Space Ramblings

Apple Wins Before it Wins?

Poor Chicago Tribune. They don’t quite seem to have the concept of tech journalism down yet. Or the journalism part even. Consider the following story.

Companies try to threaten iTunes, but Apple still wins

As competitors challenge Apple Inc. in digital music, the biggest beneficiary could be Apple.

Last week, Wal-Mart Stores Inc. and RealNetworks Inc. strengthened their digital music offerings to better compete with Apple’s iTunes store. Wal-Mart began selling songs without anti-piracy locks for 94 cents apiece and RealNetworks’ Rhapsody subscription service announced new partners that would promote it on MTV and distribute it on Verizon cell phones.

But the competition might actually help Apple.

That’s because the firm makes a slim profit selling songs but cleans up on iPod music players.

A robust market for digital songs should translate to more demand for the music players on which to play them, and Apple’s iPod is the runaway leader.

“ITunes was developed to promote iPod hardware sales,” said Susan Kevorkian, an analyst at research firm IDC.

“The introduction of services that offer digital music to the installed base of iPod users will help drive more iPod sales,” she said.

The range of problems with this story begins with the fact that Apple hasn’t won yet. Writing Apple might benefit or Apple could win would be one thing. Writing Apple wins is dishonest and out of bounds.

And then there’s the premise of the story which is pure Steve Jobs Reality Distortion Field. If Apple doesn’t need iTunes to make money and if iTunes is in fact a money drain on Apple and any songs sold boost iPod sales, then why not jettison iTunes altogether? After all the market is mature enough to manage 99 cent music sales without iTunes in the equation. MP3 music sales are now here to stay even if iTunes were to vanish tomorrow.

But of course Apple isn’t jettisoning iTunes and if iTunes were to lose its monopoly, the iPod’s monopoly might be sliding too, something Steve Jobs is well aware of. Without iTunes the iPod is just another music player, currently popular but who knows what tomorrow brings. It’s the integration of iTunes and iPod that has made the iPod so dominant into a single system. Break the MP3 half of that system and you’re just left with a bunch of white plastic gadgets.

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