It is not going to be a happy weekend at the Jobs’. Both of Steve’s babies – Apple and Pixar – are in bit of a pickle. Pixar is being informally investigated by the SEC which has asked for more information from the company after it missed its second quarter earnings estimates because of slower than expected sales of “The Incredibles” DVDs. (Dreamworks is also being looked at for over estimating the demand for Shrek 2 DVDs)
Steve and his troops are facing a long pitched battle with the music industry, according to The New York Times. Over past three years, Apple and its iTunes have saved their music industry from falling into the dark abyss that is peer-to-peer sharing. Now the same record industry wants to kill the golden goose, by raising prices of the songs.
Why? Because the record executives are thinking to themselves: That damn Steve, he is so smart that he makes money by selling iPods and by selling music. How can this geek be a better businessman than us, they say? I mean they have been screwing the talent for so long, and now this computer guy, pulled a fast one on them! The nerve! (I am channeling their inner thoughts here, in case you were wondering.)
> “As I recall, three years ago these guys were wandering around with their hands out looking for someone to save them,” said Mike McGuire, an analyst at Gartner G2. “It’d be rather silly to try to destabilize him because iTunes is one of the few bright spots in the industry right now. He’s got something that’s working.”
Well put Mike! The record industry just can’t help itself, and shoot itself in the foot. Thankfully, they record business is split into two camps – one that wants price of downloads to stay at 99 cents, and the boneheads.
> “I don’t think it’s time yet,” said Jimmy Iovine, the chairman of Interscope Records, Universal’s biggest division. “We need to convert a lot more people to the habit of buying music online. I don’t think a way to convert more people is to raise the price.
Many lament, that Apple could really help the market grow if it opened up and work with other device makers. Nevertheless, its going to be tough going for Steve and his team for some months!