by , 5:00 AM EST, April 1st, 2005
In a surprise move, Apple Computer announced Friday, April 1st, that it was licensing Microsoft's Windows Media platform for use with both the iTunes Music Store and the company's market-leading iPod music player. Apple will be replacing its proprietary FairPlay DRM scheme and AAC codec with Microsoft's Janus platform, allowing the company to leverage the more open nature of Microsoft's Windows Media platform across its burgeoning consumer electronics product line.
In addition to managing a la carte downloads from online music stores, Janus has the added bonus of allowing music lovers to take rented music with them in Windows Media-supported devices, something that has helped Napster become the #2 online music service. By licensing Windows Media and Janus, Apple will be able to follow in Napster's footsteps, and the company plans to open a rental section in the iTunes Music Store.
iTunes users will have the option of converting all of their songs to Windows Media in an upcoming update to iTunes, and iPods will be converted to Windows Media players in a firmware update due later today.
More Choice, and changing momentum
One factor in bringing Apple to Microsoft's trough has been the changing landscape in the online music industry. Apple's iTunes Music Store has, by some estimates, some 90% of the market in legal music downloads, but replacing AAC and FairPlay with Windows Media and Janus gives Apple access to 100% of the market.
Microsoft has worked hard to show customers that having access to more choices in digital media devices and online music stores is better than having access to many consider to be the best music player, the iPod, and the top online music store, the iTunes Music Store.
Microsoft's 'More Choice' campaign has had an impact on Apple's sales, and Apple wanted to jump on the Microsoft bandwagon in order to keep pace with these changing tides.
"Microsoft has scored a success with consumers with its 'More Choice' campaign," Apple vice president Phil Schiller said in a statement. "Our customers have been letting us know that they expect that choice from Apple, and partnering with Microsoft seemed the best way to achieve that."
Six ways to punch you below the belt
Sources close to the company admitted to TMO that Microsoft had also hit Apple where it hurt with its "Six Tips for Buying an MP3 Player with Flash Memory" tip sheet for consumers. The Six Tips offered consumers a guide to selecting a music player that meets their needs, and emphasized some of the many features and benefits found only in non-iPod, Windows Media devices.
"That was just genius," said one source, who requested anonymity. "You'll notice that they didn't even mention the iPod once. Once a potential customer sees that, they're sold on an iRiver, a Dell DJ, or whatever. We couldn't compete with that, but thankfully Microsoft was willing to help us out."
In an interview with The Mac Observer, Apple CEO Steve Jobs pointed out that Apple was doomed as long as it tried to go-it-alone, and that the time had come for Apple "to do the right thing" for its customers and shareholders.
"We've had a pretty good run so far, you'll have to admit," said Mr. Jobs, "but let's face it: This is Microsoft we're talking about. Everyone knows they get it right by the time version 3.0 rolls around, and it was only a matter of when before our time in the limelight of success was merely dust in the wind."
He continued, "Why take chances? This way we can keep our customers while letting Microsoft have all the headaches of managing customer expectations and problems. That stuff was killing our margins."
When asked if Apple had always intended to adopt Windows Media as the platform controlling iTunes and iPod, Mr. Jobs declined to comment.