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Microsoft’s Bill Gates’ prediction of Apple iPod market share decline fails to materialize
Sunday, September 18, 2005 - 10:38 AM EDT

"The success story of Apple's iPod music player has impressed the whole sector. The Californian computer manufacturer has sold 22-million iPods since 2001, including 6.2-million of the music players in the last business quarter, corresponding to about 70% of the worldwide market," Christoph Dernbach reports for The Mail and Guardian. "Apple boss Steve Jobs recently presented the new iPod nano in San Francisco. It is just the size of five business cards laid on top of each other."

Dernbach reports, "Microsoft co-founder Bill Gates has repeatedly predicted that Apple's success in entertainment electronics and in the music business will not last as Apple has opted for a closed system using its own hardware and software. 'I think you can draw parallels here with the computer: here, too, Apple was at first in an extremely strong position with its Macintosh and graphic possibilities -- as with iPod today -- and then let its position slip, Gates said in a newspaper interview in May. However, the trend change predicted by Gates is not in sight. In the United States and Britain, Apple's iTunes music store dominates with a market share of about 80%. Only in Germany does T-Online with Musicload have the edge in the digital music business, a position that cannot be extended internationally."

Full article here.

[Fixed quoted source. Thank you, SGM.]

MacDailyNews Take: The iPod is not the Mac, so stop trying to compare them. The Macintosh platform required and still requires substantial investments by developers to create compatible software. The iPod simply plays music that can be encoded, for very little cost, in any format the "developers" (musicians and labels) desire: AAC, MP3, WMA, etc. The music doesn't need to be rewritten, recorded, and remastered. It's like writing Photoshop once and then pressing a button to translate it for use on Mac, Windows, Linux, etc. For Gates to draw an analogy between Mac OS licensing and the iPod/iTunes symbiotic relationship either highlights his ignorance of the vast differences between the two business situations or shows Gates trying to dent iPod's dominance with a dose of FUD.

Related articles:
Music lovers make Apple's iTunes Music Store AAC format the de facto standard for online music - August 28, 2005
Financial Times writer: Apple must act soon or lose its lead in digital music market - July 07, 2004
Financial Times on Apple Computer's results: 'only a matter of time before this apple falls' - July 14, 2005
iPod, iTunes, and iTunes Music Store competitors lack Apple's 'seamless integration and ease' - August 28, 2005
Apple's roadkill whine in unison: 'incompatibility is slowing growth of digital music' - August 13, 2005
The New Zealand Herald serves up a steaming pile of iPod FUD - August 11, 2005
Bill Gates: 'I don't believe the success of the Apple iPod is sustainable in the long run' - May 12, 2005
FUD campaign against Apple's iPod+iTunes fails to stick - April 08, 2005
Apple's iPod and iTunes competitors continue whining about FairPlay - February 07, 2005
The de facto standard for legal digital online music files: Apple's protected MPEG-4 Audio (.m4p) - December 15, 2004
Another day, another 'iPod may go the way of the Mac' article - August 16, 2004
The iPod is not the Mac, so stop trying to compare them - August 13, 2004

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Reader Feedback: ( = registered)

Sep 18, 05 - 12:03 pm Comment from: Jack Arends

Gates is not stupid. So it is FUD. Which is about par for the course for Gates. We all know how he plays the game. It is about winning at any cost and the only rules are "what can you get away with".

It is really nice to see the best product win for a change.

Sep 18, 05 - 12:17 pm Comment from: Mystical

Sony has a new iPod killer. And the list goes on

Sep 18, 05 - 12:21 pm Comment from: iThink

...it's the latter.

FUD.

That's how Gates and MS started stealing billion$ and billion$ anyhow, when I think about it.

Sep 18, 05 - 12:40 pm Comment from: Tempus Fugit

iPod nano

the iPod killers killer

Sep 18, 05 - 12:58 pm Comment from: Elmer F.U.D.

iPod nano

The iPod mini killer

Sep 18, 05 - 01:12 pm Comment from: Tastes like chicken

"Gates is not stupid. So it is FUD."

Agreed, it's a healthy does of FUD.

However, if Gates is a genius and gets the music player market, why can't MS come up with a credible answer to the iPod? One answer is you can't steal class. The other is that Gates and MS are clueless to the market (witness his laughable comparison to computer platforms), and FUD is the best they can do. MDN's take aptly covers that.

"Apple's success in entertainment electronics and in the music business will not last as Apple has opted for a closed system using its own hardware and software."

