HP to stop bundling iTunes next year

Posted:
in iPod + iTunes + AppleTV edited January 2014
Following the termination of its exclusive deal with Apple Computer, Inc. to distribute re-branded iPods, Hewlett-Packard is preparing to reengage in the digital music business this January, and will likely do so without Apple's iTunes software, reports Macworld UK.



"The company's executive vice president Todd Bradley confirmed such plans last week, during which he also revealed the company would honor its contractual obligation to install iTunes on PCs HP ships until January 2006," according to the report. "Beyond that, the future of even vestiges of the HP/Apple deal are shady."



Bradley's comments corroborate an August AppleInsider report entitled "HP likely to stop bundling iTunes by '06," which quoted American Technology Research analyst Shaw Wu. In the report Wu predicted HP would abandon iTunes as its default music player by 2006 in favor of forming a new relationship with Microsoft and its Windows Media Player technology.



Similarly, Macworld UK also believes: "It's likely HP will now choose to deliver solutions based on Microsoft's Windows Media technology."



In January 2004, HP and Apple formed a strategic partnership where HP agreed to install Apple's iTunes music jukebox software on its computers in exchange for the rights to sell HP-branded iPods. Apple also sought the benefits of HP's 100,000-plus retail outlets world-wide, knowing they could quickly expand the iPod's reach.



Unfortunately, the partnership barely got off the ground. Almost immediately, the two company's began to quarrel over price protection on iPods and other business aspects. At one point HP halted orders to Apple for new iPods for several weeks, protesting a need for price protection which Apple failed to offer.



But by May of this year, it seemed as if the two companies had worked through their differences. HP began expanding its iPod offerings to include the iPod mini and iPod shuffle. At the same time, Apple was quietly negotiating its own presence in big box retailers such as Wal-Mart, which had previously sold only HP-branded iPods.



Only several weeks after launching a pilot prgram at Wal-Mart, Apple forced its foot in the door of another large HP iPod retailer: on July 21, AppleInsider reported that Apple had landed an iPod deal with RadioShack. Eight days later HP announced that it would stop reselling iPods.



According to Apple, HP iPod sales accounted for less than 8-percent of total iPod shipments during the last quarter in which sales results for HP iPods were released.
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Comments

  • Reply 1 of 31
    Meh, it's HPs loss
  • Reply 2 of 31
    boogabooga Posts: 1,082member
    Wonder if this is related to HP getting in bed with HD-DVD.
  • Reply 3 of 31
    Ironically, before the "Great Culling" of Compaq branded products, HP actually had a well respected brand of MP3 players (don't think they were WMV specific) that sortof loosely tied in with the iPaq brand.



    If I were HP, I'd look at seriously repositioning their PDA products as lifestyle devices; ie. stick 1.8" and 1" HDs in different models and position them as handheld photo viewers/vaults, audio players, and PocketPC devices. Phone functionality optional.



    It would certainly be their strongest strategic move, as their PDAs I'm sure have some residual brand respect if not current brand respect?I'm not up on the current PDA market as it doesn't really tweak my interest. I'm willing to bet that professionals in the 25-50 year old range that PDAs are targeted at are also a large segment of the music player market still, despite the growing popularity in the "youth market."
  • Reply 4 of 31
    hmurchisonhmurchison Posts: 12,425member
    Quote:

    Originally posted by Booga

    Wonder if this is related to HP getting in bed with HD-DVD.



    No. That has nothing to do with it. Apple doesn't care what HP does regarding HD-DVD. This is about righting what many thought was a mistake. HP not making their own player and accepting a bad deal from Apple. HP is a bit torqued by that according to my acquaintance from HP.
  • Reply 5 of 31
    melgrossmelgross Posts: 33,536member
    Even though it may seem as though Apple doesn't need Hp, it was bad business practice doing what Apple did.



    You don't compete directly against your business partners.



    I'm not saying that it was a bad move in and of itself for Apple to go to Walmart and RadioShack, but it was bad politics.



    With Hp removing iTunes from their machines, Apple will lose the recognition of people who buy those machines. The fact that it has been on those machines has been responsible for many people coming in contact with the product for the first time. Hp sold 8.5 million computers in the 3rd quarter worldwide, almost as many as Dell.



