iPod Nation? Not the Best Idea

by Chris Seibold Sep 02, 2005

The iPod doesn’t seem like much, it is positively miniscule in any of its three form factors and the technology housed inside the music player isn’t exactly cutting edge. Likewise the iTunes music store isn’t exactly a marvel of technology or a shining example of clever coding. Taken separately both are solid entries in their respective fields but when coupled they become a synergistic duo capable of market dominance. There is no better testament to the juggernaut that is the iTunes iPod combination than the recent demise of Rio.

Rio, you surely recall, was one of the early participants in the .mp3 player market so their exit seems a bit puzzling. Their early entry should have assured a following under most circumstances. By all reports Rio players were a major player in the nascent market for digitally encoded audio players until the release, and subsequent domination of that slice of retail, by the iPod. Some will argue that Rio simply made players that were substantially inferior to the iPod and thus deserved their fate in a free market economy. On the surface this seems true enough but the players weren’t far enough behind the technical or style curve to relegate them to the junk of heap of innovation. The players did lack one crucial feature: access to the iTunes music store. Of course, the iTunes music store is Apple’s incentive to get people to purchase the iPod so the exclusionary tactics are understandable and warranted.

What seems a little less clear is the unabashed glee Apple fans seem to feel because of the exit of a rival player from the market. Surely everyone enjoys seeing a company they feel a certain kinship with succeed but gloating in a rival’s demise seems a bit hypocritical for lovers of all things Apple. For years Apple loyalists have been decrying the stunning level of dominance exhibited by both Microsoft Windows and Microsoft Office. These are two market leaders (and calling Windows a “Market Leader” does not belie their true dominance) that have been derided again and again for stifling competition and forcing end users to endure whatever dreck Microsoft felt like heaping upon their customers.

So the question that surely must be asked is: Why is Apple market dominance a welcome change for Mac fans while Microsoft market dominance remains, judging by commentary at sites frequented by Mac and Linux enthusiasts, the most evil thing ever foisted on the computer using public. At this point some will certainly point out that the difference is that while Apple holds the lion’s share of the digital audio player market it is a luxury item as opposed to Windows and Office which are quite rightly often seen as staples of computing life. Which is a salient observation but, it must be noted, misses the deeper question. The question that must be asked is an Apple dominated market segment anymore desirable than a Microsoft dominated segment?

Here is where the warm feelings people hold in their hearts for Apple will shine through. They will surely argue that Apple treats their customers with much more respect than the Microsoft monolith. Retellings of the unfair business practices of the past will surface in an attempt to explain away Microsoft’s competition crushing market share. Shipping systems with I.E. pre installed as the default browser will be used to explain Explorers dominance. Using a proprietary format for Word and Excel to make editing and reading files difficult with other applications will be noted as a source of Office’s popularity. These practices, and a plethora of other examples, will be raised to explain why it is okay, in fact, good that Apple rather than Microsoft dominates the digital audio market.

Of course framing the argument in that light is an obvious example of a false dichotomy. The argument assumes that there must be a dominant player in the mp3 player/online music market. This is not the case. While operating systems and, to a lesser extent, Office suites are text book examples of instances where one would expect to see a natural monopoly form one would not necessarily expect the online music/digital player markets to behave in the same manner.  In short there is plenty of room for multiple vendors of both hardware and software hence a Microsoft or Apple monopoly is not a given.

Now that the notion has been dismissed that if not for Apple then Microsoft would dominate the online music arena we can turn our attentions back to the relevant topic: Apple’s dominance. While great for the company and nice for the share price for the consumer one company dominating so thoroughly is not a good thing even when the majority of Apple fans think it may be. It is simple to see Apple as a beneficent king passing out musical goodness at low prices to the iTunes enabled masses but it is a façade. The reality is that Apple is in business to make money. Apple’s goal is, corporate mantras aside, to make sure as much of the disposable income that leaves your wallet ends up in Apple’s coffers. There is nothing wrong with this. However when one company wields excessive power in any particular market place sooner or later the consumer will suffer. Current actions seem to contradict the previously espoused notion. To wit: Apple seems to be fighting tooth and nail to keep song prices at their current price point ($0.99). Some would see this as Apple championing the interests of consumers, protecting us from the slime covered, cash snorting leaches that comprise the music labels. There is some truth in that sentiment, but just as much as they are fighting for consumers Apple is attempting to assure the continued success of the iTunes music store. Apple, probably rightly, feels that a morass of pricing schemes will end up alienating end users and slow the growth of this still very young market. Or, put bluntly, Apple is naturally protecting their own self-interest.