So far it's been proven that music players have to be closed; the Apple-involved ROKR phone is a case in point. In this kitchen, two cooks are one too many.

Sep 18, 05 - 01:15 pm Comment from: meatofmoose

I would be more impressed if Bill Gates would be able to predict when Microsoft will offer a commercial release of Longhorn.

Sep 18, 05 - 01:20 pm Comment from: Suicidal Gingerbread Man

MDN-

Small note. That's a Mail & Guardian article, not a Globe & Mail.

Sep 18, 05 - 01:21 pm Comment from: R

M$ WILL win the music war-- by making sound only hearable through Microsoft Ears, the breakthrough technology that translates ordinary sonic vibrations into substandard sonic rattlings. All hail Microsoft Ears.

Sep 18, 05 - 01:33 pm Comment from: duper

...it still would be nice if the iPod supported ogg vorbis.

Sep 18, 05 - 01:53 pm Comment from: JulesLt

Seeing as he didn't give a timescale, he will probably be proved right - does anyone seriously believe that in 20 years, 80% of the world will be buying it's music through one store and using one manufacturers devices?
The question is whether Apple will be getting royalties from having defined the format or it will be WMA.

Interestingly, today I visited a few of the UK's major electrical retailers and while they had a large stock of iPod accesories, their MP3 player displays were curiously missing the most popular player, and do not make clear there is any 'format' issue with the ones they do sell. One of them did have iPods but literally 'under the counter' - I wonder if they're getting promotional assistance, or if it's just the usual thing (they'd rather sell anything but Apple due to smaller margins on Apple products)

Argos, meanwhile, claim the iPod plays WMA!! Defined as 'a format that lets you get twice as much music in half as much space' - how scientific

Sep 18, 05 - 02:10 pm Comment from: predictions

meatofmoose: that is way too easy. NEVER. Longhorn is never going to be released. Ever heard of Vista? The new Microsoft FUD on the OS sector.

Sep 18, 05 - 02:35 pm Comment from: billysmom

actually, the iPod does play wma; one merely converts it into AAC using iTunes, and away you go! i have a lot of friends with large, dark side, music libraries. once they found out that this conversion could easily be done, they all bought iPods. that argument really doesn't wash.

is anyone actually suprise that little billy was wrong in predicting the demise of iPod? has little billy ever been right about anything? does little billy even know his right hand from his left? he and monkey boy are about the past; His Steveness and Apple are about the future.

Sep 18, 05 - 03:14 pm Comment from: Macaday

Good line:

"Gates and and Ballmer are about the past; His Steveness and Apple are about the future."

Seconded.

Sep 18, 05 - 03:24 pm Comment from: Reality Check

"Apple's success in entertainment electronics and in the music business will not last as Apple has opted for a closed system using its own hardware and software."

And since when exactly has M$' music system been open? Last I checked, WMA-DRM is quite proprietary itself. And the songs will only play on Windows PCs and not Macs, so it's actually even more of a closed system than what Apple currently has in place. The only reason he calls it "closed" is because Microsoft doesn't own it, so his statements are nothing more than transparent FUD.

Sep 18, 05 - 03:28 pm Comment from: DudeMac

The iPod's success has to do with the fact of great design, great marketing and great cross-platform compatibility keeping the Windows-only competitors at bay!

Sep 18, 05 - 03:30 pm Comment from: FUD Buster

Bill Gates obviously either hasn't read this article, or else he's simply in a serious state of denial, one or the other...

http://daringfireball.net/2004/08/2004_wont_be_like_1984

Sep 18, 05 - 03:31 pm Comment from: neomonkey

Maybe someday we'll get a DoJ with the cajones to break up the illegal Microsoft monopoly as Judge Jackson recommended. Meanwhile Gates will keep on FUDding as much as Bush about how swimmingly things are going in Iraq.

Sep 18, 05 - 03:43 pm Comment from: Teflon

I am growing weary of MacDailyNews' same response to every negative iPod story. We get it. If you can't think of anything new or news-worthy to say, then just shut up.

Sep 18, 05 - 04:35 pm Comment from: macnut222

"I am growing weary of MacDailyNews' same response to every negative iPod story. We get it. If you can't think of anything new or news-worthy to say, then just shut up."

Another option is that you can ignore the article altogether and relieve us of your complaints.

Sep 18, 05 - 04:40 pm Comment from: luke

What is an advantage with the iPod playing Ogg Vorbis?

