by Playfuls Staff |
17th July 2006
Apple Inc. is now facing probably the greatest challenge in the Steve Jobs-era, with the competition getting more and more powerful and the European authorities targeting iTunes. But that is just the beginning.[more]
Up until now, Apple’s story has been marked with a lot of successes which have propelled the Cupertino-based company among the most preferred and even adulated in the world. Since Jobs returned to his leading position inside the company, investors thrived and rejoiced with pleasure seeing their money growing day by day and Apple’s fame becoming almost a world-wide phenomenon.
What no one can deny is that Apple has always been focused on originality, both in design and in capabilities. Since the beginning Apple saw itself put rather in a niche position on the market than a dominant one, with rival Microsoft gaining ground due to Bill Gates’ genius. So they had to adapt somehow if they wanted to stay alive, since owning a Mac PC for example was a lot more expensive.
They lured clients with the design first. Apple’s products are now undoubtedly distinct among all other products, and this has turned into a great asset for Steve Jobs. He can now rely on a huge community of Mac users who would rather cut a hand than give up their good ol` Macintosh… Moreover, the uniqueness of Apple’s products has been awarded by the Queen of England: Her Highness greeted British-born Jonathan Ive, senior vice-president of design at Apple, with a noblesse title, for his fundamental contribution at developing the design of iMac, the G4 Cube, the iPod and the Mac Mini.
Born in London in 1967, Ive studied art and design at Newcastle Polytechnic before co-founding Tangerine, a design consultancy where he developed everything from power tools to televisions. In 1992, one of his clients – Apple – offered him a job at its headquarters in Cupertino, California. Working closely with Apple’s co-founder, Steve Jobs, Ive developed the iMac. As well as selling more than 2m units in its first year, the iMac transformed product design by introducing color and light to the drab world of computing where, until its arrival, new products were encased in opaque grey or beige plastic.
Due to this innovative approach to design, which Ive and his close-knit team of designers at Apple have later applied to newer products (like the iPod Shuffle or the ultra-slim Powerbook G5), the Cupertino-based giant has finally reached the long craved dominant position which it had been dreaming at since its foundation.
Thanks to the iPod and the iTunes Apple has now the power to dictate the price of downloaded songs and to reshape the future of the movie industry. iPod became so popular that it almost missed the entry in the dictionary as a common noun (just like in Google’s case, which is now a transitive verb). Even sports-equipment producer Nike could not ignore it: Apple and Nike have signed a collaboration contract for the common release of Nike+iPod Sport Kit, which allows Nike+ ready footwear to communicate with the Apple iPod
nano through a sensor in the Nike+ footwear and a receiver plugged into the nano. The Nike+iPod Sport Kit allows the runner to receive audible updates on speed, distance and calories burned upon request throughout the run.
Moreover, in a study named “hundred-university student survey”, conducted by Student Monitor at the beginning of June 2006, it has been revealed that students prefer having an iPod rather than buying a beer. It is more than good news to the parents since it is the first time in ten years when something else than drinking reaches the top of the preferences.
Still, since iPod and iTunes are inseparable to the present day, with iPod playing only content downloaded from iTunes, many users have begun to protest against iTunes’ conditions of exclusivity. This has kindled the fire in Europe for anti-trust laws, with France leading the way, and Scandinavian countries following.
The war that kept everyone in suspense for about a month (between June and July) has finally come to an end. And it seems it ended pretty badly for the Cupertino-based company.
French lawmakers have decided on Friday that companies which use DRM (digital rights management) technologies to protect music downloads will be required to provide information about their technology to competitors wishing to create interoperable systems. This could be a great step forward for all open-source programmers and users in the world.
The consequence for Apple is not that happy: it means that Apple should make its FairPlay DRM technology, which protects music downloaded from iTunes and up-loaded on iPods, available for most programmers, including those from competing rivals, like Creative or-perhaps in the future- Microsoft.
Up until now, Apple offered a license for FairPlay DRM only to Motorola Inc., following a partnership signed between the two companies, which allowed users to download tracks from iTunes directly onto their Rokr Motorola-made cell-phone. The single law-evasive possibility that music and film vendors had was to sell DRM-protected products for proprietary systems-like the iPods- only when the owner of the copyright agreed to that.
The French law on authors' rights orders the creation of a new regulatory authority to ensure that companies using DRM respond to requests for interoperability information. But DRM technology producers have the option of forbidding access to the source-code of their products if they are ready to prove that the overall security of the DRM technology is affected in some way by disclosing information about the code.
"While the U.S. inclination is to resist regulatory intervention, Europe has a lot of proposals now that could affect iTunes and others," said Jonathan Zittrain, professor of Internet governance and regulation at Oxford University. "The very nature of a networked product means that changes in Europe could bring changes to the product in all markets."
"Europe has managed to shift the debate into a conflict between citizens and digital controls," said Peter Brown, executive director of the Free Software Foundation, a group that opposes proprietary software. "This is great because the discussion has been limited to technology circles for too long."
In order for everyone to understand: this law stipulates that interoperability should become a rule for iPod and iTunes. This means that music downloaded from other sites than iTunes should be compatible with iPod and that iTunes should allow other MP3 players (from Creative, Sony or SanDisk) to download and play tracks with iTunes DRM.
