Mac Musings

Microsoft Monopoly Jealous of iPod/iTunes Music Store Monopoly

Dan Knight - 2005.09.02 - Tip Jar

It's a funny world we live in. Microsoft, which controls over 90% of the operating system market, is upset that Apple controls 70% of the digital music market. Is the pot calling the kettle black?

Microsoft wants Apple to "open up" the iPod so it can play WMA files, digitally protected files that require Microsoft's software. Microsoft says it wants to give iPod owners more choices, but what it means is that Microsoft is jealous because its platform doesn't have a big enough market share.

It's not just Microsoft that's upset with Apple. Everyone who makes a competitive MP3 player is hurting as the iPod dominates sales and Rio goes belly up.

And now the record companies are complaining. They want more money per track, but Steve Jobs won't budge from 99¢ per tune. In fact, the iTunes Music Store in Japan opened with two big record labels missing because they wouldn't agree to uniform pricing.

Has Apple, the perennial underdog, become the bully of the digital music schoolyard?

That's what many want you to believe, but it's not as clear cut as that.

When VHS beat Beta, it was because the market chose the product with higher recording capacity and more vendors. When Windows beat the Mac OS, it was because the market chose the product that worked with existing DOS software and on existing DOS computers.

With the iPod, the market picked the best music player based on capacity, flexibility, cost, and ease of use. From all the reviews I've read, nobody has yet come close to mimicking the iPod's ease of use.

1 - 2 - 3

The iPod's success is built on a tripod strategy. First came iTunes, a Mac-only program that let you rip, manage, mix, and burn your music collection. Then came the iPod, followed by a Windows version of iTunes, followed by iPods with USB.

The third leg is the iTunes Music Store. Just as iTunes wasn't the first music manager and the iPod wasn't the first MP3 player, iTMS was not the first online digital music store. It was just the first successful one.

Microsoft has countered with its own digital restrictions management (DRM) software built into Windows Media Player. It's supported on a new generation of MP3 players and by all of the high profile online digital music resellers except for Apple. (There are a few services, such a eMusic, selling unprotected content, but they tend to have much smaller music libraries.)

All of those MP3 makers are scrambling for their own piece of the 30% of the market that the iPod doesn't own, and all those other music services are trying to survive by competing for customers in the smaller segment of the digital music market.

Microsoft isn't used to losing, and it has won most of its markets by leveraging dominance in another market. Microsoft used its BASIC to get DOS on the IBM PC, and it used Windows to make Word and Excel de facto standards. Its Internet Explorer is so ubiquitous that the US Patent Office seriously considered not supporting industry standards or other browsers on its website.

Apple has learned a few things from Microsoft - and from its own history in human interface development. Many people find iTunes the right solution for ripping and managing their music libraries - even Windows users. And many people find the iPod the right digital music player.

And, when they want to buy a track online, they find iTMS their only choice.

Microsoft calls that a monopoly (they should know all about monopolies, since the US government has determined that Microsoft is one), conveniently ignoring the fact that nobody is required to choose an iPod or iTunes, nobody is required to buy tracks online, nobody is required to have an iPod to buy from iTMS, and everybody can buy CDs to rip themselves.

Apple has cleverly leveraged its dominance in one market to create the success in another market. And instead of competing on its own merits, which it has thus far failed to do, Microsoft wants to piggy-back on Apple's success.

Sorry, Microsoft, but that window of opportunity has closed and the gates are locked. You'll just have to live with being second fiddle in this market.

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Dan Knight has been using Macs since 1986, sold Macs for several years, supported them for many more years, and has been publishing Low End Mac since April 1997. If you find Dan's articles helpful, please consider making a donation to his tip jar.

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