In the third week of October I was bombarded with press releases from Apple Computer. There were improved financials and hot sales numbers for the super-powered new G5 Mac, the iPod music players and the iTunes Music Store. Then there was a new release of OS X (code-named “”Panther””), and the “”Hell
Froze Over”” first Apple app for Windows — iTunes.
This is all old news by the time you read this, but that collection of announcements got me re-thinking my opinion of Apple’s longer-term strategy.
Apple’s iTunes/iPod strategy is an odd one — the flip side of the old “”razor/razor blade”” marketing strategy. In this case Apple is giving away the razor blades (songs and software) to get people to buy the razors (iPods). Is this innovative marketing or a suicide attempt?
“”Give away”” is a slight exaggeration, of course, but Mac or Windows users of iTunes software can either download their tunes illegally, rip music off of their CDs, or pay US$0.99 per song to legally download music from Apple’s Music Store.
And, even if the music sales continue to do well, the best estimates I’ve found are that Apple takes home only 35 cents of that dollar per song, and the record companies (greedy so and so’s that they are) grab the other 65 cents.
Whatever happens, music sales won’t likely have much impact on Apple’s bottom line. But accelerated sales of iPods will. What’s more, the iPod, already the best selling MP3 player on the market, is more than a typical MP3 player. It has enough developer “”hooks”” built into it that it could evolve into an all-purpose PDA.
Already, in addition to music, you can store your contact database on your iPod, use it as a dictation or recording device with a capacity of more than 600 hours, or use it to transport 20,000 three-megapixel digital photos. For that matter you can store anything you want on it that you could otherwise store on a PC’s hard drive.
That doesn’t mean you can do much with some of these materials without additional hardware, but the case for treating an iPod as a legitimate business expense has never been stronger.
Factor in the audible books service from Audible.com, and you can tell your boss that you’re listening to a hot new XML manual instead of the Sex Pistols.
It’s far too early to tell, but this “”Hell Froze Over”” gambit of feeding Apple apps into the Windows world may just pay off big time. More than a million Windows users downloaded iTunes software within three days of the announcement, despite the fact there are many respectable and free Windows music software packages already out there.
Can this possibly be the first of a series of Trojan Horses that Apple will send to infiltrate the Windows world from within?
Charles Whaley, PhD, is a Toronto-based IT consultant and market analyst with Information Technology Enterprises.
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