There is every chance that at some point in the future, as Apple tightens their grip ever more snugly on the throat of the online music industry and as DRM becomes more capable of stopping P2P networks that Apple will abuse their position. But, for the sake of argument, let us assume that Apple takes the highest road possible and operates from a position of enviable ethical standards. There will still be damage to the consumer. Such dominance of any market discourages competition by its very nature. A company wishing to enter the market in either arena (hardware or software) will often be discouraged simply by the power of the market leader. Thus innovative digital players or more useful retail arrangements may never come to market simply because others see not legitimate method to compete with the master of the market.

Of course things have not reached that stage yet. There are still any number of companies willing to take a chance on a growing market. The reason is easily understood, what is worth billions today will be worth tens of billions in the future as the market grows. Everyone would like a piece of that and any company that can capture a majority of the growth leaving Apple with only current users would soon outgrow the Cupertino conglomerate.  But Apple has no cracks showing in the good ship iPod and as the market matures there is less incentive to jump in with both feet and a handful of cash. Apple is well positioned to dominate the long-term online music market which is great for Apple but the fact remains if Apple dominates a mature music market in the end customers will lose.


  • People aren’t so much pleased that Rio’s dead, but are pleased that a supporter of WMA has failed.  It’s not Rio people are gloating over, it’s Microsoft, it’s WMA.

    It’s a shame for Rio.  They don’t necessarily deserve this, they didn’t really have any choice but to get into bed with Microsoft.  If the record companies could get together and make an audio format that didn’t rely on Windows DRM, but an open DRM that was free to manufacturers to use and was as flexible as iTunes,  then they’d start to take market share away.

    Maybe people aren’t willing to move away from windows for their computing experience, but somehow they instinctively know that WMA, with that windows moniker, is the kiss of death for their music.  Music’s too important to risk having it all owed by Microsoft.

    Now I think Apple should start licensing fairplay to other people.  Not portables, but to people like Roku.  Wither that, or start making devices a little bit better than airport express.

    Hywel had this to say on Sep 02, 2005 Posts: 51
  • I agree. The reocrd labels could very easily set universal standards for the online downloads. Then the competition would take off and we could choose where to buy music. I have often wondered why the labels let the iTMS, Napster, BuyMusic or any of the others all use their own DRM. Why not just commission someone to create a DRM they all agree on and sell the license to anyone that wants to sell their music? Although I shudder at the thought of how restrictive the label’s own DRM would be.

    Gabe H had this to say on Sep 02, 2005 Posts: 40
  • Hywel, what’s bad about airport express? Apart from that Apple does not offer a decent remote with a screen? In the latest firmware Apple even fixed the interrupted datastream problem that made usage with old/slow to sync DACs painful. It is now practically flawless. If you take a mini (even a screenless one, you’d just need a screen for the initial setup) + FireWire HD + APX + your notebook + netTunes you get an extremely convenient music server solution that you can control from everywhere in your network. Whenever I tell someone about it their faces fall off because it’s so amazingly cool & the technical extra skills required is being able to open a port in your Firewall, if at all.

    And Rio did make some nice products (say the Karma, ugly as sin, but cool player, it does gapless playback!), it’s a shame about them. I second you regarding the WMA aspect. Whoever uses it must be in total ignorance. Same as WMV & DOC, MS formats are the plague. You can’t even use (nice) RTF anymore because MS screwed up their own format so badly over time.

    Bad Beaver had this to say on Sep 02, 2005 Posts: 371
  • Gabe H, because all the MI is ever able to agree on is that they want more money for less. You name it in your thought about the DRM to expect from them.

    Bad Beaver had this to say on Sep 02, 2005 Posts: 371
  • “what’s bad about airport express? Apart from that Apple does not offer a decent remote with a screen? “

    Well that’s it. No screen and no remote.  Basically no UI.  It’s like worse than an iPod shuffle UI, but for your whole library.  Take a look at ROKU, and it’s a much better box for music.

    The express is great for what it is.  It’s a Wi-Fi base-station/access point.  The line out is more of a bonus feature, and a good one too.  For me, I’m wired at the moment, so the only reason to go wi-fi is to get music somewhere else in the house.  To pay out that much money and have no UI would be madness.  I have no network really.  I have cable modem to my Mac and that’s it.  What I do to listen to music is plug my iPod in somewhere instead, but it only holds 10% of my library.

    Roku’s not compatible with Fairplay, but Apple don’t license fairplay to them and they don’t make a competing product.  It’s an example of how restricting DRM can be.  I am thinking of buying a Roku soundbridge, as I only have a handful of tracks from iTMS, mainly the free ones.  The problem I have is that if in the future, CDs get iTumes (rip) proof, then I might want to buy from iTMS instead.

    I think a lot of people would buy a Roku type device from Apple.  I’ve no idea why they don’t make one yet.  If they’ve no intention of making one, then why hold out on the licenses to non-competitors ?  Makes no sense.

