Comments on Apple v. Real

My friend Nick ‘Rawhide’ Matsakis had some insightful comments on my question about Apple v. Real, and since I’ve somehow broken my comments form (grumblings on MovableType to come later) and he’s a grad-student-with-no-time-for-his-own-blog™ I’m posting them here.

The way I see it, there are three parts to Apple music triumvirate: The iPod, the iTunes Content Store, and the Fairplay format (AAC+DRM). Each of these support the other two in a devilish lock-in scheme. Customers don’t appear to mind this lockin so much since the Apple solutions are all in the top of their class and arguably best of breed.

Despite many competitors, no one else has this kind of seamless experience and there is still no one who can. Sony has crashed and burned (see here) and Microsoft will no doubt have an excellent music store, but the only player they have announced is a $400+ media center thingy that plays movies and shows pictures. Meanwhile, Apple will sell millions of iPods this Christmas, with the $250 Mini leading the charge.

Also, despite claims of being proprietary, Apple has opened up this triumvirate. HP will begin selling iPods in a few weeks, Motorola will begin selling Fairplay-enabled cell phones next year, and has been selling spoken-word content on iTunes for 9 months. So, what is the problem with Real making its content play on the iPod? The iPod is clearly the big moneymaker for Apple, so making it be able to play more content should only be a good thing, right?

On its face, yes, but I think there are two issues here. The first is one of control. Apple has ‘opened’ up its triumvirate, but only a tiny crack and only in ways that 1) are strategic for Apple and 2) maintain the quality of the experience for users (at least Steve Jobs’ vision of a quality experience). Having Real have access to the iPod doesn’t appear to offer either of these.

More iPod content is good, but the engineering effort required to maintain interoperability is better spent working with the likes of HP and Motorola, which will each bring the Apple solution to millions of customers (perpetuating the lock-in, etc.) Likewise, the deals with HP and Audible have maintained Apple’s control over the experience. I’d be surprised if the Motorola phones didn’t have an Apple-designed media player that enforced the Apple brand in its appearance and operation.

Also, more importantly, Real is a real competitor to Quicktime in the online streaming media domain. Apple would probably be very happy if Real disappeared completely, offering them a bigger slice of the cross-platform content-creation platform.

In short, I think this is all about Real, and the results might have been much different if another company had approached Apple trying to license fairplay. Personally, I want to think Apple is being foolish in not trying to get a broader base form MPEG-4/AAC over WMA. However, I think they are adopting the Microsoft battle plan: grab as much land as possible in the beginning then rent it to the rest of the world at a profit. This plan hurts consumers, but I think it is the only way that Apple will be able to hold off the onslaught of Microsoft.