Should Apple Have An iPod IPO?

from the spin-out-time... dept

Business Week is suggesting that, for all the congratulatory backslapping the folks around Apple have been doing around the iPod and iTunes, they’d be smart to spin off their music business now. The reasoning is that the music side of Apple probably has a much higher perceived value than real value right now. While Apple has been able to command considerable marketshare in both the downloadable music market (even though they don’t make any money there) and the handheld music player market, the writer doesn’t believe they can hold either position. They’ve been able to get away with being the high-priced provider so far, but competitors are nipping at their heals. Both the hardware and the downloadable music services risk becoming commodity products, and spinning out a portion of the business and taking the cash would let Apple move on to the next big thing. Of course, the main problem with this idea is that it doesn’t appear that Steve Jobs believes the market is going to become commoditized (though, the article suggests, recent insider selling at Apple means other executives aren’t so sure).

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Comments on “Should Apple Have An iPod IPO?”

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mhh5 says:

hmmm.. Apple is always dying somehow...

Should Apple also spin off its computer hardware business as computers become a commodity as well? Why can’t Apple remain in its “niche” high-end market without journalists always writing about how Apple will soon be forced out of the market by its cheaper competition?

August Jackson (user link) says:

Re: hmmm.. Apple is always dying somehow...

I actually agree. One of the things Apple has done in the PC space is to take something that everybody else in their market treats as a commodity and market it as an end-to-end “experience.” The joined-up nature of the iTunes music store, iTunes software and the iPod is a perfect example.

  • The hardware is cool and works well. Some hardware may store more or have better battery life or beat the iPod on individual attributes, but nothing beats it for overall performance or pure coolness– nothing.
  • The store is really easy to use. Some stores might offer more selection or offer cheaper prices, but the look and feel, how you buy and an ever-expanding list of features capabilities make for a great overall shopping experience. Please also note that P2P mp3 swapping is not somehow mutually exclusive of use of the music store.
  • The software is a great environment to play your music on a PC. Some software likely offers more advanced features, particularly things like conversions, “skins” or other elements, but I’ve yet to see anything that even comes close in usability and the feel of iTunes. Everything else I’ve ever used is a pain in the ass by comparison.

Lest we also forget that music is moving (whether the industry likes it or not) from a product model to a service model. Services don’t translate to commodities very well, and end-user experience becomes a critical element of a consumer service offering. Apple are in a good space for where the music industry is headed.

So, can others say their solutions to one or all of these beat Apple in certain attributes. You bet. Can anybody claim that they cover the gamut of digital music as well as Apple do? Nope. Who else on the horizon will be able to compete? The WinTel manufacturers are all either turning out their own pale comparisons to the iPod (Dell) or licensing the iPod itels (HP). I don’t see any of them doing software on their own, and I hope they aren’t looking to Redmond for something that’s going to be all that iTunes is. And, finally, none of them are doing their own stores with the same pinache or ease of use that Apple are. Like all things WinTel, it’s all piecemeal and so the experience is so much less than stellar.

Business Week have got it all wrong about commoditization being a threat to Apple’s approach. Spin off the music side of things? Maybe, but it’s not necessary, really. Compete in a “commodity” basis? Not a chance.

Anonymous Coward says:

Re: Re: hmmm.. Apple is always dying somehow...

Oddly, it seems to me that just the opposite is true.
While I hear rumors that iTunes and the iPod are easy to set up and get working on a mac, since no one has a mac or knows anyone that’s seen one, that’s not terribly compelling. From personal experience and everything I’ve heard from people, getting iTunes to actually work on your computer and convincing it to rip your music and stuff it into the iPod is a mutliple day adventure of trying various things and updating drivers. And when it is working, iTunes is quite awkward to use and very much counter-intuitive. From what I’ve seen, there’s lots of better software out there for handling and playing music.
It appears to me that people are only using iTunes because nothing else works with iPods, not because it’s actually good software.

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