|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | |
JULY 27, 2004
By Peter Burrows For Apple, Harmony Is Off-Key RealNetworks' attempt to make its music downloads work on iPods does Jobs & Co. and consumers a disservice -- and should be thwarted For proof of Apple Computer's (AAPL ) makeover, consider this: After being ridiculed for playing the patsy to Microsoft (MSFT ) in the PC wars of the '80s and '90s, rivals in digital music now accuse it of hogging the winnings in that arena at the industry's expense. Why? Apple's red-hot iPod music player enjoys roughly a 50% market share. And since the iPod works only with Apple's iTunes Music Store, device owners have made Apple king of the legal download market as well, with more than a 70% share. So far, even giants such as Sony (SNE ), Wal-Mart Stores (WMT ), and Microsoft have failed to counter this one-two punch. Yet a smaller rival, RealNetworks (RNWK ), thinks it has found a way to break Apple's lock. As of July 27, consumers can go to Real's Web site and download software, dubbed Harmony, that lets them play songs purchased at Real's download store on any portable player they choose -- including the iPod. What's more, Real is in talks to license Harmony to other online stores that might also want to sell to iPod users -- without Apple's approval. "Apple clearly has a great device with the iPod, and that's great for them," says Richard Wolpert, Real's chief strategic officer. "But we just want consumers to be able to choose whatever device they want to choose. We think that will make the entire market grow." LEGAL BATTLE? You might think Apple would welcome a product that encourages consumers to legally download music onto their player. But it's said to be more than a little unhappy, and with good reason. Apple CEO Steven P. Jobs should clearly and firmly squelch Real's attempt to infiltrate Apple's music empire. GartnerG2 analyst Mike McGuire sums it up: "At some point, Apple may decide to license [its iPod technology] to others. But they should do it for good business reasons, not because a rival issues a press release or some beta software." Apple isn't commenting on Real's move yet. But it's almost certainly exploring the possibility of a copyright lawsuit. And that's not the only option. Experts say it could require iPod owners to download a firmware upgrade the next time they try to buy a song from iTunes that would render Harmony useless -- much as a security patch resolves a computer virus. If Jobs's lawyers tell him it's legally justified, the CEO might even consider an even more radical way of making his point: loudly inform iPod owners that Apple will no longer honor their warranty if they buy songs from Real or other rival online music stores. BIG-TIME PARTNERS. Such a move might temporarily cast Jobs as the Darth Vader of interoperability to industry watchers. But in the long run, it's in Apple's best interest. Jobs & Co. don't need anyone's help to achieve their iPod sales growth or profit goals. Despite an already dominant position, iPod continues to outgrow the market. In the second quarter, Apple sold more than 800,000 iPods and just sold its 100 millionth song. The momentum should continue in the months ahead, due in part to savvy marketing deals. Later this summer, computer giant Hewlett-Packard (HPQ ) will begin selling an HP-branded iPod and start loading iTunes software on millions of its home PCs. And on July 26, Motorola (MOT ) announced that by early 2005, some of its phones will be capable of storing and playing a handful of songs downloaded from iTunes. Such deals have far more potential to drive iPod sales than what Real is proposing so far. At this point, Harmony will apply only to Real customers who purchase songs from Real's seven-month-old RealPlayer Music Store. It's similar to Apple's iTunes Music Store in that it sells 500,000-plus songs for 99 cents apiece -- but unlike iTunes, it has a piddling single-digit market share. In the future, Real plans to adapt its Rhapsody all-you-can-eat subscription service -- in which music fans pay a monthly fee to rent all the tunes they want -- for the iPod and other portable devices. Until then, Apple's investors have little to gain from letting Real's music customers play their songs on iPods.
BW MALL
SPONSORED LINKS
Buy a link now! | | |
 Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version
