Re: Dumb iTunes Question - in defense of Apple

[Christian Lindemer <CD-Lindemer@wiu.edu>]

Brad Caviness wrote:
> Am I crazy, or didn't Bill Gates invest pretty heavily into Apple a year 
> or so ago?

You're crazy, from what I know.  Apple got a token investment from MS 
about seven years ago - they purchased $100 mil in non-voting shares of 
the company - but that has all been sold back, I believe.  I may be 
wrong, but that's still a relatively small portion of a company that has 
$4.8B in the bank.  I will grant you that they were in debt at the time, 
though.

> iTunes for Windows, I guess, serves the same purpose as cds at best 
> buy... sell the cheap stuff at a loss, but don't cut any breaks on the 
> expensive stuff, i.e., the iPods. Silly me, I was thinking in terms of 
> making a profit off iTunes itself by selling compatible files to the guy 
> (or lady) who bought a Creative Nomad or an Odyssey 1000. Which 
> wouldn't, of course, increase their market share, necessarily, but could 
> turn a tidier profit for almost no overhead. And, since that's not the 
> case, I'm inclined to believe either Apple likes their little club 
> (making windows iPod users like allowing women and righteous foreigners 
> in the outer court of Herod's Temple), or the mark-up on iPod is 
> unbelievably high.

They make a good margin, but nobody seems to know what it is.  With the 
first revision of the iPod, pourchasing the tiny 5-gig hard drive direct 
form Toshiba would cost an individual as much as the iPod containing it 
from Apple, so they must have been getting /some/ volume discount. 
Still, if it's worth it to build up an entire music delivery system for 
the contingent sales of a single device, then the margin must be pretty 
decent.

As for your earlier question about Apple being incompatible just to be 
incompatible, here's the reason:  The only way to get on the music 
industry's good side was to offer files in some sort of format that 
could be protected/restricted to the person who purchases it.  That 
leaves MP3 out - without modifying the file format in some way that 
makes it incompatible anyway, it's not possible to lock them down.  So, 
they had to use a format other than MP3.  The only stock format that is 
designed to be protected is Microsoft's WMA.  I should hope that Apple's 
reason for avoiding that format are obvious, but if you should need a 
clue just look at the web browser market and what happened re: Internet 
Explorer and Netscape Navigator.  Their only choice was to make a new 
protected format, so it didn't matter *how* incompatible they were - 
compatiblity's like that, somethign either is or isn't.  They chose to 
adapt AAC with a special "container" to protect it.  The files you get 
are a standard MPEG4 / AAC file, with an extra bit of encryption to 
prevent one person sharing their purchased library with a million of 
their closest friends.

An interesting note:  ripping your own CDs through iTunes cannot create 
"protected" files, unlike Windows Media Player.  The songs you rip are 
pain-jane MP3 or MP4 files.  I have known more than one person who left 
Windows Media Player set up as default while ripping CDs to WMA files, 
then re-installed Windows on their computer.  They thought that backing 
up their WMA files would keep their library, but WMP would not allow 
them to play the files since the re-installed computer seemed like a 
/different/ computer as far as WMP was concerned.

-Smitty the know-it-all

---------------
Unsubscribe by going to http://www.actwin.com/OtR/