Bashing iPod is Futile


Russell Beattie, one of my dear friends, has come to this conclusion that Microsoft and its DRM strategy are ultimately going to be winners and will leave Apple’s iPod and iTunes music store grappling at straws. Russell, when he writes about mobile phones and wireless technologies is seldom wrong, but I take umbrage to his conclusions. His reactions, and perhaps others who think along those lines – its 1984 all over again – are off a tad.

Russell thinks that by kowtowing to Microsoft, the companies like Yahoo are losing their place on the table, and helping Microsoft create another monopoly. I am not so sure – because I am not convinced that Microsoft’s scorched earth strategy is going to work – as long as we have the iTunes option.

Remember it hasn’t worked in Mobile Phones. Symbian continues to outsell Windows Mobile handsomely. Same in the digital music world – once you have seen or used an iPod, you know the better option. In the PC era, Apple’s strategic mistake was pricing, not the product. Well, this time around Apple got the pricing right.

By the virtue of my job as a senior writer for Business 2.0 I am exposed to many a few new technologies and gizmos. I often get to try them out. For instance, last week I had a chance to play with some of the upcoming Archos digital music devices, and this weekend had a chance to play with Toshiba’s GigaBeat player. I have seen many a few players come to the market, and well lets just say, I would not buy them. I am not a technology dimwit, (or at least I like to think that) and still I had trouble navigating and using these devices. They are despite appearances boring and lack the ‘take my dollars appeal’ of iPod. If you are a device maker – you basically don’t have the uniqueness that would make you stand out. (Creative Zen comes close, and is worth your time, but others….)

Lets turn to the whole experience of using Microsoft’s DRM and Windows Media Player. Whether you are using one device or the other, it doesn’t make much difference. The uniformity of the subscription music services is yet another reason why many devices and services are simply too ‘me too’ in nature. Some are arguing that even record companies should get into online music distribution business themselves. On the Windows platform, it takes some effort to get the whole music thing going. In other words, the complexity of these devices mimics challenges posed by Microsoft Windows. There is going to quite a bit of consumer confusion when it comes to digital music service – subscriptions from Napster, Real or Yahoo? Hundreds of devices to choose from? On the other hand: iPod, which you know works – – yes even on a Windows machine it simply works.

And perhaps it is time to step outside the hothouse of Silicon Valley, and look at consumer behavior at large. (Never mind the fact that as consumers, we have historically wanted to buy our music, and not rent it!) When dismissing iPod’s chances in the future, it is easy for the technorati to overlook the iconic status of iPod, which believe it or not is available in many shapes, sizes and prices. It is has the same status appeal, the very same cachet as say a Burberry plaid, Zegna sports coat, and Armani cologne. It has the same ‘sensory’ appeal of a Mini, or a BMW, at prices which can be deemed affordable. Now if you have been watching the retail trends, you can see the world has been focusing on ‘affordable luxury.’ Gucci clutches and Coach handbags – as long as they stay below the $500 price tag, are flying off the shelves. iPod is no different. But lets look beyond the world at large.

One last thing – to think that guys at Apple, including Mr. Paranoid are not going to do something about these competitors is short term thinking. Didn’t someone just mention that PlayStation3 and Apple iTunes might be getting cozy?


Om Malik


thanks for your comments. you just made my argument a little bit easier to understand



Speaking from a “rest of the world” point of view. I live in Malaysia and here the handphone market is a bit different. Most people I know don’t buy handphones from carriers. The only phone I bought from my carrier was my first phone. Most people simply buy a phone and then swap the SIM card over.
So in the “rest of the world”, the markets work normally.
Here, Symbian smartphones are more popular because of 2 main reasons:
1. Windows phones are percieved to be slow. Certainly the start-up time is longer and the menus are less responsive.
2. Symbian phones acts more like a phone than a PDA. Most people I know who own a smartphone don’t even know that their phones are smartphones. They just buy Nokia or Erricsson etc. The phones are just marketed as phones. Windows devices on the other hand are specifically marketed as smartphones.

Les Posen

From my blog commentary on Om’s entry:

“I’ve never equated luxury items with “best of breed”. It’s usually well-made articles with a hefty premium for brand and packaging, much the way Steve Jobs described Apple in the days he wasn’t running the show, while off at NeXT and the beginnings of Pixar.

No, the iPod is not an affordable luxury. It’s an affordable “best in the world at what it does” product.

How many of those do you have any your home or on your person?