    Apple should have found a better way to end the relationship, if that was what they wanted.
  • Reply 6 of 31
    ibillibill Posts: 400member
    Quote:

    Originally posted by melgross

    Apple should have found a better way to end the relationship, if that was what they wanted.



    I think it was HP that ended the relationship, not Apple.
  • Reply 7 of 31
    louzerlouzer Posts: 1,054member
    Quote:

    Originally posted by iBill

    I think it was HP that ended the relationship, not Apple.



    HP ended it because apple treated them like crap. Sign an agreement to distribute iPods, then try to screw them by not offering them buy-back capabilties when Apple comes out with a better and cheaper iPod, leaving HP with a boatload of overpriced product. Yeah, its all HP's fault.
  • Reply 8 of 31
    louzerlouzer Posts: 1,054member
    Quote:

    Originally posted by zedrac

    Meh, it's HPs loss



    How in the world is it HP's loss? No one bought an HP machine to get a bundled version of iTunes (a piece of software you can download for free and install anyway)! It wasn't a selling point. In fact, it was done more to get the iPods. But apple didn't want/need them for the iPod sales, so they lost that deal. So now there's no need for the iTunes thing.
  • Reply 9 of 31
    melgrossmelgross Posts: 33,536member
    Quote:

    Originally posted by Louzer

    HP ended it because apple treated them like crap. Sign an agreement to distribute iPods, then try to screw them by not offering them buy-back capabilties when Apple comes out with a better and cheaper iPod, leaving HP with a boatload of overpriced product. Yeah, its all HP's fault.



    That's the point.



    The problem is that Apple will make other companies wary of entering into deals if they think that the deal is one that Apple might want to scrap.



    I used to have this problem with my partner. sometimes I wanted to hit him upside the head. If I didn't stand on top of him, we would have gotten a rep of being renegers. If someone would be given an estimate for a job, and it turned out to be too low, he would want to charge them a higher price, after the deal was done. Not good. Ya take ya lumps!
  • Reply 10 of 31
    Quote:

    Originally posted by Louzer

    HP ended it because apple treated them like crap. Sign an agreement to distribute iPods, then try to screw them by not offering them buy-back capabilties when Apple comes out with a better and cheaper iPod, leaving HP with a boatload of overpriced product. Yeah, its all HP's fault.



    Uh...let's see here...HP has got have about twice as many lawyers as Apple. Why the heck did they even sign a deal that put them into that position?



    It's HP's fault.
  • Reply 11 of 31
    I don't see how HP can enter the MP3 market without cruisifying theirselves. It's just too late. I mean, iRiver and Creative BARELY have a chance if at all.



    Although on the other hand, I am concerned that HP might have a insider understanding about how the iPod works, etc., that theirs can copy it.
  • Reply 12 of 31
    melgrossmelgross Posts: 33,536member
    Quote:

    Originally posted by Chris Cuilla

    Uh...let's see here...HP has got have about twice as many lawyers as Apple. Why the heck did they even sign a deal that put them into that position?



    It's HP's fault.




    It isn't their fault that Apple did what they did. Perhaps they could have sued, perhaps not.



    Part of it was the change in leadership at Hp. If Fiorina was still there, things might be different.



    In all fairness to Apple though, they might have felt that Hp was slow out of the gate. Hp didn't do much to get the product into any of its foreign dealerships, so that 100,000 sales points were really more like 15,000.
  • Reply 13 of 31
    Quite honestly I was always amazed that HP entered into this agreement. Why not just resell Apple's iPods if they wanted a piece of the market? Seems to me they would have sold more of them at lower cost to HP.



    And frankly, while it was a bit sketchy how it all went down, based on Apple's past behaviour I can't see how they can expect to be surprised.
  • Reply 14 of 31
    melgrossmelgross Posts: 33,536member
    Quote:

    Originally posted by ChevalierMalFet

    Quite honestly I was always amazed that HP entered into this agreement. Why not just resell Apple's iPods if they wanted a piece of the market? Seems to me they would have sold more of them at lower cost to HP.



    And frankly, while it was a bit sketchy how it all went down, based on Apple's past behaviour I can't see how they can expect to be surprised.




