In an interview with BusinessWeek, Hewlett-Packard’s new CEO Mark Hurd explains why his company decided to stop selling rebranded versions of Apple’s iPod.
“There are a lot of bets we can make, but we want to make those bets in markets that are exciting, have growth, are worth dominating—make that ‘leading,’ the lawyers don’t like ‘dominating’—and in which, by the way, we can lead,” Hurd said. “So think about putting our logo on the iPod. Is the market worth leading? Maybe it is. But can we lead it, with no or very little technology differentiation? Doubtful. You have to go into places where you can lead.”
HP said it would stop reselling Apple’s line of iPods in late July, saying only that “the iPod doesn’t fit in with our digital entertainment strategy.”
In what can only be seen as a potential problem for Apple, Creative Technology said today that it has been awarded U.S. Patent 6,928,433 — which it is referring to as the “Zen Patent” — for portable media player navigation. “The Zen Patent was awarded to Creative for its invention of the user interface for portable media players, including many of the Creative Zen and NOMAD Jukebox MP3 players, and found in some competing players, such as the Apple iPod and iPod mini,” the company said in its announcement of the patent win.
“Creative’s invention for the user interface for portable media players enables selection of at least one track in a portable media player as a user sequentially navigates through a hierarchy using three or more successive screens on the display of the player,” the company explains. “One example would be the sequence of screens that could display artists, then albums, and then tracks. When the user selects an artist, the player displays a list of albums for that artist. Selection of one of the listed albums then displays a list of tracks on the album.”
Apple appears to be set to introduce an all-new iPod next week as the company will hold a special event at the Moscone Center in San Francisco, California. Apple has used similar events in the past to make such major announcements.
In an invitation sent to select media, including iLounge, Apple hints that it will unveil a significant new product at the event. The invitation reads in part: “1000 songs in your pocket changed everything. Here we go again.” The slogan “1000 songs in your pocket” was first used by Apple when the original 5GB iPod was introduced in 2001.
The invitation-only event will take place on Wednesday, September 7 at 10:00 a.m. iLounge will be in attendance to bring you coverage.
A San Mateo Calif. County judge on Thursday gave final approval to the settlement of the iPod battery class-action lawsuit. According to lawyers, the settlement will allow as many as 1.3 million iPod owners to get new batteries and could cost Apple $15 million.
“All these people are going to get relief, and we think that’s a big victory for them,” said Steve Williams, lead counsel for the suit and an attorney for Burlingame’s Cotchett, Pitre, Simon & McCarthy.
Under the settlement, consumers who bought first- or second-generation iPods before May 31, 2004 are entitled to either $25 cash or a $50 credit at the Apple Store. Owners of third-generation iPods are entitled to a free replacement battery if their battery fails or a $50 credit. iPod owners who already paid to have their battery replaced can get up to half of that cost back from Apple.
American Technology Research analyst Shaw Wu believes Apple will ship 7.1 million iPods in the current quarter. The sales number would be a 15 percent increase over last quarter, but Wu warns that average iPod selling prices may come under “greater than expected pressure.”
“We have noticed very aggressive pricing, particularly on 4GB iPod minis”, Wu said in a research note. “We believe part of the reason is that iPod inventories remain relatively high on an absolute basis and this aggressive promotion is to ensure sales in an otherwise slower consumer period.”
The analyst also echoed recent speculation that Samsung is offering Apple heavily discounted prices on its flash memory chips. “Our sources tell us that Samsung was willing to drop its prices aggressively to lock in a marquee customer and win back some business from Toshiba, Apple’s other flash supplier. Interestingly, we believe Apple will also likely source from Hynix, adding a third flash supplier and thus further driving down pricing to protect its gross margin.”
Interestingly, Wu also said that he “is hearing” that Apple will likely source components for future portable devices (including iPods) from Intel, Broadcom and Sharp.
Paper Mate has apparently teamed up with Apple to launch two new digital music-themed promotions. The pen and pencil maker is giving away more than 400 iPod minis and an undisclosed number of free song downloads.
Paper Mate is giving away one 4GB iPod mini a day until May 31, 2006—457 in total (the promo officially started on March 1, 2005). While packaging for Write Bros stick pens, American woodcase pencils and Sharpwriter mechanical pencils carry the promo graphics, no purchase is necessary to enter—a daily winner will be chosen at random from all eligible entries received each day.
In addition to the iPod mini sweepstakes, the company is also giving away free song downloads from the iTunes Music Store. Each specially-marked package of Paper Mate FlexGrip Elite ballpoint pens or Mechanical pencils have a 9 digit code that can be redeemed for a unique 12-digit iTunes Music Store code and used to get a free song. The song codes expire on May 31, 2006.
Billboard’s Antony Bruno has written and an article looking at the growing threats to the iPod and iTunes that Apple faces. He says that while analysts expect Apple to have another great holiday season, the company’s reign as digital music king may last “only another 12-18 months before the playing field levels out.”
