Short version: Corporations are trying to pass laws restricting what duly-elected officials can do (viz, starting up wireless public networks), EVEN AFTER they have refused invitations to provide the service. (There's a story in the program about a small town that no company would serve, despite being asked, and how the town council did it themselves... and then the telecoms went to the statehouse to try and make what the council did illegal. Interesting.)
A lot of the posts here assume that Apple intends or should to try and monopolize the digital music market, and analyze Apple's strategy on that basis.
That's not necessarily the strategy.
If you are Apple and want to be the digital music market leader, you'd need to think about a few things.
First, you're not going to be able to achieve and maintain monopoly-level penetration. It'll just be too damn competitive, and MS will do almost anything to stop you.
A previous posted that Apple is "pretty much in control of the game" and that it's all theirs to lose. Well, I'd posit that a sounder strategy would be based on assuming that they will lose some ground, and take the long view based on that. The competition, and subsequent market fracturing, are inevitable. The question for a boutique operator like Apple is, how do we survive and maximize our end position?
Second, 'market leader' != 'market dominance'. Apple can do pretty damn well with 25%-50% of the market.
Third, the real money for Apple is in the digital-portable-and-accessories market. I think one of their execs was even quoted as saying that the iTMS wasn't intended to make money directly, but rather to drive lifestyle-device purchases.
Fourth, in two years or so there'll be a half-dozen major music stores on-line, all competing in the Windows space. Only one will be in the Apple space.
Now, say you're Apple. You wanna make money and stay relevant, but you know you won't be the only player in the market. You're strong in integration and quality, and think you can maintain that lead, meaning you're providing a premium product and service.
What you want to do is make sure that enough Win users like your service and buy your device to stay on top (relatively) and a remain key player (Mac market is locked up). You've got first-mover and mindshare advantages. You want to keep, say, 30-50% of the total market to yourself, driving device sales. You're not wasting your time trying to be all things to everyone and competing with everyone in the world. You don't need 80%. You're just trying to capture a big enough share to remain in the game.
In this light, the way they are approaching things makes a lot of sense. It would be great for the iPod and iTunes to support WMA, and for other players to support FairPlay, but now is not the time, strategically, for that. You want to sell devices, remember? So first, you want to see if you can do that by providing a full, integrated premium service. If you can just remain the market leader, then you're going to do well. Support for other formats, and other devices' support for yours, will come, over time. In the meantime, your business model works, whereas it's not yet clear whether others' models will. Remember, they're missing that juicy margin on hardware.
And now you're starting to get into the longer-term future -- strategic positioning in anticipation of the inevitable online-music market shakeout in two or three years.
Despite the inevitable comments about betamax and vhs, open vs. closed, no one really knows how it will all shake out. And history is only suggestive, not predictive.
It's not about absolutely crushing the competition. It's about creating a viable long-term business.
The real interesting bit in this soap opera, the one uncontrovertible, earth-shaking thing, is that Apple is now openly competing on the Windows platform. I don't know what the long-term plan is, but I'm expecting some more surprises over the next few years.
Slashdot Mirror
This topic was covered on PBS' NOW program last weekend.
http://www.pbs.org/now/transcript/transcriptNOW108 _full.html
Short version: Corporations are trying to pass laws restricting what duly-elected officials can do (viz, starting up wireless public networks), EVEN AFTER they have refused invitations to provide the service. (There's a story in the program about a small town that no company would serve, despite being asked, and how the town council did it themselves... and then the telecoms went to the statehouse to try and make what the council did illegal. Interesting.)
A lot of the posts here assume that Apple intends or should to try and monopolize the digital music market, and analyze Apple's strategy on that basis.
That's not necessarily the strategy.
If you are Apple and want to be the digital music market leader, you'd need to think about a few things.
First, you're not going to be able to achieve and maintain monopoly-level penetration. It'll just be too damn competitive, and MS will do almost anything to stop you.
A previous posted that Apple is "pretty much in control of the game" and that it's all theirs to lose. Well, I'd posit that a sounder strategy would be based on assuming that they will lose some ground, and take the long view based on that. The competition, and subsequent market fracturing, are inevitable. The question for a boutique operator like Apple is, how do we survive and maximize our end position?
Second, 'market leader' != 'market dominance'. Apple can do pretty damn well with 25%-50% of the market.
Third, the real money for Apple is in the digital-portable-and-accessories market. I think one of their execs was even quoted as saying that the iTMS wasn't intended to make money directly, but rather to drive lifestyle-device purchases.
Fourth, in two years or so there'll be a half-dozen major music stores on-line, all competing in the Windows space. Only one will be in the Apple space.
Now, say you're Apple. You wanna make money and stay relevant, but you know you won't be the only player in the market. You're strong in integration and quality, and think you can maintain that lead, meaning you're providing a premium product and service.
What you want to do is make sure that enough Win users like your service and buy your device to stay on top (relatively) and a remain key player (Mac market is locked up). You've got first-mover and mindshare advantages. You want to keep, say, 30-50% of the total market to yourself, driving device sales. You're not wasting your time trying to be all things to everyone and competing with everyone in the world. You don't need 80%. You're just trying to capture a big enough share to remain in the game.
In this light, the way they are approaching things makes a lot of sense. It would be great for the iPod and iTunes to support WMA, and for other players to support FairPlay, but now is not the time, strategically, for that. You want to sell devices, remember? So first, you want to see if you can do that by providing a full, integrated premium service. If you can just remain the market leader, then you're going to do well. Support for other formats, and other devices' support for yours, will come, over time. In the meantime, your business model works, whereas it's not yet clear whether others' models will. Remember, they're missing that juicy margin on hardware.
And now you're starting to get into the longer-term future -- strategic positioning in anticipation of the inevitable online-music market shakeout in two or three years.
Despite the inevitable comments about betamax and vhs, open vs. closed, no one really knows how it will all shake out. And history is only suggestive, not predictive.
It's not about absolutely crushing the competition. It's about creating a viable long-term business.
The real interesting bit in this soap opera, the one uncontrovertible, earth-shaking thing, is that Apple is now openly competing on the Windows platform. I don't know what the long-term plan is, but I'm expecting some more surprises over the next few years.