But wait: there’s more! According to rumors and recent speculations, a huge predator lurks in the dim waters that surround Apple’s white design: it has been scientifically identified as a new species and is preparing for a hard bite on Christmas. You guessed it: it’s the iPod killer from Microsoft.
Microsoft cannot accept that its dominant position can be threatened, even if it deals with an area that is not exactly linked to software. The iPod and iTunes now control 80% of the digital music market, which is growing exponentially. And Microsoft is not there…Can you imagine that?
In order to compete with Apple, Microsoft first launched MSN Music, which did not manage to attract many users and it certainly did not shake the iTunes giant. So Redmond officials thought of a partnership, even if that would mean losing some money in the benefit of the partner. Which in this case is MTV, the well known music television. The result of such alliance was the URGE music download service, launched simultaneously with the new edition of Windows Media Player (now at version 11).
Up until now, URGE didn’t exceed expectations and let’s not forget that Apple is not standing still in front of the concurrence (rumors have circulated about talks that Steve Jobs was having with big movie studios to begin video download on iTunes).
These are probably the reasons for which Microsoft is allegedly taking into account the final solution against iPod: a new MP3 player built entirely under Microsoft’s brand. Unlike the iPod, it boasts with wireless fidelity capabilities. Another iPod-killing feature is the possibility to receive a bonus of some kind if the owner of the gadget agrees to watch entirely an advert presented on the screen, bonus that ranges from a discount coupon to voucher. The gadget shall receive an ad from an “Ad-Node”, through a sensor integrated into the MP3 player.
Microsoft also hopes to attract users with is the possibility to share songs with those detaining the same Redmond-built device, using the wireless capabilities. You like a song, mark it for download and the rest is done by the MP3 player.
Speculations have also been made about a larger screen than the current iPod’s and a serious orientation towards "Connected Entertainment", with interoperability between the device and X BOX Live! or Windows Mobile-powered handhelds. It should be available before Christmas to compete with the new products that rivals are planning to sell for this important shopping period of the year: Sony’s PS3, Nintendo’s Wii and, of course, Apple’s revamped iPod.
Rumor has it that Microsoft is even already in talks to secure licenses to sell digital content for its future MP3 player.
But that is really just the tip of the iceberg, as I have mentioned in the title. Microsoft is not preparing a single iPod-killer. It prepares at least three of them, and they’re shooting the fatal bullet this Christmas.
Seattle Times was reporting last week, citing inside sources from Microsoft, that the company’s mysterious iPod killer comes along with at least two more “side-kicks”. They are all comprised in a project called “Argo”, which is apparently lead by former X BOX co-founder J Allard.
"What's being developed is actually a complete line of Xbox-branded digital-media products, including a device that plays media, a software media player and an online media service," the Seattle Times reported, citing an insider "close to the project" as a source. The Seattle Times hints at an announcement from Microsoft on July 27th at the company's annual financial meeting.
The Argo project is not only meant to compete and “pawn” Apple’s popular iPod, but also to conquer our digital media world.
Generally speaking, Poject Argo is rumored to support the so-called XNA toolkit for allowing developers to easily port games to multiple platforms, including X BOX 360 of course.
And that is not all: some analysts say the iPod portable music player may be losing its luster among consumers, even in England. The gadget that revolutionized the way millions of people listen to music is increasingly the subject of Internet chat room conversations alleging the products are unreliable and made in Chinese sweatshops.
At the beginning of June, UK-based newspaper The Mail on Sunday has published a investigation about the life of workers from an Apple partner in China which receive a payment of $50 a month (less than 27 pounds), but who are forced to work 15 hours a day and sleep in rooms with more than 100 beds. Moreover, outsiders were banned.
The British newspaper also reported that at another factory, in Suzhou near Shanghai, which produces the iPod shuffle, employees were paid £54 per month - but that half of that sum had to be spent on accommodation and food within the factory complex. According to the Mail on Sunday, women rather than men were employed on the production line.
A later investigation conducted by Apple revealed that “there’s nothing wrong”, but people aren’t so trustful anymore, especially since we are talking about China, were thousands of people die every year in mine-accidents, produced because of the lack of safety measures.
For its part, updates to the iPod are among things that Apple is expected to show off at its annual developer’s conference in San Francisco next month. While wireless downloading is one possibility, analysts have speculated about an iPod cellphone or a new video iPod with a larger screen.
So these are the hard times that Apple has to face in the near future. Steve Jobs’ challenge is to lead the company through them and get it out (almost) intact. Let’s not forget what happened to Microsoft this month, after their refusal to reveal the source code for Windows: they were fined with a record sum by the European Union and other fines are already on track to being applied. This is what you get for messing with the EU and Apple should fear that or at least take into consideration.
Microsoft has already been forced to sell Windows XP without Windows Media Player integrated in it, due to the same accusation that iPod and iTunes are facing now: monopolistic policy. Europe is an important market and the measures adopted here are definitely starting echoes.
Is an iTunes with Creative Zen compatibility something we should expect soon?