Bruno says that Sony, Samsung, MSN and others are planning their attack. “Anticipated developments include a music subscription service and subsequent advertising blitz from MSN Music, the long-anticipated relaunch of the Sony Connect store, several new MP3 devices and the introduction of mobile music services from several wireless carriers,” Bruno says.
Bruno says, however, that Apple won’t go without a fight. “It is expected to introduce a video-capable iPod in September and finally unveil its iTunes-compatible mobile phone with Motorola,” says Bruno. “It is also rumored to be working on a subscription service with the help of a former Xbox Live executive.”
Piper Jaffray analyst Gene Munster believes that Apple’s strong showing on Amazon.com is an indication that the iPod shows no signs of slowing down. Munster notes that iPod models hold the top 10 spots on Amazon’s Top Sellers list for MP3 players.
“We believe that the iPod is continuing to gain traction in the September quarter as evidenced by the number of iPods included on the Amazon Top Seller List for portable MP3 players and All Electronics,” Munster wrote in a research note obtained by iLounge.
The analyst also points out that iPods account for 2 of the top 10 products on the overall electronics Top Sellers list, with the 20GB iPod holding the No. 1 spot.
Toshiba today announced the availability of its first hard drive based on perpendicular magnetic recording (PMR), a new technology that increases the amount of data a drive can hold. The new MK4007GAL 1.8-inch PMR drive can store 40GB of data on a single platter, making it possible for thinner portable devices with larger capacity.
Toshiba, which makes the hard drives found in current iPods, hinted that future gadgets will take advantage of the new innovation, noting that an 80GB version is on the way. “The addition of PMR technology will increase capacity options for product designs beyond those currently on the market today, especially as Toshiba introduces an 80GB 1.8-inch HDD with PMR later this year,” the company said.
O’Reilly has announced the release of the “iPod Shuffle Fan Book” by J.D. Biersdorfer.
“The iPod Shuffle Fan Book is the ultimate written companion for Shuffle owners,” says O’Reilly. “Learn how to master the art of shuffling: discover and create custom playlists, share and publish with iMix, and burn playlists on CDs. Beautifully designed in a colorful, compact format, this handy reference book is a must have for shufflers everywhere.”
The title is priced at $9.95.
Apple may have lost its attempt to patent the iPod software interface because long-time rival Microsoft had already filed a similar application. Bloomberg News reports that Microsoft’s patent application was filed with the U.S. Patent & Trademark Office five months before Apple’s request, which was rejected last month.
“Apple plans to appeal the decision to ensure it won’t be forced to pay royalties to Microsoft on every iPod sale,” Bloomberg reports. “The decision could be a setback for Apple, which is also facing increased competition from Microsoft, which makes software for rival music players, and other companies that want to take market share.”
Apple spokeswoman Natalie Kerris said that Apple will continue to pursue the iPod patent. “Apple invented and publicly released the iPod interface before the Microsoft patent application cited by the examiner was filed,
Microsoft says that the iPod will face increased competition from new portable devices before this year’s holiday shopping season. The company is helping electronics makers such as Philips, Samsung and Creative Technology design and test digital music players that will take direct aim at the iPod.
“Come this fall there is going to be a number of devices that get close to competing with Apple’s iPod,” said Erik Huggers, the head of Microsoft’s Digital Media Division. By the second quarter of next year “there is going to be a whole lineup of products that can compete with Apple in industrial design, usability, functionality and features.”
Jupiter Research analyst Michael Gartenberg, however, says Microsoft has a steep uphill battle. “It’s going to take a lot to dethrone Apple,” said Gartenberg. “Apple won’t sit on its laurels and I expect we’ll see another iteration of the iPod for the holiday. Unless Microsoft is really willing to spend the time and effort to get behind a player or a select group of players, it’s not going to happen.”
Real Networks has disclosed that its Harmony technology puts the company at risk of legal action from Apple. The company’s Harmony translation software enabled songs purchased from the company’s music store to play on iPods.
“If Apple decides to commence litigation against us in order to prevent interoperation with its products, we may be forced to spend money defending their legal challenge, which could harm our operating results,” the company said in an SEC filing this week. “Although we believe our Harmony technology is legal, there is no assurance that a court would agree with our position.”
Real also said Apple will mostly likely “continue to modify its technology to break the interoperability that Harmony provides to consumers” and that it “may no longer work with Apple’s products, which could harm our business and reputation, or we may be forced to incur additional development costs to refine Harmony to make it interoperate again.”
iPodSubwayMaps.com is a website featuring subway maps for major cities scaled specifically for viewing on color screen iPods. The site currently has maps for New York City, Washington DC, Boston, and Hong Kong.
