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HP likely to stop bundling iTunes by '06

post #1 of 21
Thread Starter 
Hewlett-Packard, the world's second largest personal computer maker, will likely stop including copies of Apple's iTunes software on its computers later this year following a failed iPod licensing partnership with the Cupertino, Calif.-based iPod maker.

This recent assertion comes from analyst Shaw Wu of American Technology Research, who in a research note today cited industry and channel sources in saying that "HP will likely not bundle iTunes with its desktops and laptops by the end of this calendar year."

Instead, Wu is lead to believe that HP will soon abandon iTunes as its default music player in favor of forming a new relationship with Microsoft and its Windows Media Player technology.

Following a Friday Wall Street Journal web report, HP said it would stop reselling Apple's iPod digital music players around the end of September amid disagreements over finances and the company's digital strategies. A company spokesman was quoted as saying that HP would continue bundling iTunes on its desktop and notebook PCs for the time being.

The initial response to the fallout by analyst and industry followers was one of mild to little concern, considering HP accounted for just 5% of total iPod sales since entering into the partnership with Apple. However, the partnership enabled Apple's industry-leading iTunes music service to reach millions of Windows users every year; a move by HP to remove iTunes from its desktops may affect Apple's reach and ultimately its marketshare.

As part of the original agreement between the two companies, formed in January 2004, HP agreed to install Apple's iTunes music jukebox software on its computers in exchange for the rights to resell Apple's iPod digital music players.

The partnership was initially greeted with much fanfare because HP's 100,000 plus retail outlets worldwide offered the potential to dramatically expanding the iPods reach in international markets where Apple was not present.

"Unfortunately, the partnership barely got off the ground. Its impossible to say whose fault it wasApples or HPs," said Needham Co. analyst Charles Wolf. "HPs strategy to enhance the iPod with brightly colored paper covers was hardly consistent with the companys desired image of an innovative company. And despite the opportunity to sell the iPod abroad in markets Apple could not reach, HP appears to have confined its sales to US retailers."

Apple apparently saw little need for the redundancy HP was forming in its iPod distribution channels, and because it did not offer the PC maker any price protection on the players, easily overtook those markets in which HP had formed inroads.

"The relationship between Apple and HP undoubtedly deteriorated when Apple began to expand the iPods presence into retail outlets, such as Radio Shack and Wal-Mart, that already stocked HPs version of the product," Wolf said. "With HP and Apple selling in many of the same stores, HPs incremental contribution was probably close to zero."

But will a decision by HP to stop placing iTunes on its computers in lieu of a more versatile Microsoft solution further open the door for the iPod's many competitors in addition to a Microsoft music store?

HP, which is prohibited from reselling or developing a competitive music player until August 2006 under its original agreement with Apple, is not likely invest in marketing a new player of its own. Instead, the company appears focused on a digital strategy centered around digital printing and imaging.

Representatives for HP were unavailable for comment.
post #2 of 21
Quote:
Instead, Wu is lead to believe that HP will soon abandon iTunes as its default music player in favor of forming a new relationship with Microsoft and its Windows Media Player technology.

Now we know the real reason HP dropped the iPod.

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     197619842013  

     Where were you when the hammer flew?  

 

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iPhone 5 • iPad 4 • CR48 Chromebook • ThinkPad X220

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post #3 of 21
Fine with me.... but it is nice for windows users to see something thats from the mac platform. maybe there was some switchers from just seeing iTunes. Not likely.
post #4 of 21
It's rather odd - HP had 5% of iPod sales and iPods have about 90% of the total market - meaning that HP had around 4.5% of the total market. Now they can come out with an iPod Killer that will join all of the other iPod Killers, sharing their massive 10% of the market. Smart business move.
Ken
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Ken
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post #5 of 21
This fits with HP's strategy of becoming a better Dell than Dell. Microsoft will have them at their knees, and HP will say, "Sir, Yes, Sir". Because they think that's the key to Dell's success.

At this point Dell is branding their own printers, I'd be surprised if cameras aren't here or almost here. Where HP thinks it can do better I'm not sure, but they've scrapped Itanic, Alpha, HP/UX, and anything remotely interesting to go for a box-mover strategy. Maybe their alliance with AMD will be their distinction, but, well, good luck with that.
post #6 of 21
Whether Hp will come out with a player in the second half of '06 isn't important. What is would be the abandonment of iTunes and Quicktime. Now Apple has to get people to download it there again.

As we know from the Explorer/Netscape battles, that isn't as likely as we might think.

This will result in many less people having this on their desktop when they buy a new machine. 15 million a year less. With it on screen, people could just click on it to see it. Now they have to go and get it themselves. that may not seem like much work, but for most people, it is. If WMP is there instead, they will click on that.
post #7 of 21
Quote:
Originally posted by ClimbingTheLog
This fits with HP's strategy of becoming a better Dell than Dell. Microsoft will have them at their knees, and HP will say, "Sir, Yes, Sir". Because they think that's the key to Dell's success.

At this point Dell is branding their own printers, I'd be surprised if cameras aren't here or almost here. Where HP thinks it can do better I'm not sure, but they've scrapped Itanic, Alpha, HP/UX, and anything remotely interesting to go for a box-mover strategy. Maybe their alliance with AMD will be their distinction, but, well, good luck with that.

Don't bother putting Hp down because it doesn't matter. What matters is how this affects Apple.
post #8 of 21
Apple is evil
But its nice,
Nice it's good,
And good is not bad.

so Apple It's Good.

Good and Evil I keep booth

But you don't like theatre, do you?
post #9 of 21
Quote:
Originally posted by JoeAlamaiz
Apple is evil
But its nice,
Nice it's good,
And good is not bad.

so Apple It's Good.

