Napster’s chief executive says that Microsoft and its hardware partners are to blame for Apple’s dominant 80 percent market share in digital music sales.
“There is no question that their execution has been less than brilliant over the last 12 months,” Napster CEO Chris Gorog said at the Reuters Global Technology, Media and Telecoms Summit in New York. “Our business does rely on Microsoft’s digital rights management software and our business model also relies on Microsoft’s ecosystem of device manufacturers.”
“It’s a lot more complex to get organized properly than it is to build one device and one service as Apple has done,” Gorog added. “It’s always been painful at the introduction of new technologies. But it always takes shape like it’s done in the past.” Gorog still contends that the Microsoft partners will win. “Ultimately, the consumer electronics giants… are all going to come to this Windows Media party,” he said. “This is really going to be the ubiquitous format.”
The wide-spread shift from CDs to MP3s and iPods has caused a drop in sales of large home audio systems, putting Apple in a prime position to sell its new iPod Hi-Fi to consumers looking for a simple way to enjoy their digital audio at home. While electronics manufacturers race to add iPod connectivity to their equipment, a new report in the Wall Street Journal says it may be too little too late.
“Sales of traditional stereos have taken a hit,” the Journal reports. “Last year, retail sales of home audio equipment, including stereo system components and surround-sound ‘home theater in a box’ rigs, dropped nearly 18%, to 10.2 million units, according to market-research firm NPD Group Inc. In the same period, sales of portable digital players like Apple’s iPod more than tripled, to 22.4 million units in 2005, from 7.1 million in 2004, says the Consumer Electronics Association, a trade group.”
Music fans aren’t just exclusively listening to their downloaded tunes on an iPod either. “Even when consumers aren’t using portable devices, more are shifting their music consumption away from stereos,” the newspaper says. “Among 1,031 adult respondents to a consumer-behavior survey published last year by the CEA, 34% said they listened to music at home primarily on a PC, compared with just 26% who said they used a stereo or surround-sound receiver as their main home listening system.”
Below is a roundup of our coverage from Apple’s special media event, which took place earlier today at the company’s headquarters in Cupertino, California. During the presentation, Apple CEO Steve Jobs introduced the iPod Hi-Fi, leather iPod cases, and Intel-based Mac minis.
Apple CEO Steve Jobs introduced the iPod Hi-Fi during today’s special event at Apple’s Cuperinto headquarters. [Live coverage] The high-end speaker system delivers “breathtaking acoustic performance and room-filling sound unlike any other speaker system designed for the iPod in an innovative, all-in-one design.”
The iPod Hi-Fi, which can be powered from a wall socket or by six D-cell batteries, features an integrated iPod dock and is controlled by the 6-button Apple Remote. It’s available starting today for $349.
Compatible with all dock connector iPods, the Hi-Fi charges your iPod while docked and offers Tone Control, Large Album Art mode and volume mirroring on fifth-generation iPods and iPod nanos. The device also features molded handles, a removable front grille, touch-sensitive volume control buttons, a built-in power supply (no external power brick), and a 3.5-mm auxiliary input. The Hi-Fi measures 17.0” x 6.6” x 6.9.”
“iPod Hi-Fi has been designed and engineered by Apple to deliver unrivaled sound quality, realistic sound imaging and optimal audio performance,” the company says. “Its clean, all-in-one design features a unique isolated enclosure system that includes two custom designed wide-range speakers and a tuned, ported bass system, minimizing vibration while maximizing sound quality and allowing users to listen to their favorite music as it was intended with amazing sound clarity and rich, deep bass.”
Apple also today introduced new Intel-based Mac mini computers. Available in a 1.66 GHz Intel Core Duo processor configuration and a 1.5 GHz Intel Core Solo processor configuration, the new systems feature Apple’s Front Row media software and a new music, video and photo sharing feature that uses the company’s Bonjour wireless networking technology. The new Mac minis start at $599.
