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iPod: The Gift That Keeps on Going

By Cynthia L. Webb
washingtonpost.com Staff Writer
Thursday, December 16, 2004; 10:15 AM

Apple couldn't ask for a better dilemma -- with nine days left until Christmas, retailers are reporting a shortage of the popular iPod digital music player.

People still can find the item on Apple's Web site and at the computer maker's stores, but the gadget shortage at mass market retailers is kicking the iPod up to that lonely top shelf of mega-popular gifts of days past, just like Tickle Me Elmo and the Cabbage Patch Kids. The only difference so far? We haven't heard about any pushing and shoving in the aisles over the iPod -- yet.

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"Many of the most-popular models -- including some of the colorful, diminutive iPod minis and the 20-gigabyte white iPod -- are out of stock through Amazon.com Inc., Buy.com Inc. and other Web sites. Target Corp. stores in Chicago and the San Francisco Bay Area say they are out of many iPods, as does J&R Electronics Inc. , a big electronics store in New York. Best Buy Co. is out of most iPods on its Web site, although a company spokesman says the vast majority of its stores 'have at least one' iPod in stock," the Wall Street Journal reported. Apple told the Journal it is churning out and shipping iPods as fast as it can. Is this "only one left" strategy being spun by the retailers or is Apple's PR machine and distribution strategy using the oldest trick in the book to do the same thing? It's probably a healthy dose of both.

The Journal reported that eBay is helping to ease the crunch, but buying one of the players at the auction site could come at a hefty premium. "The spotty availability of the iPod has created a booming aftermarket for the devices on eBay Inc.'s auction site, where a pink iPod mini earlier this week fetched $380, or more than $130 above the music player's suggested retail price. In April eBay created an iPod category on its site in response to active trading of the gadgets among its users. In its first month, there were 3,000 iPod-related listings, according to an eBay spokesman. Now there are about 18,000 listings in the category," the article said. "Such iPod-mania suggests that Apple's manufacturing and distribution system hasn't kept pace with the company's larger-than-life marketing efforts for the device. The iPod has achieved near-cult status among its fans because of its elegant design, ease of use and cozy integration with the iTunes Music Store, from which Apple sells digital, downloadable copies of songs for 99 cents each. Apple now offers a broad spectrum of the devices, all of which can store thousands of songs, ranging from the $249 iPod mini to the $599 iPod photo, which also displays an owner's photos on its color screen."
The Wall Street Journal: Out of Tune: iPod Shortage Rocks Apple (Subscription required)

The Minneapolis Star Tribune ran its own iPod lovefest piece today: "[IPod is selling] like nothing in the history of Apple Computer Inc. and like nothing else this holiday season. Analysts say Apple will sell about 4 million iPods this quarter, up from 733,000 in the fourth quarter last year." Bloomberg also picked up on the iPod shortage, noting that Amazon.com is out of the $299 20-gigabyte iPod. "At Richfield-based Best Buy Co. Inc., the nation's largest retailer of consumer electronics, the 20-gigabyte models are 'in short supply,' spokesman Brian Lucas said. Best Buy doesn't expect to get any more iPod shipments before Christmas, he added." Here's one reason: Some people are scooping up more than one. Here's one Apple worker who gets the toe-the-company line award for talking cheerfully about sales: Dan Fenner, assistant manager at an area Apple store told the paper, "We've got people buying for whole families, six or eight at a time... I'm in the process of ringing up a corporate sale of more than 200 iPods." The iPod, by the way, continues to be a goldmine for Apple's overall sales. "If computer-makers indeed continue evolving into broader consumer-electronics companies, Apple would seem to be well-positioned to become a leader again. Already, in the company's fourth quarter, 23 percent of its US$2.35 billion in revenue came from iPod sales," the Philadelphia Inquirer reported recently.
Minneapolis Star Tribune: Santa Takes A Shine To Apple's iPod
Bloomberg via New York Daily News: Shortage of Popular Apple iPods
Philadelphia Inquirer via MacNewsWorld: Apple Rides iPod's Popularity To Wave of Core Innovations (Registration required)

For those who have gotten their hands or mittens on an iPod for the holiday season, WSJ tech columnist Walter S. Mossberg yesterday offered a primer of how the iPod works, including how to add songs from your CD collection and burn them from Apple's iTunes and other online music stores. "By all accounts, millions of people will buy or receive Apple Computer's iPod digital-music players this holiday season. The gadgets are beautifully designed and simple to operate, which is one reason they're so popular, even after three years on the market and despite a rising number of competitors," Mossberg wrote.
The Wall Street Journal: Making the Most of Season's Big Gift: Our iPod User's Guide (Subscription required)

Function Follows Fashion?