Sep 18, 05 - 05:26 pm Comment from: g3m4nn

Look at it this way: What if the sony Cassette walkman and all of it's clones adopted a different way to scramble the electrons on the tape, with different schemes for decoding it? Everyone would have went nuts trying to deal with compatible tapes for their players. That's what's happening now. As we've seen in the past formats will always thin out and eventually lead to a dominating player(not music player but company). Once this curent cycle is complete the winner wil license out their format and the industry will standardize. In the mean time, pick your favorite and choose the standard with your wallets, and stop talking shit about the other guy.

Sep 18, 05 - 05:28 pm Comment from: g3m4nn

Oh yeah, BTW the iPod could easily play WMA with the right firmware, as their chips are the same as every other player. Apple has it shut off and with good reason.

Sep 18, 05 - 05:33 pm Comment from: Hidden iPods

JulesLt wrote:

"One of them did have iPods but literally 'under the counter'"

Were the iPods locked behind glass (to prevent theft), or were they hidden?

If it was the later, Apple seriously needs to establish & enforce sales floor terms with retailers, or Apple WILL face an iPod decline down the road. Retailers who have iPods hidden away, or try to strong-arm "the other iPods", should face permanent blacklisting by Apple.

Sep 18, 05 - 05:50 pm Comment from: ZZZZZZZZZZZZzzzzz

Another "who cares" news story dredged up by MDN because there is no interesting Apple news.
You, too, can dredge up Apple news stories from all over the world:
http://news.google.com/news?hl=en&ned=us&q=Apple&btnG=Search+News

Sep 18, 05 - 05:51 pm Comment from: Sol

He also predicted the rise of tablet PCs and Portable Media Centres.

Sep 18, 05 - 06:38 pm Comment from: mike

Gates is not stupid. So it is FUD. Which is about par for the course for Gates. We all know how he plays the game. It is about winning at any cost and the only rules are "what can you get away with".

---

Remember that next time, he has no integrity, lies to the media.. so next time he makes a promise, remember, it has just as much credence..

Sep 18, 05 - 07:46 pm Comment from: John

The iPod is a superior product and no one has come close. Gates was talking through is behind like most PC pro people who write for the internet. All FUD. They can't take it when the all Mighty Windows platform gets beat fair and square with an outstanding product like the iPod. Just like with Apple now starting to gain momentum with OSX winning back marketshare. They start trying to compare MS Vista to Tiger when there is no comparison because Vista is just beta ware that isn't even functional yet compared to Tiger which is a fully functional released OS. And OSX Leopard will be out before Vista is released and Apple will bump ahead once again.

Sep 18, 05 - 07:58 pm Comment from: MacDude

What happens in any buisness is this.

1: A company comes out with a new product or improves on a exsiting product, and if they keep improving on it and being aggressive with marketing will command the market share leader.

2: Eventually the market gets saturated and johnny come lately's come in and attempt to chip at the leaders market share.

Since it takes time for competitors to copy the original, set up factories and develop a marketing stragety. It's important for the first company to have as much of a head start as possible to recoup their R&D;efforts and turn a profit.

That's why keeping one's mouth shut about real/speculative Apple products that haven't appeared yet is so important.

Eventually yes perhaps the iPod's star will fade, every product does. People always want to try something new regardless.

But there's a catch with the iPod, it's a device that can work just fine for many years, so turnover is not like a PC. Also over time and the more the iTMS is used, the bigger the ACC/Fairplay music library becomes and less and less people are willing to take the time to convert all that music and suffer a quality loss.

Sep 18, 05 - 08:00 pm Comment from: MacDude

Oh, Bill Gates will die before the iPod looses it's shine anyway.

Sep 18, 05 - 08:43 pm Comment from: So...

You got digital music with an unlimited market potential and Apple
knows it.

Where is Apple's entry into the gaming console fray? Is there any
reason for Apple to jump into this market, or have we decided to let
that go unchecked, as well? smirk


CT ======]---------- And so on, and so forth, etc., etc., etc. (If you got the time)

Sep 18, 05 - 08:51 pm Comment from: winmacguy

From Steve Ballmer
"Some Microsoft critics say that many of the features in "Longhorn" already exist in other operating systems. How do you respond to that?

I don't hear that from enterprise customers. They don't look at the Mac. They just don't. Some people will say some of the features are kissing cousins to features they've seen elsewhere, and that is true. I'm not apologetic about the fact that we should, in a way that doesn't offend anyone else's intellectual property, study and learn and benefit from the work others have done."

