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OCTOBER 14, 2004
By Alex Salkever A Bitter Apple Replay? [Page 2 of 2] REDMOND'S PATIENCE. Then, there's Microsoft. If past is prologue, Apple should expect a relentless marketing attack tightly integrated with offerings from Windows PC makers. Moreover, time is on Microsoft's side. The digital-music-player market is still nascent. The prices remain high and penetration low. Apple may have the lion's share of business right now, but the market will grow quickly. That could give Microsoft, a patient adversary, plenty of time to catch up in the music-software and DRM standard businesses. Sure, Apple has partnered with one of the two biggest PC makers, Hewlett-Packard (HPQ ), to sell iPods. But that's not an exclusive deal, and HP could easily strike deals with other music-player makers or, as it originally planned, come out with its own. Microsoft will probably make a steady stream of improvements in its media-player software. Will it ever match Apple in ease of use and elegance? No -- but who cares, really? Many consumers are more than happy with something that's good enough, and cheap. WINDOWS OPENING. While I don't think Microsoft software is as usable as software from Apple, it's clearly not unusable. For Apple to assume that Microsoft isn't up to creating software that's "good enough" smacks of the same blundered logic that led Jobs & Co. astray a decade ago. Apple could easily avoid an unpleasant redux. First, it already has built a version of its iTunes music-jukebox software for Windows PCs. Likewise, Windows users who buy iPods can also buy downloads from Apple's iTunes Music Store. The key thing here: Apple has already dipped its toe into the Windows software waters and found it feels good. By some estimates, as many as 60% of iPod buyers are Windows users. So Apple already has shown it can compete in the Windows market. Allowing other Windows-compatible music players to sync up with iTunes and play copyright-protected songs purchased from the iTunes Music Store wouldn't be a huge jump. Of course, Jobs would be forced to cede a little more control. But he already started doing that by building iTunes for Windows. GIVE NOW, TAKE LATER. Second, this time around the device makers are wary of Redmond. Many admit off-the-record that they don't want Gates to do with music players what he did with the PC operating-system market. Further, industry insiders admit that Apple's software is the best in terms of ease of use and design. If Apple licenses FairPlay, it could sacrifice some sales and profits from its iPod line in the near term. But over the long haul, sowing the seeds of mass adoption of its DRM standard and its iTunes music software will help ensure that Apple's own future hardware offerings aren't marginalized. Jobs should sacrifice some of control and integration to make sure Apple has a seat at the table -- and a say in cutting up the larger, more lucrative digital-content pie.
 Salkever is Technology editor for BusinessWeek Online. Follow his Byte of the Apple column, only on BW Online
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