There are plenty of rivals lining up to try to beat Apple at its own game. The New York Times sized up some of the competition, including Rio, Creative, Virgin Electronics, iRiver and Archos. "They and other companies are pushing their design teams to challenge iPod on two of its strongest assets: function and fashion. 'We live and breathe competition and talk about iPod every day,' said David Feldman, vice president for marketing in North America for Archos, a pioneer in developing digital music players. To come up against the 800-pound gorilla, we have to provide differences in our product mix. We have to have capabilities beyond the iPod.'" The result is a number of new music players, on the market or in the works, that have Apple in their sights. Some are similar to the iPod in features and capacity but cost less. Some have extras the iPod doesn't, like built-in FM tuners. And some offer an alternative to the iPod's rectangular shape, seeking to steal some of its less tangible hipness."
The New York Times: And Now For Something Slightly Different (Registration required)

A Mini, And It's Not an Austin

David Pogue of the New York Times today wrote about how Apple has even created buzz and hot sales for its iPod mini, a compact version of its iPod player that comes in designer colors, but sells for just $50 less than another, regular-sized Pod that can store four times as many songs. "But the Mini was an enormous hit, and back-ordered for months. Its appeal was never about logic; it's about emotion, style and status. It's so small, cool and comforting in the hand that to hold one is to want one," Pogue wrote. "Some of the similarities are broad, like the charging cable that also auto-loads a copy of your music collection from your PC. Some are tiny: the iPod-like 'Don't steal music' sticker (on the Dell's screen), the choice of colors (Creative's Zen Micro comes in 10) or the fingerprint- and scratch-prone mirror-chrome back panel (on the Rio Carbon). There are also some very important differences. For example, the iPod Mini works with the Macintosh and Windows. But if you want to buy pop music legally online, you must use Apple's iTunes Music Store. That's not such a horrible fate; Apple's store is widely admired. Still, iPods can't play songs bought from other online music stores. The rival players present the opposite situation: they accept songs bought from almost any online store except Apple's (Napster, Wal-Mart and so on), because all of these stores and players use Microsoft's copy-protection format. Of course, both the iPod and its rivals also play unprotected files like WAV and MP3 and songs you've ripped from your own CD collection."
The New York Times: With Mini's Rivals, More Is Sometimes Less (Registration required)

Get Real, Or Don't

But trying to crack Apple's cachet can be a major headache for those who try to play hardball. Just ask rival RealNetworks. "No longer only a war of words, Apple Computer Inc. has quietly started to block the technology that RealNetworks Inc. created to get around the iPod music player's copy-protection armor," the Associated Press reported, following the heels of other reports that RealNetworks and Apple were butting heads again. "Making good on a promise not to sit idly, Apple counterattacked RealNetworks' Harmony technology with one of its newest iPod models, the iPod Photo, which debuted Oct. 26, Apple spokeswoman Natalie Kerris said Wednesday. She refused to say which, if any, other iPod models may have already received a similar software upgrade. RealNetworks introduced Harmony in July, hoping to break down some of the walls created by incompatible, proprietary digital music standards. The Seattle-based company claimed it reverse-engineered Apple's copy-protection code so songs purchased from its RealNetworks' RealPlayer music store could be playable on Apple's best-selling iPod. Otherwise, Apple's protection scheme limits the iPod to songs downloaded from Apple's leading iTunes Music Store or songs in the generic MP3 music format. It's unclear how many people are now stuck with songs they could no longer play on their iPods."

Bloomberg noted that Apple's "software changes are the latest move in a battle between RealNetworks and Apple that began in April after Apple Chief Executive Steven Jobs refused an e-mailed request from RealNetworks Chief Executive Rob Glaser to open up the iPod to RealNetworks' music. Jobs refused the alliance and used The New York Times to publicize Glaser's e-mail. RealNetworks responded by designing Harmony without Apple's assistance."
The Associated Press via washingtonpost.com: Apple Fights Back Against RealNetworks (Registration required)
Bloomberg via the Seattle Post-Intelligencer: Real Networks Says Apple Blocks Its Music

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