Mind Poison

One of the pieces of conventional wisdom most easily pulled out of the average high-tech buff's mind is the danger of closed platforms. While Apple held tightly to the Macintosh platform, IBM opened the PC platform so that any company could make compatible computers. The rest is history. Maybe I'm going to severely embarrass myself here, but I'm going to argue against this conventional wisdom in the digital music player market.

Lately, there's been a bit of buzz about Apple's iPod, and how to best manage that product. The iPod is easily the number one digital music player in the market, and it's basically a closed platform. You want iPod, you go to Apple, you buy their thing (iPod), and you download songs in their format (AAC + FairPlay). If you want to use either of those components (the players or the song downloads), you have to use the other.

So now there's a lot of pressure on Apple to open up the platform they've created to avoid a repeat of what happened with Macintosh. Particularly, the CEO of Real, Rob Glaser, has begged Steve Jobs to open the iPod platform.

Apple would have to be a real idiot to do this now. It would be tantamount to surrendering without a war. To a weaker enemy. They've got the majority of the mp3 player market, and make a healthy margin on iPods. They've got even more of the digital download market (at least 70%). Though hey, Real would love it if Apple was stupid enough to give them a free in to the market.

The are two supposed threats. The first is obviously Microsoft. Microsoft's competing digital media platform is more open, in that other companies can license it and provide products based on it. The second threat is the major consumer electronics giant, Sony (those guys who invented the personal music player market, and until recently owned it). These are credible threats, of course, and not to be taken lightly. But so far, they haven't posed much of a problem in the market.

Sony just recently announced their offerings in this market, such as their VAIO Pocket iPod-clone, and their online music store, Sony Connect. Without seeing either of these in person, both seem pretty lame. I think this article on iPodLounge does a pretty good job analyzing Sony's offerings.

See, the thing is, in order to be competition, someone has to actually want to buy the competing product. The VAIO Pocket left me totally unexcited from the moment I first saw it. I can't speak for everyone, of course, but I am a consumer in this market. I'd rather have my iPod, easily.

This "having to be desirable" is the same thing that makes Microsoft not much in the way of competition at this point either. Simply having tons of products doesn't attract consumers; they have to want a specific one. Especially since it's not like they're afraid of the iPod disappearing, given its huge success so far. So far, I haven't seen any competition for the iPod that would make me consider going that route. The iPod is priced at a premium compared to other music players, but it seems to be worth it to people. It's not a Macintosh-like price hike compared to the rest of the industry, especially if you believe, as I do, that Apple has come up with a much more attractive combination of dimensions, interface, weight, storage space, price, and battery life than anyone else so far.

Another thing that's different is that Apple seems to have a better strategy for staving off competition this round. They've sought patents on their user interfaces, and patents are likely to hold up better in court than their previous attempts, in which they attempted to apply copyright law to their interfaces. This will make it harder for competition to copy the attractive features of the iPod very closely.

And, if it starts to heat up, and iPod starts losing market share, because Microsoft or Sony has finally come up with something attractive, they still have opening up the platform as an option. Nothing precludes that at a later stage. Especially since they are starting from a very strong position in the market, and they control all aspects of the complete, integrated solution that consumers want.

Real Networks threatening to join with the competition was pretty funny, though. I can see Steve Jobs laughing now. "Oh no, please don't go associate your crappy brand and large, loyal user base with our competition! We'd love some of your brand poison over here!"

Update:

Wow, lots of comments.

Xirt/Matt: How right you are. I remember hearing the history of all that, but I'd forgotten the details of it all. In any case, however it happened, its effect was the same.

I'm no fan of the DMCA, but one of the few encouraging signs I've seen about it is that the right to violate the DMCA for purposes of reverse engineering has been upheld. In Sony v. Connectix, the court found that Connectix was exercising fair use of Sony's code since otherwise, the DMCA would be indirectly outlawing reverse engineering by way of making any intermediate copies made while examining the data illegal.

A $50 iPod Killer: Given the cost of micro-drives, and the very limited number of suppliers, I imagine this device would not be competing in the same category. If Microsoft could actually make a comparable device that cheaply, that would be problematic. But what would have prevented Apple from doing whatever it is that makes it so cheap? I'm skeptical, but even if it's true, it would likely serve a different market segment (See HP/Dell posts).

Wezelboy: Yeah, that's what I'm saying. The closed platform isn't necessarily the mistake, despite what Rob Glazer and others say. It sure as heck hasn't stopped game consoles. Innovation is important, but so are network effects. If Apple's format gains traction, that makes their platform more attractive. Given how far Apple has come already, that has everyone else starting at a disadvantage. They're not invincible, but they have a good chance, and are in the best position they can possibly be in right now.

However, I hardly think iPod DJing is a major market segment. If they can make changes in software to accomodate it, it would probably be smart. But another player just for that? I doubt it would sell, even if every asshole who thinks he is a DJ bought two.