It seems that there is now a concerted effort by both RealNetworks and Microsoft to enter the integrated digital music device and download service market.
According to Monday's Wall Street Journal article, both companies are eyeing Apple's 75% share of a market which accounted for $1.5B in revenues for the company in just the last quarter. The firm has, according to the WSJ, sold 60 million iPods since the product line's introduction.
That must be nearly, on average, one per household in the US. Not that all sales are in the US, but as a benchmark, it's a huge installed base penetration for the device and its companion download service.
There's a really good quote in the article by Mike McGuire, an analyst with the Gartner Group,
"You've got to come to the party with something pretty special."
RealNetworks' Rhapsody service is more or less a musical rental business model. One pays a monthly subscription to keep downloaded material activated. Rhapsody will now work with SanDisk's Sansa player, the leading rival company to Apple in this market.
Microsoft is now approaching the product/market in the same manner as it did the XBox360, and with the same senior executives responsible for this new digital music/media business group. Rather than rely on outside developers, they are now mirroring Apple's total system provision of a player, the Zune, and its own net-based downloading service.
Apple has had this market largely to itself for at least five years. It's prices are very low now. Even more than a year ago, they had penetrated the lower end of the market with a $100, 512KB Shuffle. I can't see anyone undercutting them on price.
So it's difficult to see just what is left in the marketplace for Microsoft and RealNetworks to serve with significantly superior or different, value-adding functions and features.
In Microsoft's case, I'd even go so far as to suggest that this may mark their second major step toward dis-integrating the monolith that has been the Redmond software titan. As I opined to my consulting friend, S, some months ago, I think that way lies any hope of rescue and financial success for Microsoft.
From what I've read, there is no mention of the Xbox or Zune being integrated into or with other Microsoft products, notably Windows. But I don't know if wireless transfers of music is enough to dethrone Apple after a five-year headstart.
It will likely come down to a preference for the online interface experience. Or perhaps upgrading and replacing an older player with the same brand, in order to keep one's music library intact. Funny how well-designed products just naturally promote legal and profitable tying.
In the final analysis, based on what I've read so far, Apple doesn't have much to worry about in the near term. They've made their platform into a multi-media one, from simply music, in order to facilitate future growth. And adeptly sidestep competition from pure music players.
If this is the best RealNetworks and Microsoft can do, they may be in for a bad time in the digital media device and download product/market.
Subscribe to:
Post Comments (Atom)
2 comments:
I am not sure either what MS can really do. But here are some possibilities:
1. Don't distribute music in encrypted format(s). Apple's proprietary format means you paid for it, but you don't really own it, without converting it to a non-excrypted format by means of another piece of software. MS could use Apple's inability to ever get this part of things right effectively with a smart marketing campaign.
2. COnsider charging less than $0.99 per song. As with Xbox, MS presumably is content to trade early profits for market share.
3. Consider a subscription model wherein the player is thrown in for free. Sign up for MS music for a 1 or 2 year contract at $X per month and get the player for nothing. Players will soon be commoditized (Apple's format silliness notwithstanding) anyway.
4. Have EVERYTHING available. iTunes has dropped the music of many older artists, unless "popular demand" brings them back. A more complete music store would be a very good first step for MS.
5. Stay the course and be prepared for a long haul. Apple always blows it eventually. Difital music will be no exception.
Thanks for your comment. Those are some original and good ideas. Especially giving the player away, and striving to offer a greater variety of music. I wasn't aware that Apple is pruning artists already.
As to whether Apple 'always blows it eventually,' I'm not sure about that. The long haul here could mean that Apple already takes the high ground in video, as I wrote in the post.
And MS ends up simply gaining profitless share in audio players.
Should be interesting to watch, tho, eh?
Post a Comment