Your car, perhaps? Your fridge? TV? Home? Aircraft? Ah, perhaps your bicycle or motorcycle? Notice how many middle-aged men and women are riding expensive cutting-edge bikes in smart racing gear? Why? Because they can afford to… It’s relatively inexpensive to buy the best – and bikes are the epitome of simplicity of design that works.

The iPod’s best of breed status isn’t just about a halo effect or cachet or the “in” thing propped up by a huge marketing budget. I want to suggest that those things came after, when the iPod had established its King of the Hill status, and continued to improve and innovate, rather than standing on its well-earned status.”

The whole entry can be read here:


Apple is already working with some of the telcos by way of Quicktime. Sprint, Verizon, DoCoMo all using Apple’s quicktime to deliver content. Interesting read here:
With itunes you get Quicktime. Quicktime is an architecture. This is not 1984. Anyone that says that does not know what they are talking about & it would be nice to see them all admit they were wrong when the time comes. iTunes & the iPod are crossplatform. The Mac wasn’t. MS’s biggest advantage was having IBM back them. They burned that bridge. They have burned a lot of bridges. I can’t think of any sane reason why any record company would want to be beholden to MS. I can see telcos delivering content but I can’t see them managing content or doing anything innovative with it. Apple clearly has a strategy…MS’s strategy is (as usual) me to. G5’s in the Xbox 360? I thought the pentium was a better chip?

Om Malik


here is the list of companies with windows based phones – siemens, samsung, lg, motorola, audiovox and lenevo. if you check out the list of phones on microsoft website. given the razor thin margins, carriers are amazingly conservative in terms of picking phones. the buggy phones never make a return to the bigs as they say.

Dustin Wyatt

Dangit, I also meant to add this:

I’m not so sold on carriers making wise decisions on picking devices based on cost of support. There’s plenty of models out there that are notoriously difficult to use and full of bugs.

Dustin Wyatt

I’m not taking so much as a US-centric as a me-centric view. I have no knowledge of cellular overseas.

As far as good Symbian devices vs bad Windows devices, is that due to Symbian being better than Windows or due to the fact that Nokia, seemingly the main Symbian device manufacturer, has devoted so much to making such devices?

I know of no major manufacturers whose whole smartphone lineup is Windows Mobile-based.

I do know that the Audiovox SMT 5600 Windows Mobile device (which I just got in the mail a couple hours ago) gets nothing but glowing reviews. Thus, I see that it is possible to have excellent Windows devices. Very few are doing it as of yet.


“given the option of paying $5/mo to Yahoo for unlimited access”

It’s UNLIMITED access as long as you keep paying FOREVER.

So when you stop paying you’re left with NOTHING. Nada. Zip. Zilch.

“Unless Apple gets into the subscription game, I don’t see how they can compete.”

Compete with what?

Nobody but Apple is making any substantial money off digital music. Nobody. So why would Apple try to lose money intentionally?

At $60/year Yahoo won’t be making any money. The labels already want more money. How’s that a sustainable business, to paraphrase Bill G?

Om Malik


you are right about a lot of things in your comment. however, if you did the comparisons, there are more total number of windows mobile models available. the reason carriers don’t carry them is because they don’t work perfectly and carriers end you spending a lot of dollars on support, which is something they don’t have to deal with symbian.

just as an aside, i think you are taking a too US centric view of the wireless world.

Om Malik


i agree with you. I think Yahoo is doing it as a defensive move, because they have to do something. having said that, they will be under pressure from google and MSN on all fronts. they will also have to figure out a way to deal with their ISP partners – Verizon and SBC. This is not going to be easy.

having said that, in the end I agree that the pricing model of $60 a year cannot continue. You already see record labels complaining about the 99cents a song model, and want to charge more. lets wait and see how it shakes out


The only threat to Apple and tangentially iPod domination of online music distribution is Steve Jobs health and continued interest in running the show at Apple.

Yahoo music has the possibility of killing the WMA market as much as enhancing it. No one can do more than break even at the prices Yahoo is rolling out their service. So here is the scenario. Yahoo kills off Napster and Real (very likely.) Either by undercutting them on price or they try to match prices and eat up their cash reserves in record time. Now there is no competition for Yahoo in the subscription space. What happens? Yahoo raises their prices and kill off their own growth.

Maybe they will be smart enough to keep offering their $60/yr price but honestly, who is making money off such a low price? Artists will be unhappy if their revenue from digital purchases falls after finally seeing an upside to online sales. The RIAA gets their cut but will immediately start pressuring Yahoo to raise their prices. Yahoo has at best a break even service at the current subscription price. That leaves no profit to grow the service by adding new regions or countries. Yahoo is big but they are not any more capable than Apple at sustaining loses on a big gamble. Apple has no debt and about $7 billion in cash to play with. Yahoo has $750 Million in Debt and only about $3.3 billion in cash. Long term, Apple wins a battle of who can sustain loses the longest.

