I spent most of the day intensely working on an e-commerce site for one of my consulting clients. So, imagine the shock I experienced when I sat down at my desk late last night and saw that Hewlett-Packard and Apple Computer have agreed to establish a digital music alliance. The agreement calls for Apple to make a version of the iPod for sale by H-P, while H-P will promote iTunes Music Service by bundling iTunes software on all of its consumer PCs.
I almost fell out of my chair when I read this.
General news and business publications, like the New York Times and the Wall Street Journal, are giving this deal major coverage. But, has the technology business media put it in the proper perspective? At this writing, CNet News.com has only one link on its home page to a story about the alliance, while devoting fairly large space to a deal between IBM and Real Networks, and minor industry stories about PeopleSoft, Oracle, and Nortel Networks. InfoWorld is even more out-to-lunch on this story. Of the tech industry publications I looked at, only eWeek devoted major space on its home page to the alliance and its business implications.
As I said, the New York Times is giving this alliance the attention it deserves. Their major article about this, published Friday, said:
The partnership is a coup for Mr. Jobs, who has gained significant leverage in the last year because of Apple’s success in the burgeoning digital music business. The move gives Apple, which has long been pigeonholed as a niche player in the personal computer industry outside the Microsoft- Intel mainstream, access to major marketing channels and retail chains like Best Buy, CompUSA and Office Depot where Hewlett has a powerful presence.
For Hewlett, the alliance gives it instant access to Apple’s technology and music rights and the opportunity to offer a full range of popular digital products to consumers while gaining newfound independence from Microsoft and a significant advantage over Dell Computer, which sells its own music players only online.
I guess this means that I must have been on to something when I referred to the iPod as “a cultural phenomenon”, and called it “the best large capacity MP3 player ever built“. What else explains H-P’s willingness to abandon its independent effort to design its own digital music device and music download service?
H-P’s “if you can’t beat ’em, join ’em” strategy stands in sharp relief to the chaotic approaches of companies like Dell who continue to focus on price and storage capacity issues, rather than holisitic user experience and style. The New York Times article had a really telling quote attributed to a Dell spokesperson:
We expect competition and it’s good for customers. Over time, however, customers will want industry standard choices.
It’s a good thing the Times didn’t name the Dell spokesperson. This way people won’t laugh in his or her face. When will people from the price and capacity school realize that the digital music market is not merely an extension of the personal computer market?
What does H-P’s willingness to ally itself with Apple say about Microsoft’s plans for the digital music marketplace? It’s certainly possible that H-P wanted more influence over the music service they offered to their customers than they could have had as part of whatever Microsoft envisions for the future. But my bet is that they looked carefully at the potential of solutions offered by Apple and Microsoft, and they chose the one that has the best chance of being widely accepted by retail customers.