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Apple's tight grip on digital music won't last much longer?

Written by James Delahunty (Google+) @ 21 Aug 2005 17:33 User comments (20)

Apple's tight grip on digital music won't last much longer? Apple currently has a tight grip on the MP3 player market in the world and on sales of music downloads. The company has sold over 20 million iPods and 500 million track downloads to date. However, increasing competition might loosen Apple's grip. Analysts now give Apple's hold another 12-18 months before it slips. Apple's success in the digital music world so far has been incredible as the company seems to be able to turn to gold anything it touches.
Apple immediately dominated the category of flash-based MP3 players with the introduction of the iPod Shuffle. The company has also brought podcasting from the underground into the mainstream by adding support for podcasts to iTunes. The company currently has 80% of the MP3 player market and 75% of online music download sales but competition is started to grow at an alarming rate so how long can Apple keep this?

"It's inevitable that over time their market share declines," Piper Jaffray senior research analyst Gene Munster says. "It's safe to say that nobody can sustain an 80 percent market share in a consumer electronics business for more than two or three years. It's pretty much impossible." While Apple struggles to hold onto the dominance, the company is most likely saddened to see falling support from record labels. Many believe however that Apple is bringing the lack of support on itself due to the company’s policies.

Firstly, Apple is not open at all to suggestions of more flexible pricing and promotion of music. Many labels have indicated that the digital music market would benefit if tracks had individual prices based on their popularity and other factors. Also the labels are upset with the fact that music from non-Apple music stores doesn't work with iPods. Even WMA tracks provided with copy protected CDs don’t work with iPods and many believe Apple's tight grip on it's FairPlay DRM technology is unfair to consumers who purchase CDs and want to store the music on their iPods.

However, one can understand that Apple would much prefer consumers purchase music from iTunes than get it from a copy protection music CD. "It's a monologue with them," one anonymous label executive said. "They pretty much say, 'This is what we want to do,' and if you disagree with them you're an idiot. It's like dealing with a cult." So how will another company help these angry label executives by forcing Apple's dominance down from the top?

Firstly a company would have to make a product that has the same effect on customers as the iPod did. Apple's iPod has both a classy look and simplicity. Creative Labs is the leading competitor to date. It's products are critically acclaimed, mainly the Zen Vision which has support for digital video files. Creative currently has about 9% of the market. However, a much bigger company with a strong global brand identity is required to dethrone Apple.

Two major contenders are Samsung and Sony. Samsung already stated that it wants 10% of the market this year, and aims to be the global leader by 2007. It sounds like an impossible task, but Samsung has a reputation of going head to head with market leaders, and winning. Sony may seem like more of a possibility as it also has it's Sony Connect music store. Sony also only had 1 MP3 device on the market last year, but now has more than 10 and is the biggest seller of MP3 players in Japan.

Source:
Reuters

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20 user comments

121.8.2005 21:16

Apple always finds a way to shoot its self in the foot. Could they be doing it again by pissing off the record companies?

221.8.2005 21:31

Thank god, i am tired of them running this monopoly with an iron fist. I belive microsoft should buy 'creative' MS can help put creative on the map and help them advertise, its apparent that creative doesnt have enough money to advertise because if they could they would have more then 9 percent of the market creative is so much better then apple. The zen line totally outshoots the ipod mini line for a more affordable price. I belive then vision will really get them some income.

321.8.2005 21:50
dasrock
Inactive

how about Apple amd Microsoft getting together. humm Xbox360 with a portable Ipod (xbox version: green/ black), yeah the ipod can slide into the HD slot of the 360. US vs japan....again..

421.8.2005 21:51

anything ipod is way overpriced and useless after a year or so. they were just first to the market and have the most advertising with those stupid dancing people

521.8.2005 21:52

ooh, i forgot to say, the girl that was actually in the ipod commercial the one with people dancing said that she cant even afford an ipod :) lol. just a fun fact.

622.8.2005 6:25
whocares1
Inactive

punx777....If you don't like Apples monolopy on the mp3 industry, why would you want M$ to buy Creative? Your contradicting yourself. Dosen't M$ has enough monolopies on their hands?

722.8.2005 6:28
whocares1
Inactive

monopoly* Why wont it let you edit your comments?

822.8.2005 7:06
gareth22
Inactive

there are plenty of good alternatives to the apple ipod and all the big players that people just arent read up on. I would recommend a MP3 player store in Canada that ship out mp3 players to the world. They are also quite good with customisation of cars with TFT monitors. I bought the 20GB model from www.mp3playerstore.com and it arrived in Ireland at Dublin Airport in 4 days with DHL delivery

922.8.2005 7:21
jerryk
Inactive

Dear punx777, me think thou dost protest too much. Advertising isn't going to help Creative or anyone else. Apple has the whole enchilada because they did it right in the first place. So far a zillion predictions about their fall have only proven that everyones crystal ball is broke. Only a better thing will replace the iPod and that obviously hasn't come along yet. While we're at it, why should Apple allow others to use what they've invented? It puts nothing in their pocket, dilutes their control and would be giving away their advantage. They're number one because they did what was necessary to be there...so quit whining.