View the rest of the article here
http://www.eweek.com/article2/0,1759,1860443,00.asp?kc=EWRSS03119TX1K0000594

Sep 18, 05 - 09:34 pm Comment from: hiproductionsdotcom

Not sure I buy into that at this juncture.

Andrew Hamilton
Las Vegas Videographers
http;//www.hiproductions.com

Sep 18, 05 - 09:46 pm Comment from: Steve Jobs

The only iPod killer is the next iPod.

Bill's a bozo so often it's easier to note when he isn't one.

Sep 18, 05 - 10:30 pm Comment from: BuriedCaesar

And another word for "prediction" is "guess"

Sep 18, 05 - 11:22 pm Comment from: Glug, glug, glug...

Crisp, refreshing and ice cold.

Was water that good??? wink


CT ======]------------ See Below

Sep 18, 05 - 11:32 pm Comment from: Finally!

Games can be found everywhere, this is not unfounded. Computer
gaming does have it's good points and there are Mac games for those
who choose to venture into them.

An Apple game console called something like the "itvTube" could open
up some worthwhile earning opportunities for game programmers. If
thier is a game console pie...Apple might as well dig in!!! cheese


CT ======]------------ No sweat

Sep 18, 05 - 11:35 pm Comment from: No PS Zone

"Where is Apple's entry into the gaming console fray? Is there any
reason for Apple to jump into this market, or have we decided to let
that go unchecked, as well?"

Why would Apple jump into such a crowded and bitterly competitive arena? The iPod became a success because all the others sucked. Sony PlayStation doesn't grant that kind of opportunity, at least currently.

Apple should keep doing what it's good at, and enjoy the console fireworks. The more resources Sony and MS funnel into the console wars the better. Only when (and if) the crystal ball shows consoles emerging as a clear threat to ITMS and Apple hardware, should Apple consider a response.

Sep 18, 05 - 11:45 pm Comment from: Bill Gates

the nano is great despite what anyone says... its small, lightweight, color screen, and beautiful.. it is very easily scatched which sucks, but thats why they make cases... and apples cases are by far the best... it holds just as much as my mini did.. glad i i got my money back for it to pay for the nano.. thanks walmart!!! and all that FM stuff is crap... the best way to go if ur car doesnt already support iPod connections is get a blitzsafe adapter.. i just installed one in my beetle.. and is works flawlessly.. perfect clean crisp sound in my car... awesome!!.. not the most fun thing to install.. but installable none the less... my point is iPod's are great by far.. the nano is the coolest one yet.. but dont be side tracked by the scratch nightmares.. just get a case, blitzsafe and enjoy!!!

*Microsoft sucks donkey d!ck*

Sep 18, 05 - 11:53 pm Comment from: Flash Memory

With flash memory headed in it's current direction...Apple has a
hardware/media bonanza to exploit. Why not take this baby for a
spin around the block. I'm sure Apple employees could use a fun new
project to keep spirits up during this historic juncture as they make
the transition to Intel processors. mad cool mad


CT =====]----------- Discombobulated

Sep 19, 05 - 12:09 am Comment from: Feeling Blue?

Turn the screw. Finding keys? Don't call them fleas. <•>|<•>


CT =======]------------ FRAM oil filters

Sep 19, 05 - 05:08 pm Comment from: edward

bill gates and apple both are not stupid. only different fact is that MS has no good sight for the future unlikely Apple. so ipod will be the same not to develop periodically? what about ipod nano? here is the line. MS doesn't have any anwser for their new OS. they copy mac os x all time. even new office 12 got metal interface like mac os x. I think that they should worry about the creation for their own. actually there isn't totally new creation going on. they have no idea how to develop entire new windows os. before asking question about ipod market share, they must think about the creation not copy.

what a pathetic!

Sep 19, 05 - 07:54 pm Comment from: mike

"Where is Apple's entry into the gaming console fray? Is there any
reason for Apple to jump into this market, or have we decided to let
that go unchecked, as well?"


Man you're an idiot.

Sep 19, 05 - 08:37 pm Comment from: Click, click...

Can't you see a flashed based gaming console with bluetooth controllers?
That would be small and Apple...you know, kid size.

If Apple REALLY works this flash memory wave to thier advantage, they
can fly downwind. Always the leader! cool grin


CT ======]----------- ...and having fun

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