OSNews

Apple is repeating the mistakes made by themselves and others before : they think they can create a market of their own on products that are becoming commodity very fast.

ipod is great little device but plenty of other devices do just the same thing : it plays music files. With more of this devices being released every month, iPod will eventually get real competition. There are plenty of designers out there and they don't all work for Apple.

For the moment Apple think it can become the MS of music distribution thanks to the ipod and the store ? They don't realise that the market is just one year old, that they are open to the US only and that similar services are being started everywhere, distributing the same thing. How long do you think it will take for Microsoft to offer compatibility with their format to everyone ? It's done already. What is going to happen to Apple market dominance ?
Also, what choice do you think the music industry will do ? Depend on one distributor only or multiple distributors that compete by compressing their margins ? That was an easy one. Remember, they own the content.

Furthermore, competition will also come from devices that apple won't be able to compete against like 3g(or wifi) phones, streaming flat fee (or ad funded) music stations, displaying album covers and allowing to order the tunes to dowload on the device or at home on the Windows PC. Apple will be on its own, fighting against a whole new market.

It's happened before to Apple itself but to others as well. Palm has escaped irrelevance by accepting that handspring and Sony (and others) compete with them, and Psion has done the same by escaping the device market (where they didn't license early enough) to the mobile OS market where they live essentially of license fees. Why ? because Microsoft has flatened their dominance by letting others do the device design work, making colour and high res screen happen faster than Psion and Palm could afford to do.

iPod is on a market where the current dominance will be impossible to maintain, especially if everybody else does the same around a different standard. Where is the differentiation ?

Apple faces a similar challenge on the PC market. Linux already offers to people like wallmart the sale arguments of "rock solid OS" and new announces of new linux preloaded makers are increasing in frequency, with the push that Linspire and others are making on the OEM market. But even if Linux doesn't happen, Windows alone will do it : it can now run in units that look like VCR or Hifi (thanks to Shuttle and others) and offers a range of hardware price levels that Apple will never be able to match, being on their own !

I use a Powerbook because it's a fine machine that didn't have matches (imho) a couple of years ago, but last time I got in a shop, there were plenty of laptops looking just as good, doing just the same, as similar prices, cheaper or more expensive.

Apple doesn't do such a good job for share holders because it's not creating the right conditions itself to be there for a long time. It will soon have to rely on a creative gamble to avert the effect of strong competition on all its markets. its making a lot of money now but also the same mistakes as during their golden age number one : there is nothing that they do that cannot be done by someone else.