Apple's new challenges

by Jason Gross

4 September 2007

 

It’s so easy to pick on the ruler of the roost but some companies just deserve it.  After being an underdog for so many years, Steve Jobs has led Apple to the top of the media pile by dominating paid downloads and that neat little white rectangle device that plays digital files.  Now as they ready a big announcement for Wednesday (will they finally nab the Beatles into iTunes?), I start to wonder about the day that will inevitably come when Jobs’ media presentations won’t be big news.  It might happen sooner than we think.
  
A big part of the problem for Apple/Jobs isn’t just the competition though that’s heating up too.  Amazon’s launch of its own music service will be a big deal (unlike many other online music services) if only because of its well-established name and its huge share of online sales, at least of CD’s.  Also if they do offer flexible pricing and it catches on, more pressure is going to mount on Apple to do the same thing.  And if Amazon also wisely goes with the DRM-free route, they may make up in volume what they don’t have in stock as two of the four major labels haven’t wised up to this way of doing business yet.

Speaking of the majors, after Universal decided not to renew a long-term contract with Apple, they’re also holding back on offering movies on iTunes, instead opting for a joint venture called Hulu alongside Fox.  This kind of thing could spell big trouble for Apple as the way that they’ve been able to dominate the market is by getting the majors to go along with their plans.  If the majors get sick of Apple and its terms and then find their own way to make money… Well, Jobs is gonna be a hurtin’ pup.  Of course, if they flunk in their plans to go it alone, it strengthens Apple’s position.

More than just which acts may or may not be on iTunes, speculation is also rampant about how the iPod itself could become beefed up more to look like a mini-computer: iPod may become more than a music machine.  If that’s the case, it’s a canny move by Apple to reassert itself as a ‘puter leader and drag all the Pod people over to Apple machines and see them as more than cute little devices to play music.  It wouldn’t happen quickly but it could slowly push users into the Apple mindset and get them to load up on the company’s other products, which is after all, what they’ve wanted to do all along.

UPDATE: Need more proof that the majors are looking elsewhere than Apple to sell their goods?  NBC is working with Amazon now to sell its shows online.  With Amazon poised to be such a big player in the paid download market, how well will they wield this power compared to Apple?  Stay tuned…

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