The iPod’s Not a Music Player August 8, 2006Posted by David Card in Media.
If Plays for Sure is dead, then it’s bad news for Microsoft — and perhaps for a lot of the industry — but not because compatibility is the only way to make a music player.
As colleague Michael Gartenberg says, playing the PC/consumer electronics compatibility hand is Microsoft’s best game. Going head to head with Apple, for what isn’t really a music player, but a consumer-fashion fetish object, does not play to Redmond’s strengths.
But the PC analogy is too limited. There are several examples where closed-loop entertainment systems support multiple, incompatible ecosystems: e.g., videogames, satellite radio, satellite TV, and cable TV. At the same time, there are successful entertainment industry businesses driven by compatible devices: broadcast and DVD television, the TV set business, retail music, radio, etc. In fact, you’d think compatibility was the more logical model for music, since music catalogs are all the same and we’re not talking about geographic monopolies, or about programming services. But, in fact, Apple’s competing on the user experience — and on coolness — not on catalog or on broad music functionality.
Michael, if what you’re saying is: the music player business isn’t big enough to support four or five incompatible ecosystems right now, I agree. I just don’t think Apple’s in the music player business.
The iPod may well be a market unto itself. I still think the best way to “compete” with it would be to commoditize standalone MP3 players and play the CE economics game (low price) rather than the computer economics game (fixed price point, better features every release). That, or commoditize MP3 capability by putting it in phones. Apple probably doesn’t have the stomach for commodity consumer electronics. Nor does it need to, because that’s not what it’s building.
As Michael has reminded me, today music players are not about closed loops. They’re about accomodating existing MP3 collections (which Apple did best, if not first). Who cares about paid digital downloads? They make up less than 15% of what’s on a user’s iPod. If the business were really about what I believe is a totally new way of discovering and using music, that is, supporting subscription services like Rhapsody, Napster, Yahoo, and AOL — then perhaps multiple closed loops make sense. But that business is still emerging — it’s certainly not driving device sales — and I suspect it would be better supported by compatible devices. So far, none of ’em work very well.
Maybe the Xbox guys will build a kick-@ss closed loop ecosystem driven by a dedicated music player. But is that what they’re doing? Or are they just tilting at Apple’s windmill? A windmill that Apple could turn into a hydroelectric plant if it chose to, the way things are going right now.
Microsoft — not the Xbox gang — is in the software platform business. That is, core software technologies and services that support an ecosystem of apps, content, hardware, etc. Apple’s not in the software platform business. (Seen much QuickTime lately?) It’s in the world’s-coolest-hardware business.
Microsoft is not run by dummies. I want to hear what they’re really doing with Zune, and why. Notice how Xbox isn’t profitable? And how it hasn’t sewn up the living room entertainment platform?
The only way I see a sustainable dedicated music player business is if it totally re-invents music usage again, post iPod, which already did so. The jukebox in the sky could be a gamechanger, though not in 2007 or 2008. Or if it totally commoditizes the technology and acts as a Walkman replacement. Walkman replacements shouldn’t cost $200.