Also it does cost $.99 do download the song form Napster, so you have to pay for access then to download. From Napsters (www.napster.com) front page "Choose your own tracks for $0.99 each, or get the whole enchilada for just $9.95 per album."
Even though they're under new management, I wonder if Napster still has a bit of a stigma to them that gave HP cold feet?
Happiness is like peeing yourself. Everybody can see it but only you can feel its warmth.
AAC versus secured WMA, no big surprise here that HP decides to go with the non-MS solution.
Smart move, HP! Good on their part, good for Apple, and most importantly, good for the customer.
If I were in HP's position, I'd certainly be disposed to selecting Apple as my partner over Napster. iPods are wildly popular, and iTunes is a going concern run by a company that is a profitable going concern. If I'm HP looking for business partners, I am certainly going to select the one who looks like the way of the future.
Say what you want about Apple, but they keep coming up with great innovations and products that are slick, well designed and quite useful. HP made a very wise choice here and I think they will make a handsome profit from it. Not to mention Apple being "validated" by someone in the WinTel clique, and having a WinTel producer OEM their gear and install their software by default. This is win-win for Apple and HP, and not bad for consumers.
Yes, there is the DRM issue, but is it realistic to think that there will ever be a time when there is no DRM on material like songs? While I wish DRM wasn't necessary, Apple's license is pretty good - use on multiple machines, use on multiple iPods and burn them onto MP3 disks. Perfect? No. Good enough for the vast majority? I'd say so.
interface sucks, and their plug in for MediaPlayer 9 barely works, and fails completely with large fonts enabled. On the other hand, iTunes works perfectly, delivers on every aspect of the experience, from simple purchasing, sleek library management, fast searching and easy burning and sharing with authroized PCs and devices. Apple, as usual, delivers on user experience while solutions based on WMA deliver on inconvenience. I was a long time Wintel/Musicmatch user, but iTunes wins hands down. Buh-bye napster 2, buymusic.com, MusicMatch and whateve half-cooked dish MS will serve.
Personal, I am sad about the whole state of affairs in this industry. Basically, the computer manufacturers are choosing which programs the end user will use for listening to music, which antivirus software they will use. Each new computer that comes off the shelf is bundled with more and more ads and programs that monitor behavior.
The boxes coming out of the shop should stop being called "computers" and should be correctly identified as "ad delivery units."
But he expects the business will mature as users realize it's cheaper to pay a flat fee for access to 500,000 tracks than to pay $1 a song
...well that's encouraging.
But then the question is, what happens as the users realize it's even cheaper to listen to the internet radio built into iTunes for $0 a month.
Okay, yeah, you can't choose exactly what song you hear next on internet radio. But generally, if I go "hey, I want to listen to X specific song", this indicates I'm going to want to listen to it again someday in the future. Unless I keep paying for Napster's streaming service for the rest of my natural life, I can't get that. Perhaps worst of all, last I heard not *all* of the songs Napster has up for sale are free to stream when you have the $15/mo service, and there's no way to tell which songs can and can't be streamed unless you've already paid for the service.
The $15-to-stream-from-our-library thing is a really neat business proposition, and I'd call it real innovation, but I just can't see buying it. I'd rather just stick with actually buying in some form the tracks/albums. And if you're only looking at buying tracks/albums, Apple's software works both on my macs and my PCs, and they seem to have a bigger and more indie-friendly library. I think I'll stick with them.
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Obviously Apple's not giving away to iPod design without getting something in return. For every iPod HP sells, they're going to have to give Apple a cut. So, HP won't be able to make as much profit per iPod as Apple does, but HP has much larger distribution channels than Apple, especially outside North America. There's a lot of interest in tapping emerging markets in eastern Europe and parts of Asia (especially China). By partnering with HP, Apple can get in on that action without having to spend money up front to increase production capacity and develop distro channels overseas, where it currently has little of either.
Apple could likely make more money in the long run by building overseas production and distribution capabilities, but it would require a huge investment up front. Apple does have lots of cash on hand (close to $5 billion!), but right now time is far more of a concern for them. They want to establish themselves in as many marketplaces as possible, as fast as possible, before competing MP3 products get there. It would be no use for them to spend all kinds of money breaking into new markets, only to find that some other vendor has been saturating that same market for six months already with cheaper (albeit less cool) competing product.