Almost certainly Yahoo kills off other subscription service competitors long before Apple starts feeling any effect from their new service. I’m not sure a contraction of the WMA market is really what Bill Gates has in mind but it looks inevitable right now.

Dustin Wyatt

Yeah Om…sorry for the vaguness. My main point is that sales data is used to point to the superiority of Symbian all of the time. I have two related points of contention with that claim:

1.) The tech industry is full of products that are supposedly “better” (depending on who you ask) that have lower sales. Sales != “betterness”

2.) The lack of sales success of Windows Mobile can arguably be attributable to the lack of devices powered by Windows Mobile. In the Smartphone space in the US there are really only two offerings with any exposure. The Motorola MPx220 and the Audiovox SMT 5600. While the Audiovox has only had intermittent availability, it is considered by many to be the best Windows Mobile device available. The Motorola is often panned in reviews. Also, the largest cellular provider in the states (Cingular) has had only ONE Windows Smartphone available until this month when they finally released the Audiovox. That phone was the same phone with nearly universal negative reviews. Cingular has had a multitude of Symbian devices available.

Chris Cambron

Many people base their arguments on today’s reality – as though Apple’s universe will be stagnate from here on out.

Apple can, at their whim, “flip a switch”, if you will, and support both MS’ DRM as well as a subscription model. I am sure Apple has several contingency plans in place. Not to mention that Apple clearly has larger plans involving Video, AirTunes, Wi-Fi, etc. etc.

Apple has zero reason to allow other mobile players to use Fairplay at this point. Zero. Apple owns the market and is still making market share gains – it’s probably not time to make a change just yet.

Apple came out with the best products – iTunes and iPod – and kicked ass. When Apple feels they have milked the cash cow long enough, and/or the products look like they might be leveling off, they will form strategic partnerships with some of the losers like Yahoo Music and let them carry the water while Apple moves on to the next insanely great thing.

Get used to Apple dominance. The times, they are a changin.


Don’t know who that Russell Beetle guy is but clearly he’s just old and doesn’t realize 1984 or 1988 or 1995 is not 2005. MS cannot buy their way into a monopoly position on the internet. THey tried 10 years ago, trying to dismiss the internet – get onboard to MSN – the “better internet” and when that failed, they simply leveraged their monopoly position by forcing OEM’s to bundle IE or else and the went to corporations and bundled IE with a cheaper server upgrade – how does Netscape compete with that? Can’t. Back then, who was going to load a new browser via dialup? Now? With the bulk of the internet (at least the important users) on broadband, MS is just another choice and frankly, when given a REAL choice, consumers rarely choose MS – MSN, Cell Phone OS, PocketPC, WEbTV, Home Networking Gear, Tablet PC, Watch OS, et al… TEN years of failures (XBox – they’ve spent $4 billion to sell 15 million units – success or paying for success?) … MS is the new GM – still huge but run by bureacrats – MS is done.

Om Malik

Dustin, you lost me on this one. can you be more clear on what you were saying so I can respond? thanks

Dustin Wyatt

Slightly tangentially, I wonder about the use of sales data to backup claims of Symbian superiority and claims about Windows Mobile’s future success.

Om Malik

Well, it is clear that mobile phone will be the preferred choice in seriously “mobile” societies. In the US, its all about affordable luxury. I can promise you that once iPod phone comes out, a lot of people around the world will take the iPod phenom more seriously


Om, the real “affordable luxury” in the emerging markets is the mobile phone. Forget about the Apple and iPod mania. I know what I’m talking about. I live in Bulgaria, Eastern Europe.


You say that historically consumers have wanted to buy their music instead of renting it. But when in the past have consumers had the option of renting music compared to today?

And how has Apple got the pricing right? They may have the pricing of their hardware correct, but when given the option of paying $5/mo to Yahoo for unlimited access versus paying $1/track – I’ll take Yahoo.

In time, I’m sure that Creative will eventually get their interface fixed, or that the next phone you buy will support Microsoft’s DRM. There are far more hardware makers which will drive down the cost of players supporting Microsoft and give the consumer more options.

To me it’s not Apple’s DRM versus Microsoft’s, or a Zen Micro versus an iPod. It’s the subscription model which will dictate who wins, and for now that means using products and services that use Microsoft. Unless Apple gets into the subscription game, I don’t see how they can compete.

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