    At the time, it seemed that Apple and Hp were going to have a broader relationship. It looked as though Hp wanted to leave MS's orbit in the area of media.



    We'll probably never know the extent of what was intended, but it likely involved more than iPods in the long run. But the problems they both had from the start wasn't a good sign.



    The new leadership at Hp is taking the company down a somewhat different direction.
  • Reply 15 of 31
    I think it's Apple's loss and a mistake. I was actually surprised that ~8% of the iPods sold were by HP (I remembered ~4%). That is a pretty good number, in my opinion! By this time next year, iPod + iTunes will have lost significant marketshare, partially due to this loss.



    Microsoft learned long ago that you have to keep the product IN THE FACE of the consumer to keep a majority marketshare. I think people will use what is available to them. If iTunes is on the machine, people might go out and buy an iPod. Without that, they might just use the competitor's software, which advertises a non-AAC product.
  • Reply 16 of 31
    tenobelltenobell Posts: 7,014member
    I don't think its that personal its just business. You are going to partner with who is more likely to achieve your objective and make you more profit.



    Apple expected IBM to make a 3Ghz G5 and a low power G5 for the laptops. But they didn't.



    Intel expected Microsoft to support Itanium sinking billions of dollars into the project. But Microsoft at the last moment pulled any support for Itanium.



    Apple will sell more iPods in WalMart and Best Buy than thru HP.



    In a way what does it matter if HP comes pre-loaded with iTunes, if Apple continues to sell more iPods. People will need to download iTunes anyway.
  • Reply 17 of 31
    chuckerchucker Posts: 5,089member
    Quote:

    Originally posted by fluidinclusion

    By this time next year, iPod + iTunes will have lost significant marketshare, partially due to this loss.



    That's an interesting idea. Care to back it up with something less vague than "partially because HP no longer bundles iTunes"?
  • Reply 18 of 31
    Bad business Practices. If HP were still in on this deal they would be selling 4 gig minis for over suggested by Apple price. Bundling Itunes with HP's saves someone the hassle of downloading Quicktime and iTunes. Since 80% of the home users HP has will be using an iPod, they just download the software. It's a bit of inconvenience but not that much. I have seen the other MP3 players and meh, none has really done anything. I see lots of them being handed around, but nobody uses them after a while. iPods get used, alot, In our office over the last three years. Everyone has stopped using the other MP3 players and everyone, OK 45% of our office has an MP3 player. 1 person still has another version, It's weird actually. And i must have recommended 4 iPods as Christmas gifts this year alone. HP is going to lose out in thelong run. They didn't really help distibution, And Apple's next internet run is going to leave alot of people in the dust. Imaging all those switchers now being able to use the internet free from viruses and worries of attack.
  • Reply 19 of 31
    eckingecking Posts: 1,588member
    Why does everyone mention downloading itunes as a hassle? It comes on a cd with the ipod. Every other company's player does pretty much the same(including creative).



    Last year when I was still on windows I owned a sony player and the software to fill it up came from...you guessed it a packaged cd that came with it.



    Just because we're mac users doesn't mean we have to look at things on the windows end so unrealistically.



    Is some girl going to best buy to buy an ipod and says "but the computer I bought doesn't come with itunes!" and get something else? People expect everything they need to get up and running to be inside the box and it is.



    What's the problem with that? What percentage for people that bought ipods over the past year had a computer that already had itunes on it? Does this really influence sales of ipods? I doubt it.



    IN FACT most people I know that DO have itunes preloaded on their computer didn't even know they did until they got an ipod. When they installed the cd or downloaded from the net they were surprised to learn that they already had itunes.



    Having to install drivers (or in this case itunes) is pretty much standard practice for anything you buy for a windows computer.



    HP is only one of many pc vendors and way more people than those who own just apple and HP computers have ipods.
  • Reply 20 of 31
    From Apple's POV, I guess they should try to maximize the business deals in their favor, on the other hand, people who got stuck with a shitty HP iPod (PC only), might think ill of Apple.



    From HP's perspective, it's good they get out of a lousy deal, probably engineered by Carly Fiorina. On the other hand, doing a "better" deal with MS is making a deal with the devil.
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