Switched On: The misguided marketing of PlaysForSure
Every Wednesday Ross Rubin contributes Switched On, a weekly column about the future of technology, multimedia, and digital entertainment:
When longtime industry watchers - some of whom rise before dawn to hear the unique mating calls of rare species of industries - look at Apple's iPod business, they are aghast that Apple's hardware is incompatible with so many music stores and formats and that Apple's music store is incompatible with so many other players. Has Apple learned nothing, they ask, from the history of the Macintosh which, according to business school case study cliches, would have become the dominant platform had it been licensed when it had a clear marketplace lead in graphical interfaces?
Perhaps Apple has not, but perhaps there isn't a relevant lesson for the iPod. While inexpensive Macs like the Mac mini are as competitive with Windows machines as they've ever been, let's envision a fantasy world in which Macs are almost universally perceived to be as cost-effective as Windows PCs, all Windows applications are available natively on Macs, and it rains chocolate milk. (The last bit isn't very relevant to the argument, but if you're creating a fantasy world, you might as well throw in everything you want.)
In fact, there�s only really one material difference between Macs and PCs in this world, which is that some companies offer all-you-can-eat PC software by subscription. (Why anyone would want to eat software when it�s raining perfectly good chocolate milk is a mystery, but it takes all kinds to make a fantasy world go around.) Software by subscription is of interest to a small group of customers, and Apple can offer that at any time it so desires should it start to prove more popular.
In this world, customers wouldn�t care whether Apple had 3 percent market share or 93 percent market share. Why? Because the hardware costs about the same and there�s no software availability penalty for buying an Apple product. This is essentially the world Apple now inhabits with the iPod. With PlaysForSure (which sounds like a series of stage productions starring Valley girls), Microsoft emphasizes the value of choice in music stores and devices. But choice in these decisions doesn�t resonate as long as the incumbent fulfills demand at least as well as the competitors do.
In the physical world, consumers choose stores based on price and convenience. The price competition among digital music stores is minimal as there isn�t much headroom for price-slashing and no online store has a significant convenience advantage. On the device side, consumers care about price and features. Again, no Apple competitor has undercut the iPod by a significant enough margin. While many players offer features that Apple does not, they haven�t been appealing enough to overcome Apple�s integrated approach.
The only choice that consumers really care about in digital music is choice in content. After all, consumers don�t pick their cable or satellite TV plan provider based on what kind of set-top box they�ll get. They choose based on the kind and number of channels available. And here again, no Windows Media-based store offers a significant choice advantage over the iTumes Music Store; device platform market share means nothing since, unlike with software, there is practically no incremental cost to support a player with a particular piece of content.
Indeed, Apple has courted the cutting-edge content of independent labels by, for example, working with CD Baby. And music sites that feature more independent artists such as emusic.com, garageband.com, and mp3tunes.com all work perfectly with the iPod given their support of the DRM-free MP3 file format.
If Microsoft thinks that the digital music player market will mirror the evolution of the PC market, it should start thinking about a different play � for sure.
Ross Rubin is director of industry analysis at NPD Techworld, a division of market research and analysis provider The NPD Group. Views expressed in Switched On, however, are his own. Feedback is welcome at fliptheswitch@gmail.com.
