Analysts: Moves by iTunes Store also-rans may spur even more Apple iPod sales
Wednesday, August 22, 2007 - 09:52 AM EST
"As competitors challenge Apple Inc. in digital music, the biggest beneficiary may be Apple," Joseph Menn and Michelle Quinn report for The Los Angeles Times.
"Wal-Mart Stores Inc. and RealNetworks Inc. on Tuesday strengthened their digital music offerings to better compete with Apple's iTunes store. Wal-Mart began selling songs without anti-piracy locks for 94 cents apiece, and RealNetworks' Rhapsody subscription service announced new partners that would promote it on MTV and distribute it on Verizon cellular phones," Menn and Quinn report.
"But the competition might actually help Apple. That's because the Cupertino, Calif., company makes a slim profit on selling songs but cleans up on every iPod music player," Menn and Quinn report. "A robust market for digital songs should translate to more demand for the music players on which to play them, and Apple's iPod is the runaway leader."
"'iTunes was developed to promote iPod hardware sales,' said Susan Kevorkian, an analyst at research firm IDC. 'The introduction of services that offer digital music to the installed base of iPod users will help drive more iPod sales,'" Menn and Quinn report.
"'Certainly the ability to buy music in more places helps Apple,' Pali Research analyst Richard Greenfield said. 'They make very little money on iTunes transactions, and they make a good amount of money on iPod transactions,'" Menn and Quinn report.
"'By putting [MTV's Urge and RealNetworks' Rhapsody] together, they have a stronger service,' said analyst Josh Bernoff of Forrester Research. But he noted that songs through the Rhapsody subscription service don't work on the iPod," Menn and Quinn report.
Full article here.
[Thanks to MacDailyNews Readers "Judge Bork" and "Mike in Helsinki" for the heads up.]
MacDailyNews Take: Rhapsody is a product in a never-ending search for a market and AAC (Advanced Audio Coding) trumps the MP3 dinosaur in every important measure. All of the music sold via Apple's iTunes Music Store uses AAC. Wal-Mart sells MP3 tracks.
AAC advantages over MP3 include:
• Improved compression provides higher-quality results with smaller file sizes
• Support for multichannel audio, providing up to 48 full-frequency channels
• Higher resolution audio, yielding sampling rates up to 96 kHz
• Improved decoding efficiency, requiring less processing power for decode

Why does combining two marginal, failing enterprises make one "stronger service?"
I don't buy it. Lump two turds together, you have a bigger turd.