In addition to the iPod Hi-Fi and Intel-based Mac minis, Apple boss Steve Jobs also briefly announced new leather cases for the fifth-generation iPod and iPod nano. The “luxurious” leather case is “made with fine, hand-crafted Italian leather and features a soft and durable interior lining for a secure fit, making it the perfect carrying case for iPod or iPod nano.” The Apple Leather Case is available in 30GB and 60GB sizes for the iPod and one size for the iPod nano. Each is available immediately and sells for $99.
The iLounge team has arrived at Apple headquarters for today’s special event. We will deliver live coverage if at all possible. Closer to the beginning of Steve Jobs’ presentation we will switch the site over to a “lite version” to better handle heavy traffic loads. While many new products have been rumored to be announced, no reliable information has been leaked. The only hint Apple gave was on the invitation to the event, which read: “Come see some fun new products from Apple.
Apple has added five Academy Award-nominated live-action short films, episodes of “Inside the Actor’s Studio” and a free “Top Chef” trailer to the iTunes Music Store.
Shawn Fanning and Wayne Rosso—the creator of Napster and former president of Grokster, respectively—have teamed up and plan to take on the iTunes Music Store this summer.
StreamingMedia.com has released a new research report that compares RealVideo and Windows Media with top Flash and H.264 codecs. It says “the quality of the best Flash and H.264 codecs still trailed RealVideo, often by a significant margin.”
Qualcomm CEO Paul Jacobs said on Monday that he believes it makes sense for Apple to create a wireless iPod. Jacobs noted that while he talks to Apple “every so often” he does not have any insight into the company’s plans.
TEN Technology announced today that it is now shipping its naviPlay Bluetooth Stereo Headset. The wireless stereo headphones come with the company’s naviPlay iPod Bluetooth Adapter for streaming music wirelessly. The naviPlay Headset also allows users to make and receive calls with most Bluetooth enabled mobile phones. It works with all dockable iPods and retails for $200.
“The old school high-end design of the naviPlay Headset’s headband wraps over the wearer’s head rather than behind the neck,” explains TEN. “The headphones fold flat for easy storage, yet has three-axis adjustment for maximum comfort. Using a special high flex material for the headband and impact-resistant polycarbonate for the rest of the assembly, the naviPlay Bluetooth Stereo Headset achieves high comfort and durability with a high-gloss finish. Lusciously thick padding on the ear and head pads distributes the featherweight 4 ounces of the headphones while isolating ambient noise for better audio experience.”
Contour Design has introduced a new version of its Showcase for Apple’s fifth-generation iPod. Based on Contour’s original Showcase, the new hard case is slimmer, has a larger headphone port opening to accommodate oversized high-end headphones, and uses a new secure slide latch mechanism. The Showcase Video retains the shock-absorbing rubber, book-style opening, and detachable belt clip. The case comes in two sizes—for both the 30GB and 60GB video iPod—and retails for $33. The Showcase video 60 is available now and the Showcase video 30 will begin shipping late next month.
Girard Gibbs, the law firm representing consumers in the iPod battery class-action lawsuit, has released a timeframe for the distribution of settlement benefits. The settlement was approved by a judge in August, appealed in November by two individuals, and finalized in late December. As a result of the appeal, the firm said, Apple and the Claims Administrator had to delay the process of fulfilling claims. Below is the new timeframe for the settlement benefits.
February 17, 2006 - The Claims Administrator will mail $25 checks to Class Members who purchased the AppleCare Protection Plan and obtained battery repair/replacement under the AppleCare Protection Plan.
Beginning of March 2006 - For Class members who own a First or Second Generation iPod and who selected the $25 cash payment, the Claims Administrator will begin mailing $25 checks to those who submitted valid claims.
Middle of March 2006 - For Class members who own a Third Generation iPod and who selected battery/iPod replacement, the Claims Administrator will begin mailing letters containing instructions for battery/iPod replacement to those who submitted valid claims.
