I never expected that my observations about Apple would generate so much heat and debate. I think it is a simple point I started from and was trying to make ("giving your customer more choices and alternatives for using their device is a smarter strategy than doing otherwise") yet I don't expect "the unconvertibles" aka the Mac users that were kind enough to share their views to agree with me. I do thank you for your comments though.
So my point is not that I have a problem with Apple choosing to play this way but rather having a huge opportunity that IMO it misses. Why is that - the opportunity costs are simply too high - or the cost of not opening up. Of course it will have expensive implications (aftersale support is one of them) but the benefits of position consolidation in terms of market adoption and complementor development are way too high to be neglected. And that means the business success would be rather judged not by the number of iPod sales but on the platform adoption and usage in more than one context. Of course it is not an applicable strategy in the case of a player that targets just a niche - say 2-5% of the market. ("iPod is a luxury item at a premium price")
It is also true that now you can call iPod a standard since it is first mover in a very young marketplace and it is reaping all the subsequent advantages. But this may prove to be just a short term illusion as long as it doesn't have a serious competitor (which NOW it is the case) but what will it happen after lots of companies with a me-too strategy show up at the party? In this position Apple is dominating the market but if doesn't create an infrastructure for exploiting the network externalities it would simply not be a sustainable position.
Bottom line: while I do believe that Apple is a great company mainly for the products it's shipping I have my doubts when it comes to how they reacted on Real's case. It may be just a temporary thing or a well-defined corporate strategy, time will tell. And of course those are my observations with no pun inteneded - it's just me trying to be more of an objective "analyst" and less of a subjective user. Or, perhaps I just belong to the I don't have a head for business club. :)
Have you seen Convergence Kills? He seems to see it as Apple millking the iPod building towards their next big thing which isnt the ipod at all
Apple is not a record company (Apple Computer, that is), and they don't own a music catalog. It is a safe bet that the abilities of the iPod, iTunes, and the iTMS had to be negotiated and approved by the record companies. I wonder how many and what kind of changes can be made without triggering a contract renegotiation (aka price increase). Apple is trying to maintain the $0.99 per song price at its store....
Apple, as Steve Jobs keeps saying is the only company that sells "the whole widget" in its fields. Misunderstanding what that means has lead to more heated, impractical Apple commentary than just about anything else. Not everybody wants the whole widget. Some people want half a widget, others, just a quarter. Apple is not very interested in their business. They will sell you their whole widget and not really stop you from splitting it up and reconfiguring it but that's just an unusual, bizarre side market for them. What is the whole widget? It is all elements of the solution to your problem set put together in a seamless, simple way by a team that is highly opinionated and of good taste regarding effective, efficient workflow, good aesthetic instinct, and an insatiable, anal retentive demand for things to be done... just... so... If you want all that, you go to Apple, buy the whole widget and go off to techno-bliss. What Real's sin was, was not that they were competing with Apple. If that were the case, Apple would have been upset when Real's player started being able to play content bought on iTMS. No, what made Apple upset was that Real was attempting to insert itself into the widget. Once your widget isn't the whole widget, you've fundamentally changed Apple's market. You've created a situation where the 2-10% of the population that wants the whole widget can no longer get it from Apple. There is now *something else* mixed up in there. Threaten the widget and the wrath of Steve will fall down upon you like a load of bricks, soon to be followed by many loads thereafter by Apple fans who understand, and want, the whole widget. It's not a market for everybody. It certainly can be confusing when you come from the perspective of a majority of companies in the technology field who do not believe in the whole widget and do not offer it as a central business offering. Respect the widget, respect the methods that Apple allows you to add onto their widgets without compromising them, and you can make pretty good money working for Apple even with music/iPods (at least HP and Motorola think so).
heh, I find it hard to believe though that being in the driver seat you only target "2-10% of the population" and try to create a "market that is not for everybody". Even though the reaction in Real's case combined with Apple's historic strategic decisions seem to support it, I doubt that it's the case. It's not black and white as most would put it, there's lot of grey in between and fact is that Apple's opportunity costs in this moment seem quite high.
Not everybody is going to buy a BMW. BMW never markets in order to try to push more volume than GM. There are a whole slew of products that limit their markets in one way or another. Apple has tried, in the past, to drive down the difference in prices and appeal to the mass market. If you look at the record of the Performa line, you can see how well that turned out. Apple has a rich history and has tried to do, at one point or another, a lot of what its critics think it should. That Apple does not wish to repeat past disasters should not count against it. Apple is, step by step, opening up its major IP properties to create diverse 3rd party communities. It does this in a measured way in order to fund the next round of acquisition (like Final Cut Pro) and innovation (iPod, Airport Express, xRAID). They're leveraging their strengths to go into new markets and are dominating some verticals (Hollywood special effects) and making good inroads in others (bioinformatics) that you wouldn't have guessed five years ago.