“Thanks to a favorite site of mine, Lifehacker.com, “I came up with the idea of sticking subway maps onto my iPod photo,” says creator Bill Bright. “By chopping up sections of the New York City MTA subway map into 220x176 pixel sections, I was able to carry a complete New York City subway map in my pocket at all times! Hopefully these will be just as helpful for you as they are to me. Soon I’ll be adding in an infrastructure which will allow this site to be more community-based—where you will be able to upload, download and rate user-submitted maps.”
Following a lengthy attempt of nearly three years, Apple has reportedly failed to patent the software interface of the iPod.
“The company’s patent application, which lists Apple VP Jeff Robbin and Apple CEO Steve Jobs as two of its primary inventors, received a final rejection last month from the United States Patent and Trademark Office,” reports AppleInsider. “Standing in Apple’s way appears to be a prior filing by inventor John Platt, who submitted a patent application for a similar software design for a portable device in May of 2002—just five months before Robbin submitted his claims on behalf of Apple.”
Platt’s application describes his invention as a system that “generates playlists for a library collection of media items via selecting a plurality of seed items, at least one which is an undesirable seed item,” according to the Apple enthusiast site. “The process by which the iPod’s software displays its own menu-based interface is very similar to the process Platt’s filing goes on to describe.”
Apple will soon begin providing refunds to Canadian customers who bought iPods when levies were being imposed on digital music players in the country.
“Apple is pleased that the Supreme Court of Canada let stand a lower court ruling that blank media levies on iPods are invalid, and will shortly announce a claims process so consumers can request a refund for the levies they paid,” Apple said in a statement.
Late last month, the Supreme Court of Canada refused to hear any further arguments over the levy, ending a dispute over the so-called iPod tax, which has collected approximately $4 million in total.
The Canadian Private Copying Collective (CPCC) has collected a tax on MP3 players since December 2003 on behalf of musicians and record companies. The organization was forced to stop charging the levy in December 2004 by the Canadian Federal Court.
Following meetings last week with digital music companies such as Apple and RealNetworks, American Technology Research analyst Shaw Wu said he is “more convinced than ever that Apple has a substantial lead and advantage” over competitors.
In a research report obtained by iLounge, Wu said that the tightly integrated combination of the iPod, iTunes and iTunes Music Store shows no sign of giving up ground to competing companies and formats. “This is despite competitive efforts over the past 2-3 years and continued efforts to erode its dominance,” he said.
“Progress is being made by the Windows Media camp, but coordination and integration are proving difficult because of the many vendors involved including systems, semiconductor, software, content, and service providers, with their various agendas and diverse geographies,” Wu said.
Wu also said that Apple could introduce more than just new iPods at the Apple Expo this September. “We believe Apple could use the upcoming keynote by Steve Jobs at the Apple Expo 2005 event in Paris to make a significant announcement beyond just new iPods,” Wu said. “We believe this could be new markets including music subscriptions and video and the ever-elusive Motorola iTunes cell phone.”
Party-Pod Pro 5.0 is the latest version of the software that “gives your iPod a database of partygoer necessities.
Earth VideoWorks has announced the release of iCandy, a new product for color screen iPods that offers more than 40 slideshows with over 1200 unique pictures of sunsets, wildflowers, forests, beaches, contemporary art, and more. iCandy also comes with 500 kaleidoscope images.
“Earth VideoWorks has been publishing fine art and nature DVDs for over three years, and has an extensive digital photo library of over 25,000 images,” says the company. “These same images are now available in slideshows for iPod Photo owners!”
The iCandy package sells for $14.95 and works with both Macs and PCs.
Copy-protected albums from Foo Fighters, Dave Matthews Band and others continue to sell well despite complaints about their incompatibility with iPods.
“Aiming to curb piracy, labels like Sony BMG, which released both records, are rolling out copy-protected albums in the United States, which let users make three exact duplicates of a CD, and store files on a PC in Microsoft Corp.‘s Windows Media format,” reports Reuters. “But the copy-protection bars users from importing music onto iPods since Apple’s Fairplay software is incompatible with Windows.”
The news agency notes that about a third of the 252 customer reviews of the new Foo Fighter CD this week on Amazon complained about the protection. “This CD has a copy protection scheme that makes it totally useless to 30 million iPod owners,” wrote one reviewer. “How could a band be so stupid as to alienate such a huge percentage of their fans?”
Record executives are continuing talks with Apple to make the CDs compatible with iPods, and point out that they have released versions of the albums on Apple’s iTunes Music Store for iPod owners. “That appeased some iPod users, but others are still angry because they like to physically own a disc before importing it to iPods,” said Reuters.
American Technology Research analyst Shaw Wu said that both Apple and the record companies would benefit if they reach an agreement on the copy protection. “Apple’s the leader in digital music. It doesn’t make sense to release too many copy-protected CDs if they’re incompatible with iPods. But Apple could also be at risk if these CDs keep selling well,” he said.