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Jobs' Invitation To Microsoft a Trap?
An anonymous reader writes "Chris Seibold over at Apple Matters, has written up an interesting analysis on Steve Jobs' suggestion that Microsoft make their own mp3 player. He argues that it is more bait than business plan, a deft move by Steve Jobs to lure Microsoft into a can't-win war. The key, according to the article, is the licensing of FairPlay." From the article: "The folks who stick with Microsoft get to fight over, roughly, twenty percent of the market. The folks that go with Apple would be aligning themselves with what has become the industry standard. The players that license FairPlay would have access to the iTunes store, backwards compatibility with the songs consumers have already purchased, and a chance to compete on a perfectly level playing field with the iPod. It doesn't take a Stanford MBA to deduce that the potential rewards of opting to use FairPlay far outstrip the rewards of going with PlaysForSure."
One of the things that most people don't understand is that there are many times that when you sell more, your profits go down.
To explain it in economics terms: demand for a product rises as the price falls. So, if you lower the price, you will sell more units. Let's say that you can sell 1,000 units at $100 profit per unit. Let's say that you can sell 10,000 units at $50 profit per unit. It is better to sell 10,000 units at $50 profit per unit ($500,000) than 1,000 units at $100 profit per unit ($100,000). Of course, the reverse can happen. Let's say that you can sell 1,000 units for $100 profit per unit ($100,000) or 1,500 units for $50 profit per unit ($75,000). Selling those additional units looses you money. It is desireable for the business to produce and sell fewer units.
So, if Apple allows other devices to be more iPod-like and therefore gets revenue from more unit sales (both iPod and FairPlay units), it wouldn't necesserally increase their profits since they might have to lower the price of the iPod or loose iPod sales to sales of FairPlay devices which people are more likely to substitute and give Apple lower profit.
It might be good for Apple. It might not. Only a very through economic analysis of Apple and the market (as well as a ton of speculation) could tell us whether it is actually a good move. Being biggest doesn't mean being most profitable.
It does. WPM 10 has native music store support, backed with PlaysForSure and the Janus DRM system.
Luckily, the interface seems like it was designed by monkeys on crack and nobody in their right mind wants to use it.
How many people can read hex if only you and dead people can read hex?
They got a slap on the wrist and a stern warning not to do it again. They didn't do anything to change their practices, and continued with business as usual.
A few million in legal fees is chump change for Microsoft, and they have no reason to believe any future administration will attempt to crack down on them again. Even if someone did try to crack down on them, a new administration would likely be in office long before the case came to a conclusion.
Even the last anti trust scandal took years to wind it's way into court, and there's no sign of the public pressure necessary to make such a thing happen again.
Microsoft is simply too big and powerful for anyone to do more than shake some legal sabers at them and say "boo!"
"Live Free or Die." Don't like it? Then keep out of the USA
If they have, it's a remarkable backpedal. Real tried to license it from them a while back, and were told 'no'. They developed Harmony, which stripped FairPlay encryption and substituted it for Real's own, but only after their attempts to license FairPlay legally had failed.
Personally, I think it's shite. Apple likes its vertical monopoly, and has absolutely nothing to gain by licensing FairPlay.
When you use iTunes software to rip your CD collection to MP3 or M4A for use with your iPod player, the ripped files do not have any form of digital restrictions management. It's extremely common in the United States and Canada for somebody to own 28 hours worth of CDs, which is enough to fill a 2 GB player at 160 kbps.
How is one company's CEO suggesting another company can't win unless they adopt their approach a "bad" thing? What is monopolistic about it? In fact, isn't suggesting someone else offer a product kinda, well, anti-monopolistic?
You can freely buy a competing MP3 player. If Apple was, say, strong-arming retail stores into only selling iPods the way Microsoft forced Windows onto OEMs, THEN get back to me with the "evil monopoly" talk. Until then, whatevah.
"Sufferin' succotash."
1. Burn an Audio disk.
2. Convert disk to MP3.
3. There is no three. Your done.
That's Apple DRM. OK, good for them for building something that looks like DRM so they could drag the dinosaurs in the music industry kicking and screaming into the digital age. I'm sure there were a lot of meetings where the presence of Fair Play was vital to not getting tossed out on the street in front of a moving bus. But do we really have to pretend along with them that they have a real DRM? If you have ever given Apple DRM a minute of worry, you should ask for that minute back.
San Francisco Photographers
You don't even need to email Apple; go into your account settings on iTMS (within iTunes) and you can de-authorize all your computers at once (can't do it one at a time from there) and then just re-authorize where you need it.
Can't believe what'll get a +5 Insightful these days.
Compaq reverse-engineered the IBM BIOS nearly 25 years ago. The company was founded in 1982. It is now 2006.
I find the definition helps:
"Exclusive control by one group of the means of producing or selling a commodity or service"
Last time I was in the store, there were quite a few other mp3 players on the store shelves. I cannot, for example, choose another cable company if I can't install a dish. Now -thats- a monopoly.
MSN Music (using PlaysForSure) -- you can burn up to 7 CDs without changing the track setup
Others have pointed out it's actually five. MSN Music also allows five authorized computers.
And this is different from MSN Music - how? The point of this reply is that usage rules for PlaysForSure files are set by the music store and the record companies, not the DRM format. MSN Music's usage rules are similar to iTMS, but is limited to Windows computers. I think they both suck, but I can understand other people finding the terms reasonable.
Apple can acquire a license) just like everybody else, but they don't. Apparently, nobody else is allowed to acquire a FairPlay license. I guess Apple is, and will always be, the only company that makes good portable music players.
TO START
PRESS ANY KEY
Where's the 'ANY' key? I see Esk, Kitarl, and Pig-Up...
The rule with tying arrangements is that if each product (in your example, the computer and Microsoft audio player) may be purchased separately in competitive mkt., then the arrangement is not illegal per se. Thus, for an antitrust violation, market power sufficient to restrain competition in the tied mkt. must first be proven. In addition, monopolization (as distinguished from mere monopoly) is prohibited. The relevant distinction is that monopolization requires not only having monopoly power, but also proof of anticompetitive effect.
Microsoft was challenged for bundling IE with Windows, where IE was the tied product. Given Microsoft's almost overwhelming market power at the time, this (in my view) was clearly illegal. With the change in administrations, however, the Justice Department abruptly ended their prosecution of Microsoft. Although the law hasn't changed, the fact of the matter is that the US government is notably less concerned with anticompetitive behavior by businesses now than it was under previous administrations. The situation in the EU, on the other hand, is quite different.
Microsoft probably could not outright bundle MP3 players with computers because of its monopoly power in the computer market. It almost certainly could provide strong incentives (in the current political climate) for such players, however.
No, it doesn't. It's strange that you would think that. I imagine you have not used the software for many years?
The "DRM by default" option (a configured checkbox that was on by default in WMP7 - released five years ago) was changed as of the next release 8 months later (four years ago).