1022.8.2005 7:59

"many believe Apple's tight grip on it's FairPlay DRM technology is unfair to consumers who purchase CDs and want to store the music on their iPods. " Patently untrue - and you'd have to be an idiot to believe this and/or reprint it without comment here. FairPlay has NOTHING to do with importing CDs to an iPod. It is only used by the iTunes store, ie, downloads - nothing more. iTunes, the music player that resides on your computer, does NOT implement FairPlay in any form when you import music from a CD. Music from CDs plays just fine on all iPods. Additionally, part of the reason the iTunes Music store works is its simplicity, and that includes simplified pricing. The labels wanting a bigger share of the pie? Well, that greed is what got them into problems with file-sharing in the first place. The idiocy of all this amazes me.

1122.8.2005 8:59

I remember a time when "pissing off the record companies" was what this was all about. When did we become concerned with their needs again?! With all the alternatives out there, I'm not sure I understand why people have a hard time with Apple creating its own solution. Is it any different than the solutions of Zen/MS, Samsung/MS, or vendorname/MS? DRM is DRM...pick your poison on that. You buy a player, you purchase digital DRM music or rip your CDs to digital to put on it, you listen...what's any different for any of these (other than the "I'm an idiot who subcribes to music" services)?

1222.8.2005 9:07

Now, microsoft isnt running a monopoly at all, the monopoly im talking about is itunes music ONLY playing on an ipod. Thats a monopoly Anyway, the reason creative is in the shadows is because NOBODY KNOWS ABOUT THEM, thats why they should advertise, thats why ms should buy them, to uncover the potential of creative

1322.8.2005 10:34

jerryk "...why should Apple allow others to use what they've invented? It puts nothing in their pocket, dilutes their control and would be giving away their advantage." This was the same reasoning used by Apple when they decided to not license the manufacture and sales of Mac computer platforms to other vendors. From a market share standpoint that one did not appear to work out so well for Apple, so, let's try it again? IMHO interoperability would make iPods and iTunes files more valuable and usful to the public. My big fear is that .WMx DRM will become the defacto standard. MS already has WAY too many fingers in the pie.

1422.8.2005 10:44
macclick
Inactive

Wow I guess I dont know how to use my iPod. I buy Cds all the time and use itunes to rip them in of my choide AAC or MP3's with out issues and wow they play on my ipod. As far as DRM well pick a format Apple did and who wants to use WMA the sound quality is rubbish. Next lets face it why buy anything else my mom bought a listed mainstream MP3 player could not figure it out. She took it back went out and got a ipod and did not even have to read the instructions. This is just a guy who wishs he bought stock at apple at 9 bucks a share like I did. He probably was thinking 9 bucks Apple will go bust at that time. PS my comment on the Music industry pricing. How many over priced CDs have you bought only to find most of the CD is not worth listening to. That is overpricing Apple has brought music prices down and maybe the profits at the labels. I would suggest that the labels get a reality check and publish better music. Why should Apple allow them to control the pricing anymore so they can take advantage of the customers.

1522.8.2005 14:58
joebaxter
Inactive

i agree with c4iscool

1622.8.2005 15:05
BURN-MAN
Inactive

My brother just bought an ipod and needed help installing and such so being that I can build a pc from the ground up I helped him out. Stole....er, um, downloaded some music from the internet THAT HE ALREADY OWNS, and we were off and running. Since my bro makes WAY more moolah than me, I guess he can afford to keep up with the Jones. Although, I have NEVER been swayed by whatever is "IN" at the moment I can tell you it is a nifty little machine. Jump into my wayback machine and remember what happened to MANY not all MANY of those little white boxs of wonderment? Let me ask you this...Apple have people as smart, if not smarter that MS does. Scientists, engineers, etc. Your telling me that that thing with all of the millions that were spent on advertising, and all that were sold, no one ever saw that the freakin battery life would outlast the warranty by just a few months?!?!?! What then? What the hell do you do then?!?!? They knew it. They knew it all the hell along. They knew that they would make another crap load of you sheeple when the stupid thing's battery went kerplooey. Oh...but they made good on it? Yeah, cause they lost a court case. Look at all the web sites on how ipod sux. They suckered you all in and you all lined up for the slaughter like a bunch of idiots. Ooooooh I own an ipod.....now I'm coooool. Noy your not. There are more inexpensive solutions such as Creative, but nothing is stopping this train folks...no way. You did it, you bought it, you got ripped and Apple executives are laughing their fat asses off all the way to thier Yachts. There is ALWAYS a niche market-place for idiots who just GOTTA have their grass as green as Mr. Smith next door. No way man ipods with be around forever....remember the "pet rock"? Did'nt think so.

1722.8.2005 19:36

HA HA HA! The mighty apple empire is starting to crumble! Rejoice!

1822.8.2005 19:56

Apple Rules!! I have used Only Macs for 20+ years and will Never go near the inferior, user intuitivless, copy of a clearly superior OS and machine in general!!!

1923.8.2005 7:17

The same expensive crap just sold by others

204.5.2007 16:36

Im not one for loving Microsoft, but I certainly can't stand apple. The quicker they loose and hopefully go bust, the better.

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