The Back Page - Apple Death Knell #50: Microsoft & Google to Squeeze Out iTunes

by - April 3rd, 2006

Apple's dominance in the music and (U.S.) video download market is near absolute, but Microsoft, Google, and cell phones are going to come and trounce the iPod and iTunes, relegating them to a niche due to their "beautifully functional closed system." This pronouncement comes to us from Australian commentator Alan Kohler in The Age, and is being added to the Apple Death Knell Counter as Death Knell #50.

In an interesting twist to most ADKC entries, Mr. Kohler spends most of his column praising the iPod -- "the beautiful iPod" to use his words -- and the great user experience of iTunes. Indeed, he owns an iPod, trashed his stereo, and plays all his music through his iPod and a pair of powered speakers he got from Apple.

The end result of all of this great design and user experience is that Apple has become a "powerful retailer" in the music business, and is poised to be the same in the video market.

So what blemish could mar this scenario? Apple's decision to keep the iTunes and iPod a closed system -- closed in terms of digital downloads; Mr. Kohler ignored the fact that CDs can be ripped and non-DRM files can be transferred to and played on an iPod -- is going to doom Apple's efforts in the market it created, just like it did the Mac.

In other words, Mr. Kohler is making the argument that many have made before, that Microsoft's business model of licensing Windows Media to any and all comers will overcome Apple's ease of use and integration, something that has heretofore been a non-issue when it comes to consumers and their wallets the world over.

The key to this, according to Mr. Kohler, is going to be a video and music store from Google, one that would presumably be built on Windows Media, and cell phones. A new generation of cell phones are going to be the preferred digital media device of the future, according to his argument.

"The shock troops for Microsoft's victory over Apple in personal computers in the 1980s were Intel, Compaq, IBM, Dell, Toshiba and so on -- that is the chip manufacturer and the cheap PC makers that licensed the Windows operating system. With digital music and video it will be Nokia, Samsung, Motorola and Sony Ericsson -- the mobile phone manufacturers," he wrote.

He went further: "This year they will start releasing phones with the same storage as iPods -- up to 30 gigabytes. iPods themselves will have to become phones."

Presumably, that won't be enough to save the iPod, however, because, "Microsoft's software will power the new generation of phone/music players, and the business of selling digital songs and TV shows will open up. Google will probably run the most popular online store, but there will be thousands."


Thousands of music and video stores online?

OK, whatever.

He closed with, "The iPod/iTunes system will move into a niche with Macintosh computers because Steve Jobs has again stuck with closed architecture and total control. This will happen quickly because mobile phones are being turned over about every year."

Unfortunately, I am not really cutting anything out of his arguments. As I mentioned, most of the column was spent praising the iPod and iTunes alike. No time was spent explaining how phones are going to ever be as remotely good at playing music or videos as the iPod, or how Microsoft and whomever are going to overcome the ease of use associated with Apple's solutions that stems from their integration.

There are so many reasons why iPod and iTunes do not face the same set of conditions that Apple faced with the Mac in the 80s and 90s, and this is something that most people who automatically assume that Microsoft's licensing strategy will automatically prevail in the long run don't seem to understand.

It is my opinion that Apple has a lock on this burgeoning market until another new paradigm comes to shift the balance of power.

Thanks to Observer Dru Richman for the heads up on Mr. Kohler's article.