BusinessWeek Looks At Apple's Future In MP3 Music Players

BusinessWeek has published a very interesting bit of commentary on Appleis future in the MP3 player market. In the piece titled, "Everybody Wants A Piece Of The iPod," Peter Burrows rounds up the competition that is gunning for a slice of Appleis market-leading iPod sales. In his look, he talks about Appleis decision to not license Microsoftis Windows Media 9 technology for the iPod, competitive issues on the hardware side that threaten Appleis sales and margins, and other related issues. From the article:

Still, the company will have to contend with a host of new rivals. By Christmas, a variety of iPod wannabes will hit the market, from Samsung Groupis YP109GS to Dell (DELL ) Digital Jukebox, due on Oct. 28. A range of new gizmos also will join the party, from smaller, cheaper models like Rio Audiois 2-ounce Nitrus to devices that play movies on liquid-crystal displays. Meanwhile, say industry insiders, Apple has lost a key advantage: the exclusive use of the tiny Toshiba Corp. disk drive that made it possible for the iPod to store so much in such a tiny package -- even as other disk-drive makers put out their own diminutive products. "Any time you can get a full-year head start, itis awesome," says Kevin Magenis, CEO of Cornice Inc., which makes a tiny drive that will appear in a dozen or so players. "But thereis going to be a lot more competition."

The risk is that Apple could end up where it has so often before -- with only a high-end niche of a market it pioneered. To keep that from happening again, itis betting Windows users will be drawn to Appleis trademark elegance and ease of use. Moreover, the emerging MP3 player business will remain highly fragmented, much like the early days of the PC market, when Apple prospered with an 11% share. In the short term, at least, the launch of the Windows Music Store is expected to galvanize iPod sales.

Thereis a lot more in the full article, and we recommend it as a good read.