Tag: iTunes

iTunes the largest music retailer

Not really mobile but at least digital and interesting in any event: a news release has it that Apple‘s iTunes had overtaken mighty Wal-Mart as the US’ largest retailer of music. Best Buy was ranked third and Amazon.com and Target tied for the fourth spot in January and February, it is reported.

iTunes apparently sold more than 4 billion tracks since its launch in 2003. The survey counted every 12 digital downloads as one CD but excluded mobile music sales. Apple claims more than 50 million customers. This is a rather impressive development: They sold around 25m tracks in 2003, surpassed the 1bn mark only 3 years later and hit 3bn in July2007.

iPhone 2.0 – it is not only the Enterprise, baby, it's the mix!

I know, I know, I know: it is all a bit tiring and I just wrote about the iPhone vs Blackberry thingee a couple of weeks ago but there is a nice new piece by one of my favourite columnists on this, namely the NY Times’ David Pogue. He considers the software update (nick-named iPhone 2.0) as more significant as the phone itself as it opens the thing up into 2 dimensions:

1. An attack on the enterprise market with MS Exchange support, push-e-mail and everything else RIM‘s Blackberry, Palm‘s Treo and all the others already have (although Pogue also readily concedes that the absence of a QWERTY keyboard might mar its success a bit; see here for Apple’s intro on it)

2. the awakening of a mobile phone as a true multi-purpose entertainment device (through the introduction of the developer programme and release of the iPhone’s SDK – which, incidentally – also extends to the iPod Touch).

Now, I have covered the first point but the let the latter one on the wayside. And, one could say, rightly so: all existing phones, J2ME, BREW, i-mode and all, have had – more or less – readily available SDK’s for (wireless industry’s) eons. And did it make it a mass market tool? No, it did not. Also today with all the super-powerful phones around, only a (growing) fraction of users actually make use of these things. Why should this change with the iPhone? Well, possibly for the same reasons that made the iPod such a success – in conjunction with iTunes that was.

What Apple managed with the iPod was two things: it brought a device to the market that even my mum could use (and she is rather technophobic) and it provided a clear-cut, transparent, easy-to-use retail model for the contents to be meant to be stored and played on that thing, and that was iTunes.

Now, incidentally, these two challenges are indeed the very ones mobile content often faces today: intuitive UI on mobile phones is still only to be found rarely (“the application you are trying to download is untrusted. Do you want to continue?”) and the retail space is cluttered and dominated by companies who excelled in building highly evolved technical networks but have rarely sparkled with superior consumer understanding. Apple is good at both…

Number 3 would then be discovery and here Apple’s novel business model with tight integration and control may actually bear rich fruit: because of the huge amount of influence (and commercial participation) Apple apparently retains with its chosen carrier partners, it is much easier for it to guarantee the placement of the app store on its phones. Other OEMs have a much harder battle at hand there: carriers routinely request that any number of applications, games, etc are being removed for phones they order; because of the huge power the large carriers have (in most countries handsets are subsidised by the carrier), OEMs struggle to assert themselves (although Nokia seems to be making at least some headway with its Ovi portal; see e.g. here and here). For Apple this is a home-run though, which is a significant advantage.

The only relief would then be that Nokia would still appear to be selling the amount of handsets Apple sells in a year within one week or so. Still…

US ringtone sales down: Novelty wearing off? Nah!

Broadcast Music (BMI) projects that U.S. ringtone sales will dip to $550m in retail sales in 2007, down US$50 million from calendar year 2006.

Here’s why according to BMI: “We believe that the ringtone market’s growth has leveled off and the novelty phase has ended.” You can read more of it here

I do not think this explanation is accurate. I suspect that it is not novelty wearing off but the kids and technology smartening up: 1) phones and computers often come equipped with Bluetooth now, 2) new phones usually are MP3-capable. The kids have figured out how to transfer their favourite tunes to their phones via Bluetooth.

This might result in sub-optimal loops being cut (i.e. the tones not rolling as nicely as a ringtone as a professionally-made one might) but on $1.99 saving per tone (when the full track costs you a mere $0.99 on iTunes), that is a no-brainer. Also: with programmes like Garage band et al, every kid can cut loops into MP3s, too.

This last bit is perhaps the one that killed it off: if a product is unique in that it is defensible against similar products on other media, pricing is not under direct pressure as it is not directly comparable (e.g. monophonic ringtones and recorded music). If it becomes comparable (e.g. MP3’s on mobile phones vs. iTunes), there has to be something special justifying a higher price-point. The higher the difference in pricing, the better that USP has to be. 20-second loop cut by a pro? Not good enough…

Conclusion? Bad piece of pricing policy and marketing, I would suggest. Elementary, isn’t it? You’ve screwed up your own market, folks…

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