March 1st, 2006
Jobs iPod Hi-Fi: Home stereo reinvented? Or load of HorseCRAP?
Please don’t say I didn’t warn you. Regarding Apple’s recently introduced iPod Hi-Fi, the first story I read was written by News.com’s John Borland. In it, Borland wrote "Jobs and Apple are pitching the iPod Hi-Fi as a replacement for the home stereo system." My hunt began for the quote. The one from Jobs that pitched it this way. It wasn’t in the News.com story. Next, I read BusinessWeek’s version. Does Apple’s refusal to license its technology…constitute a violation that trustbusters should be paying attention to? In that story, Peter Burrows wrote "Still, Jobs’ claim that it offers consumers a great way to replace their stereos is a stretch." Claim? Where’s the claim! I need a quote. And then, I found it. There it was in the San Jose Mercury News story. At the very bottom, in the last paragraph of the story, a quote from Steve Jobs. Wrote the Merc’s John Boudreau: "It’s really the home stereo reinvented,” Jobs said. "Music is not on CDs in your cabinet. It’s on your iPod.”
Bingo.
The dastardly plot I’ve been kicking and screaming about came straight out of the horse’s mouth. So, just to catch everyone up on what I’m talking about and how this works, Steve Jobs believes in his heart (or should I say admits) that all of your music should be kept somewhere on an Apple device. Judging by the Merc’s quote, his preference is the iPod. Yes, we’ve heard rumors that Apple is going to transmogrify its low end iMac into some sort of media center. But let’s judge Apple by Steve Jobs’ words instead. That seems closer to reality. So, what else is in your iPod? Well, for starters, it’s full of Apple’s proprietary CRAP. C.R.A.P., in case you missed some of my previous blogs on the topic, stands for "Cancellation, Restriction, and Punishment." I’ve even made a video about it. CRAP is my personal acronym for DRM (Digital Rights Management technology). Originally, I wanted CRAP to stand for Content Restriction, Annulment, and Protection. But Richard Stallman at the Free Software Foundation convinced me to change its meaning to"Cancellation, Restriction, and Punishment" and ZDNet’s readers sided with him. So what is CRAP?
First of all, if you want to by music by most major artists one song at a time (the way you should be able to by music) and you want it to be able to play on an iPod, then the only place you can buy that music is from Apple’s iTunes Music Store (IMS). Music sold through IMS is stuffed in an wrapper that’s made out of Apple’s proprietary CRAP. Currently, there are only three things that can legally cut through Apple’s CRAP to playback the music: the iTunes software, an iPod, or an iTunes phone from Motorola. In other words, Apple is solely in charge of when and where music that’s purchased through IMS can be played back. It has also refused to license its CRAP to other hi-fi companies. For the last year, I’ve been arguing that much the same way Apple is using its CRAP to dominate digital music and video playback in the technology market, that it will soon start to nudge the traditional hi-fi manufacturers out of the hi-fi market.
Since Apple is in charge of where CRAP-wrapped content can play, it gets to decide whether or not CRAP-wrapped content will work on the gear that’s sold by the traditional home entertainment companies. But, since the home entertainment market is a growth opportunity for Apple, especially if it can kick all the traditional players out of the game, why would Apple ever let those companies play? It doesn’t. And to the extent that Apple allows some iPod accessory companies (ones that aren’t a threat to its master plan) to participate in the iPod ecosystem, Apple charges them an exorbitant tax. Now that Apple is competing against some of those very same companies, it gets to operate in a tax-free environment while the competitors must pay to play. The real name of Apple’s CRAP is FairPlay. But how fair is that? Now that IMS has a virtual lock on the online a la carte digital music sales market, does Apple’s refusal to license its technology on reasonable and non-discriminatory terms (a practice that could foreclose on competition) constitute a tying violation that trust-busters should be paying attention to?
Back when I first wrote that Apple would use its CRAP to lock home entertainment players out of their own business, a few people wrote to me to say Apple would never do that. Think different folks [sic]. Apple is going after the home entertainment market and it will use its CRAP to keep the competition at bay. This time, you didn’t hear it from me. You heard it straight from the horse’s mouth. So, HorseCRAP anyone?