Middle of March 2006 - For Class members who own a First, Second or Third Generation iPod and who selected a $50 store credit, the Claims Administrator will begin mailing letters with certificate codes for the $50 store credit to those who submitted valid claims.
Around March 17, 2006 - The Claims Administrator will begin sending deficiency letters to Class members who submitted an incomplete/incorrect claim.
End of March 2006 - The Claims Administrator will send denial letters to those individuals who do not fit the class definition or who submitted their claims past the claims deadline.
Microsoft has set up a cryptic website for its “Origami Project,” which appears to be a new portable touch-screen device that could be introduced as early as this week. The site says the product will “change your life.”
A photo that appeared on several websites last week purporting to be the new video iPod has been proven to be a fake. The creator of the hoax has documented the process of creating the original image in a video that has been posted online.
The software inside Samsung’s new Z5 portable MP3 player “was forged at Iventor Inc. by a small team of programmers led by Paul Mercer, 38, a veteran Apple Macintosh software designer.”
The New York Times’ David Pogue comments on the reports of Amazon launching an online music store and a branded MP3 player: “First, Amazon will have to beat the iPod’s physical beauty—its chic quotient, its jewelry factor. Then it will have to match the iTunes Music Store, complete with videos, podcasts, gift certificates, and so on. Then it will have to overcome the ‘lock factor’—the fact that anyone who’s ever bought an iTunes song is unlikely to switch players, thanks to Apple’s proprietary copy-protection scheme. Finally, Amazon will have to start in 2001.”
A report in the Globe and Mail last week quoted Apple co-founder Steve Wozniak as saying that the company should spin-off its iPod division because the device was taking focus away from its computer business. Wozniak, known simply as Woz to his friends and fans, says that some of his words were taken out of context while others were simply not true. “The whole idea that Apple should do computing and not iPods is ridiculous,” Wozniak told iLounge.
Peter Nowak’s article for the Canadian newspaper had Wozniak saying that “spinning off a separate division makes a whole lot of sense.
Demand for Apple’s iPod is expected to only slightly dip from the record-breaking holiday quarter, according to Piper Jaffray senior analyst Gene Munster. Citing research from Apple resellers and unit shipment data from NPD, the analyst says that iPod demand may exceed his firm’s previous estimates. Munster says he expects Apple to ship 9.3 million iPods during the March quarter.
“Our checks with Apple specialist resellers last week indicated that they are not experiencing a significant slowdown in Mac sales,” Jaffray says in a note to clients, and “iPod availability is significantly better than it was during the December quarter, while iPod demand is only down ‘slightly,’ not ‘significantly’ from Dec-05 to Mar-06. Additionally, our preliminary analysis of iPod unit shipment data from NPD leads us to believe that Apple is on track to meet or slightly exceed our iPod unit assumptions.”
BusinessWeek’s Ian Rowley writes that “iPod mania is alive and well in Japan—one of the most competitive consumer-electronics markets on the planet.” Apple’s ad campaigns, the launch of the Japanese iTunes Music Store, the opening of a brick-and-mortar store in Shibuya, and the iPod nano are all credited with the increased popularity in the country.
“Despite an array of well-entrenched Japanese rivals, such as Sony and Matsushita, the iPod had cornered 51.3% of the digital-music player market as of the end of 2005, up from about 32% in 2004, according to research firm BCN. Sony was a distant second with 16.2%, while Panasonic grabbed just 8.2% of the market,” Rowley reports. “For now, though, the iPod absolutely rules Japan’s digital-music player market—pretty amazing when you consider that Japan is home to some of the toughest competitors imaginable in the global consumer-electronics game.”
Alex Ostrovsky, the winner of the iTunes billion song contest, has commented on his winnings. He says he will keep the iMac and an iPod, and give family and friends the remaining iPods. As for the $10,000 iTunes gift card, “My sister has already called from New York to talk about divvying it up,” he said.
A newly introduced California bill would require manufacturers to stop using hazardous materials in making cell phones, iPods and other battery-operated devices.
