• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Rivals Want Slice of Apple's iPod Pie

Posted on: Monday, 16 January 2006, 12:00 CST

By MICHAEL HIMOWITZ

On a long walk down the aisle of an airplane a few weeks ago, I could barely find a row without at least one passenger hooked up to some electronic gadget. And most by far were plugged into Apple iPods.

Even so, I didn't understand just how popular the little music players are until Apple announced its holiday quarter results -- an astounding $5.7 billion in sales overall, and about $1 billion more than estimated.

The company sold 14 million iPods during the fourth quarter and more than 42 million overall.

Think about that -- more than 10 percent of the people in the United States have bought a gadget that nobody had heard of two years ago.

The question is where that market is headed now and how sustainable it is for Apple and a dozen well-heeled wannabes.

One reason Apple has been successful is that its iTunes online store and iTunes software allow users to buy digital files online, manage them on a computer and download them to the iPod. Apple says it has sold about 850 million songs online, at about a buck a pop, and continues to sell about 3 million a day.

But a substantial chunk of that money goes to the music producers and artists. Apple makes its real money from hardware, with its market share in digital players is estimated at 75 percent.

That's why the booths at last week's Consumer Electronics Show in Las Vegas were jammed with digital music players of every shape and size. From independent manufacturers to PC makers who want to sell high-margin add-ons for their low-margin computers, everybody wants a piece of iPod's pie.

Until now, Apple has had a couple of advantages. The original iPod was far more elegant and usable than the competition, and its successors also have been superbly designed, staying well ahead of the pack. But other manufacturers are starting to catch up.

The iTunes store distributes album tracks in a format that is copy-protected but not overly restrictive, but Apple has refused to license that technology to other music vendors or manufacturers of music players. So iPod users are stuck with Apple's store for new music.

No one else in the online music business has the same kind of vertical integration between hardware, software and online purchasing. Until recently, Napster, Rhapsody and other vendors of online sources used competing and incompatible copy protection schemes.

Microsoft is bringing some semblance of order to this hodgepodge with a copy protection scheme called Plays For Sure that online music vendors and makers of players can adopt.

If an online music service has a Plays For Sure logo, its music will play on any portable device that displays the logo.

With Microsoft, Yahoo, Google and big Internet service providers all getting into the music and video download business -- and compatibility problems fading -- your choices as a consumer are likely to increase. Apple will no longer seem like the only game in town.

Given that neither Apple nor Microsoft is ever going to agree to "interplayability," there's only one way to make music truly compatible -- by converting downloads to MP3 files.

MP3s are not copy protected, and almost all digital players accept them. To converting an iPod or WMA file to an MP3 file, burn it to a regular music CD, then use the latest release of Windows Media Player or a third party program to "rip" the tracks back to MP3s on your hard drive.

The process takes a few minutes and there's a small but noticeable loss of sound quality in the process. But if you're playing tunes in any environment with even moderate ambient noise, you're not likely to notice.

Distributed by the Los Angeles Times-Washington Post News Service

Source: Tulsa World

More News in this Category