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October 26, 2006

Apple Files iPod Patent: Fear of Competition or Exposure?

By Susan J. Campbell, TMCnet Contributing Editor

In spite of the massive success that Apple has enjoyed with its iPod line of portable music players, the company must still be feeling the pressure from the competition. Apple has filled a patent application on how future iPods will use wireless for electronic media purchasing online.

This application filing occurs not too soon before the much-anticipated release of the Microsoft Zune. While this could be an effort to fight the software giant and its product directly, it should be noted that Zune’s built-in Wi-Fi will be limited to the file sharing between devices with no direct Internet purchases from the handheld.
The patent attempt could be Apple’s strategy to pre-empt the success of a Zune upgrade or product line expansion. Consider this, not only will the handheld Zune not allow for Internet purchases, it cannot connect to the Internet at all. The Wi-Fi cannot even be used to sync music with files on a PC – this requires a USB cable. The Wi-Fi appears to exist merely for song sharing 3 times per song and only between Zune units.
But, here’s another theory. Jon Lech Johansen, a 22-year-old Norwegian with a history of cracking copyright protection technologies and incensing the companies that build them, has untangled Fairplay, the digital encryption Apple uses to prevent songs purchased on iTunes from being played on non-iPod music players and multiple PCs. This same technology is used to prevent the sharing of music from iPod to iPod.
Johansen has now set up a company in Redwood Shores, California, to show others how to make their content playable on an iPod by wrapping it in Fairplay. The company, DoubleTwist Ventures, will also help companies to make rival devices play iTunes music and video on their own players. Apple, thus far, has not said a word in response to Johansen’s actions.
The events that have led to the filing of a patent application still remain unknown; however it should give an indication that Apple fears its dominance in the market is threatened. This is interesting given the reasons for the iPod’s success in the first place.
Apple and its iPod didn’t earn its throne in the portable music player industry because it had the easiest to use player that offered the best song selection. This success also didn’t come because it offered the most competitive price. Apple has been able to dominate this market because of its marketing campaign, pure and simple.
The company was able to strategically position its product in all the right places so that the iPod was the portable player of choice for the rich and famous. And guess what? This was a luxury that John Q. Public could afford. In our quest to be like the rich and famous, we all had to have one.
Apple did borrow a winning strategy from Microsoft (News - Alert) in keeping its technology proprietary. However, this strategy doesn’t seem to be enough to keep the fruity giant on top as consumers are beginning to tire of the iPod and iTunes restrictions. This patent could either protect Apple’s vision or tarnish its appeal in the eyes of the consumer. Either way – watch out for more news from Johansen and DoubleTwist Ventures as we have likely not heard the last from him.
Susan J. Campbell is a contributing editor for TMC and has also written for eastbiz.com. To see more of her articles, please visit Susan J. Campbell’s columnist page.

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