Good and Evil I keep booth

But you don't like theatre, do you?

?
post #10 of 21
Apple is notorious for not supporting companies that make these complementary products (see your Apple history regarding Mac clones).

What Apple doesn't make, they don't support and they don't promote.

Their hubris will come back to haunt them. And I'm speaking as a long time Apple customer and stock holder...

Not good.

Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

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Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply
post #11 of 21
Given Apple's dominance in the MP3 player and online store markets, it's unlikely this HP departure will affect the iPod sales train if:

1)Apple continues to roll out new iPods to keep them in the public mindset.

2)These iPods continue to drop in price and grow in features (i.e. F.M. tuner, 2gb model with screen)

3)Subscription based model is considered as an option for iTMS. No need to get all idealist, if people prefer that model, offer it.
post #12 of 21
Quote:
Originally posted by melgross
?

Drunken (JoeAlamaiz) babble?
post #13 of 21
Quote:
Originally posted by satchmo
Given Apple's dominance in the MP3 player and online store markets, it's unlikely this HP departure will affect the iPod sales train if:

1)Apple continues to roll out new iPods to keep them in the public mindset.

So true.
Quote:

2)These iPods continue to drop in price and grow in features (i.e. F.M. tuner, 2gb model with screen)

Podcasts are the new radio. Why go analog when digital is king?
Quote:

3)Subscription based model is considered as an option for iTMS. No need to get all idealist, if people prefer that model, offer it.

Yes, if the market demands it, but there's two things that Apple does that many other companies fail to do, and that's educate the consumer and retain value in products and services. Consumers are being told that the lowest price is the way to go, but seriouly, how does that really help people? It doesn't. They just end up spending money of stuff they don't need (because it's cheap), so at the end of the day, they're worse off and their life is full of junk.
post #14 of 21
Quote:
Originally posted by SpamSandwich
Apple is notorious for not supporting companies that make these complementary products (see your Apple history regarding Mac clones).

What Apple doesn't make, they don't support and they don't promote.

Their hubris will come back to haunt them. And I'm speaking as a long time Apple customer and stock holder...

Not good.

The Mac clones weren't complementary products - they were competing products that didn't even pay enough for the OS license (Apple's own fault).

Furthermore, no portable music player has a third party market that is as huge as the iPod accessory market (if they even have one).

Apple has been very smart with regards to the iPod. Make a simple player and support third party accessories.

How many cars and motorcycles have a Zen Player connector?
JLL

95% percent of the boat is owned by Microsoft, but the 5% Apple controls happens to be the rudder!
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JLL

95% percent of the boat is owned by Microsoft, but the 5% Apple controls happens to be the rudder!
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post #15 of 21
This is just sour grapes from HP. They have enough problems w/o cutting popular feautres from there ugly boxes.
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Why do so many Sys Admins hate the Mac? . A q u a M a c .
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post #16 of 21
Quote:
Originally posted by AquaMac
This is just sour grapes from HP. They have enough problems w/o cutting popular feautres from there ugly boxes.

I wonder, could Apple track what type of Windows machine a song was bought on and provide some small payment per song to the company as an encourgaement to bundle iTunes as the default music player?
post #17 of 21
Quote:
Originally posted by salmonstk
I wonder, could Apple track what type of Windows machine a song was bought on and provide some small payment per song to the company as an encourgaement to bundle iTunes as the default music player?

Yes, they could do that. But it's down to politics now, not money.
post #18 of 21
i think apple should just give CD's with iTunes on it to BestBuy and Circuity city and CompUSA and stuff. even target. kind of like how AOL does with their CD's. then they could maybe give you one free song and give a code taht would recognize which store gave out the CD. that way it could maybe act as an incentive to retailers to distribute the CD's. for example when jo blo buys his HP the guy who sold it to him would give him the iTunes CD or at the checkout the cashier could give it to him.
post #19 of 21
Quote:
Originally posted by SteveGTA
i think apple should just give CD's with iTunes on it to BestBuy and Circuity city and CompUSA and stuff. even target. kind of like how AOL does with their CD's. then they could maybe give you one free song and give a code taht would recognize which store gave out the CD. that way it could maybe act as an incentive to retailers to distribute the CD's. for example when jo blo buys his HP the guy who sold it to him would give him the iTunes CD or at the checkout the cashier could give it to him.


Great idea
post #20 of 21
Quote:
Originally posted by SteveGTA
i think apple should just give CD's with iTunes on it to BestBuy and Circuity city and CompUSA and stuff. even target. kind of like how AOL does with their CD's. then they could maybe give you one free song and give a code taht would recognize which store gave out the CD. that way it could maybe act as an incentive to retailers to distribute the CD's. for example when jo blo buys his HP the guy who sold it to him would give him the iTunes CD or at the checkout the cashier could give it to him.

I was thinking that perhaps iTunes gift cards should be bundled with an iTunes CD, but since you'd need a net connection for the iTunes store anyhow, it'd be cheaper to just stick the download URL on the card which I'm sure is already there.

iTunes is bundled with iPods though.

At any rate, giving out iTunes CDs for free and putting a bunch of Apple propaganda on the CD too is a no brainer.
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post #21 of 21
Quote:
Originally posted by Xool
I was thinking that perhaps iTunes gift cards should be bundled with an iTunes CD, but since you'd need a net connection for the iTunes store anyhow, it'd be cheaper to just stick the download URL on the card which I'm sure is already there.

iTunes is bundled with iPods though.

At any rate, giving out iTunes CDs for free and putting a bunch of Apple propaganda on the CD too is a no brainer.

And that's exactly why it won't happen.
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