Apple co-founder and chief executive officer Steve Jobs turns 51 today. Jobs was born on February 24, 1955.
Logisys Computer has introduced a new computer case that resembles an iPod. The ePod Soho case is white and has “several buttons resembling those found on the scroll wheel of an Apple iPod, as well as a blue LED light that gives the case a constant backlit glow.”
As reported earlier today, Apple’s iTunes Music Store sold its one billionth song a little after midnight Thursday. Apple has now revealed the name of the person who downloaded the track and what song he purchased.
The billionth song was “Speed of Sound” by Coldplay and was purchased by Alex Ostrovsky from West Bloomfield, Michigan. As the grand prize winner of Apple’s billion song countdown contest, he will receive a 20-inch iMac, 10 video iPods and a $10,000 iTunes gift card. In addition, Apple will establish a scholarship to the Juilliard School of Music in his name.
“I hope that every customer, artist and music company executive takes a moment today to reflect on what we’ve achieved together during the past three years,” said Steve Jobs, Apple’s CEO. “Over one billion songs have now been legally purchased and downloaded around the globe, representing a major force against music piracy and the future of music distribution as we move from CDs to the Internet.”
Following Apple’s teaser invitation to a special event next Tuesday, analysts are weighing in on what they think the company will introduce. Speculation ranges from new Intel-based Macs to a movie download service to a tablet-size iPod with HD video.
American Technology Research analyst Shaw Wu expects an entry-level MacBook laptop and an updated Mac mini, but also says Apple could announce the availability of its first full-length movie downloads. “We believe there is a greater than 50 percent chance that Apple will announce its first, full-length feature films available for download on iTunes,” he says. Wu doesn’t believe the company will debut the so-called “true video iPod.”
Piper Jaffray analyst Gene Munster thinks the event will be Intel-focused, but could also bring new iPods. However, he says it is less likely that Apple will release the rumored touch-screen iPod. “While it is difficult to predict exactly what Apple will announce next Tuesday, it is easier to predict what Apple will announce in the next 12 months,” which he says could include new iBooks and Power Macs, a larger-screen iPod, a new iPod shuffle, Airport Express for video, an Apple-branded cell phone.
Bear Stearns analyst Andrew Neff says a new video iPod is likely, though it could turn out to be “tablet-sized or HDTV-based.” “As speculation begins to build around what Apple could announce on February 28, we think—focusing on the adjectives ‘fun’ and ‘new’—the most likely products are either a tablet-size iPod or a larger HDTV-based iPod,” says Neff. “While more Intel-based products (new iBook or iMacs) or a phone are possible, neither strikes us as ‘fun’ or ‘new’.”
Michael Gartenberg, an analyst at the industry research firm Jupiter Research, reminds Apple watchers that no one really knows what to expect. “We’re talking about Apple, so it could be all of those things, none of those things, or something brand new,” says Gartenberg. Ross Rubin, an analyst at the market research firm NPD Group, said trying to speculate on what Apple might roll out at the event is a “fruitless guessing game.”
Apple co-founder Steve Wozniak says that iPods are distracting Apple from its focus on computing and should consider spinning off the business. “There’s a different group working on it anyway,
UK-based premium shirt maker Thomas Pink has introduced a new tie with a built-in iPod nano pocket. The limited edition Commuter tie is made of 100% silk and conceals the nano in a pocket on the reverse side. It also has a fabric loop to keep headphone cables out of sight. The Thomas Pink tie is priced at £49.
Apple’s iTunes Music Store, which launched in April 2003, sold its one billionth song at approximately 12:40 a.m. ET on Thursday.
Apple launched its billion song countdown contest earlier this month. The grand prize winner who downloaded the billionth song will receive a 20-inch iMac, 10 60GB iPods, and a $10,000 iTunes gift card. In addition, Apple said it will create a full-ride scholarship in the winner’s name to a world-renowned music school.