    One way to get a UI would be to buy an iBook.  It’s and expensive remote control though, don’t you think ?

    Keyspan Remote is a possibility, but that’s also expensive, and has no display.

    Hywel had this to say on Sep 02, 2005 Posts: 51
  • Why is Apple market dominance a welcome change for Mac fans while Microsoft market dominance remains evil? While this may seem hypocritical at first, the fact is that the primary reason that Microsoft is loathed (not just by Apple fans) is because they see the Windows OS as an inferior product, and it is repugnant that such an inferior product would dominate the market so completely. In other words, whether they realize it or not, they think market dominance is OK if it is the superior product is doing it. Because the iPod is perceived by many as being the best there is, it *should* dominate.

    “what is worth billions today will be worth tens of billions in the future as the market grows…any company that can capture a majority of the growth leaving Apple with only current users would soon outgrow the Cupertino conglomerate.” I think this misses the point. New market entrants need not have over 50% of market share (or even exceed Apple’s market share, whatever that is at the time) in order to consider themselves successful. As the author points out, the market is unlikely to stagnate for a very long time, and any new company who achieves even a 5% market share should consider themselves to be wildly successful.

    FreeiPodGuy.com had this to say on Sep 02, 2005 Posts: 1
  • Well, it’s nice to think that Apple is fighting for the consumer by trying to keep the download price at $.99, but I think the real reason is to prevent alternative commercial sites from becoming profitable, and thus competitive with the ITMS. 

    It’s the iPod that’s generated the profits for Apple, not the ITMS.  If I recall properly, only recently has the Apple ITMS even been breaking even, and that’s due to the sheer volume of sales.  By tying the ITMS to the iPod, they’ve encouraged their purchase.  By preventing other hardware vendors from tying to the ITMS, they’ve discouraged their purchase. 

    If the price of downloads goes up to $X.XX per song, there will come a threshold where those alternative online music stores will be able to at least break even.  At present prices, they can’t.

    I believe that’s the REAL reason Apple is trying to keep the single song purchase price down.

    Dave Marsh had this to say on Sep 02, 2005 Posts: 44
  • Personally I don’t think market dominance by Apple is really more desireable than by Microsoft. Well, of course, given the choice of monopolist I’d go for Apple smile, but monopolies are generally a bad thing.

    Hywel had this to say on Sep 02, 2005 Posts: 51
  • It’s not Rio people are gloating over, it’s Microsoft, it’s WMA.

    Not so sure about that.  Here’s what MDN had to say:

    ” It’s the natural order of things. Survival of the fittest and all that. First the weak go, then the not-so-weak. Apple’s iPod is turning out to be quite the real killer: “iPod Killer,” get it? That’s “Mr. iPod Killer” to you, bub. And we have a feeling that iPod’s about to go “serial” sooner than later.”

    Freeipodguy, this is the kind of hypocrisy that those of us outside the reality distortion field are referring to.  I’m guessing that their “natural order of things” philosophy doesn’t apply to operating systems, eh?

    If the iPod competition are “also rans” for having less than 10% of the marketshare in the wake of iPod’s dominance, then what does that make the Mac OS?

    And here’s more of the lovely comments:

    “Rio means River in spanish. That’s exactly were they went, down river floating like a dead corpse. Who’s next!!!”

    “With any luck, Creative will be next.”

    “First Snow White, now iRiver.
    Tip: Do not bite the Apple”

    ” I would personally like to wish D&M holdings all the worst and I hope you lost plenty over this. Long live the King!”

    “Looks like someone had them a nice big breakfast of CROW this morning.  Eat it, you slimy bastids.”

    “Cry me a Rio”

    “Killer iPod strikes again.

    I can just see it…all those bozo Windows apologists writing about iPod killers will soon be writing Killer iPod strikes the Dull DJ”

    To be fair, there were a few lamenting the loss of competition and a couple of them did mention Microsoft (it wouldn’t be an Apple site if they didn’t).  But the reaction for the most part is certainly unsympathetic, if not downright celebratory.

    Beeblebrox had this to say on Sep 02, 2005 Posts: 2220
  • Hywel ... I agree that having no remote control of Airport Express diminishes it’s usefullness ... I use Salling Clicker software and a Palm T2 PDA (you can also use other PDA’s or even cellphones) ... works like a charm.

    dmcleod had this to say on Sep 02, 2005 Posts: 10
  • Rio was sacked because of the MPAA and their lawsuit… likewise was the fate for MP3.com.  Had it not been for this gazillions of dollars the entertainment industry spent lobbying Washington, filing harrassment lawsuits and putting legitimate companies out of business (Rio, MP3.com, RePlayTV, etc.).

