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France vs. Apple- the tech music battle engages

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Thursday, Mar 23, 2006

Following up on yesterday’s post, there is obviously a lot more to say about the French parliament’s ruling against Apple.  There’s an excellent story at Wired about the implications of the law: How France is saving civilization.  The argument is basically that this will stop Apple from becoming a monopoly in the portable music realm as Microsoft has been with computers.  I think it is a hit against Apple’s dominance but even if they’re forced to open up their download services to be used by other manufacturers (i.e. Creative), will that really stop them from dominating the MP3 player market?  Alone, this move won’t make that change but…
  
... its possible that if the convergence of several other factors come into play, AppleՕs market dominance could indeed be in trouble. The other manufacturers are slowing starting to smarten up about strategies to compete with Apple not just in terms of features offered (bells nԕ whistles) but also exclusive deals with providers and entertainment companies as well as new sleek designs. This is important, maybe more so than functionality because one reason the i-Pod still kicks its competitors butts is because the thing has this cool aura around it. Especially when something like that is so prevalent, a backlash is inevitable and a new hot product will come around to replace it. At that point, youՕll be hearing i-Pod??? Thatҕs soooo 2004ɓ


What this means for consumers is that they really will have more choices. Apple hasnt been slack in trying to update and improve their product but theyՕll have to work harder when the turf becomes more competitive. Also, this will effect prices as i-Pods stop becoming the must-have holiday gift- Apple will have no choice but to bring down the cost to stay in business. That in itself will become a problem because the i-Pod sales are what keeps I-Tunes afloat. The contracts they have with labels are so tilted that Jobs and company get a sliver of the profits from them, no matter how many song sales theyve racked up- thatՕs why competitors are having such a hard time fighting Apple as they cant offset their loses with MP3 player sales as well.


Apple will also have a fight on its hands from elsewhere. The phone companies are pushing online music services themselves, mostly without any connection to Apple. Cost, convenience and such are stopping it from catching on in the U.S. as it has overseas but itՕs still in the early stages and once the telecomm companies figure out better and cheaper ways to do this (including more memory storage on phones), theyll be competitors as much (and more) than other Mp3 player manufacturers.


Also, as the Wired article points out, AppleՕs own dreams of home entertainment dominance (with I-Tunes as their wedge in the door) is far from a sure thing. Net and cable providers have already been thinking about this and are trying to find the convergence sweet-spot where a home user can watch programs, download music and do Net surfing seamlessly together. Since they already have a strong hold on the programs and Net, these companies already have a great head start. In fact, some of the networks themselves are offering their own programming directly to consumers instead of dealing with Apple as middleman. As much as record labels have grumbled about Apples 99 cent song pricing holding them back, these other entertainment providers are more inclined to service the public directly if they can without AppleՕs restraints (and dipping into their profits).


So again, its not just the French ruling but a combo of all these factors that might spell doom for Apple. I wouldnՕt rule them out yet or sell your shares in them yet (though you might want to keep your brokers number on speed dial) but in the hyper-speed world of tech, nothing settles for long. Just ask Netscape. Or Friendster. Or Iomega (remember Zip Discs?). Or Microsoft now. Or maybe Apple laterՉ

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