    Apple would not have gained its relative advantage today.  The Rio player rocked and was better, in concept, than the proprietary iPod AAC format that is being shoved down our throats.  Apple finally launched a flash-based player with the shuffle, which is a total dud… shoddy navigation, no voice recording and poor storage capaity.  It does look cool, but where is the functionality???

    As for Apple’s absence in the home media player market… totally bizaar!  Airport Express is useless.  You would think that more than 3 years after the launch of slim devices’ product and many more years since Tivo & RePlayTV launched the PVRs, Apple would have perfected a multimedia GUI. 

    Perhaps that is, in part, what the Intel partnership is about???  Jobs didn’t want to relinquish control over OSX - even to individuals that wanted to purchase the software to run on their x86 systems.  In the 90’s/early 2000’s, Apple may have benefitted from not associating with the x86 platform by insinuating that there was some inherent defect in the hardware platform… Mac enthusiasts did.  But those arguments have been thoroughly debunked.  Linux programmers had been using x86 platform since about 1991 and achieved significantly better performance that MSFT.  Finally Apple is coming to the table to build Mac-Intel systems for users.  Too bad they didn’t go with AMD.  Perhaps the decision was based on Intel’s multimedia Viiv processor strategy. 

    Apple’s Intel Inside decision has formed a relationship with the semiconductor OEM that aggressively mimics or acquires the technology coming out of innovative technology firms that are creating dynamic hi-performance multimedia CPUs.  If Apple aligns its branding and product development in a cycle that is quick enough to not entirely miss the boats that left 2-7 years ago, it will be able to make a huge impact in the consumer electronics industry and convert many non-mac users into Mac enthusiasts…

    Wireless optical 2-button mouse with scroll… got to love it!

    schweizelbot had this to say on Sep 02, 2005 Posts: 1
  • schweizelbot
    AAC is not proprietary to Apple ... I am guessing you meant the Fairplay DRM.

    Home media market ... I think the sales numbers of the Media Centre PC’s are substantially below expectations ... while there is more (legal) content becoming available for download ... bridging the gap between computer and TV has proved difficult so far ... and I don’t think many are interested in purchasing another expensive box to accomplish this.  If Apple even enters this space, I see it happenning in the form of an Airport Express A/V ... single purpose and relatively inexpensive (especially compared to a Media PC).

    dmcleod had this to say on Sep 03, 2005 Posts: 10
  • schweizelbot,
    - the functionality of the shuffle is right in front of you. You just press play. Fire & forget. Pretty much like a walkmen just without the tape. The capacity is just about right for a screenless device. I own a “real” iPod, but once the 512MB shuffle drops a little in price I will get one to put on my keychain. Because my keys go about everywhere, my iPod does not.

    - AirPort Express, while as we have all noticed still lacking an out of the box screen-remote solution, can entirely liberate your experience of music. And while it requires a certain preinstalled base of hardware, the unit is very affordable compared to the ROKU for example. I see little advantage in the ROKU though. OK, it has a display, so what? It’s not that you could manipulate iTunes from it, for example give a song a 5-Star rating making sure it’s transferred to your iPod via a smart playlist…

    Bad Beaver had this to say on Sep 03, 2005 Posts: 371
  • The functionality of the Shuffle is right where it needs to be.  Apple products, especially the iPod line, have thrived under the Keep It Simple Stupid mantra and I hope they stay that way.  What it does it simply does best, without bells and whistles.  It might help a little that it looks good doing it too. 

    As for Media Center PC’s - from what I’ve read elsewhere - the first couple years worth of releases were supposed to be completely overshadowed by a massive public acceptance of the 2005 version.  That obviously didn’t happen and therefore a marketing about-face is commencing.  You’ll see the entire functionality built-in with Windows Vista instead and certain hardware able to take advantage of it.  I would love to see Apple get into this market but suspect that they won’t until at least someone gets the ball rolling, MS has really yet to do so.  It’s a nice product, but no one’s buying.  I’m a gadget freak myself and early this summer I pulled the plug on my Media Center 2005 box in favor of a Tivo and a MacMini.  There was nothing more frustrating for me than explaining to the wife why Norton needed to stop the movie and download a virus update, even when the functionality had been turned off.

    dickrichards2000 had this to say on Sep 06, 2005 Posts: 112
  • “I pulled the plug on my Media Center 2005 box in favor of a Tivo and a MacMini.  There was nothing more frustrating for me than explaining to the wife why Norton needed to stop the movie and download a virus update, even when the functionality had been turned off.”

    Tell me that does not really happen, please.

    Bad Beaver had this to say on Sep 06, 2005 Posts: 371
  • Page 1 of 1 pages
You need log in, or register, in order to comment