Amazon Raises The Bar For Apple

Apple is one company that is not used to being left behind. Steve Jobs' whole schtick rests on redefining technology categories through simplification. The Apple Mac, its graphical OS, the iPod/iTunes combo and now the iPhone were instrumental in steering the rest of the market in new directions, even when Apple itself didn't always profit directly from these changes.

For years now, no one has been able to touch the staggeringly good combination of the simple iPod music player and the iTunes software and store. Microsoft's Zune (while unfairly maligned, I think) fell down horrible on the software and media side. Online stores like Napster and Rhapsody were interesting niche plays that never broke away. Curiosities like the MusicGremlin came and went with interesting ideas such as its WiFi music store, which iTunes finally embraced last week. And while arguably some of Creative Labs's players were at times functionally superior to the iPod line, Creative never paired them effectively with media partnerships and a distribution portal. Like Microsoft, Creative missed the genius of the iPod model, that technology was only half the equation. Apple earned and deserves its ownership of the digital music market because it mastered and melded technology with good pricing, seamless ordering and device synching. My 75-year-old father synchs his nan every day, and elsewhere he still struggles with DVD menus.



The first serious threat to the iTunes hegemony emerged late last month with the beta launch of Amazon's own mp3 store. The smartest thing about Amazon's foray into downloadable music is that it doesn't try to compete head to head with iTunes. Amazon does not have a player/library application. It is just a storefront extension of the usual Amazon e-tail experience, which is one place Apple's iTunes really doesn't compete that well. You find and buy a track, download it and play it on any MP3-compatible mobile device or media player. Even better, the download management software for the service (required for full album purchases) automatically loads your downloaded tune into an iTunes or Windows Media Player.

The Amazon store ups the ante on digital downloads in a number of respects, and now it is Apple's turn to play a little catch-up.

First, while the library is restricted mainly to EMI and Universal titles, they are all DRM-free. Now, iTunes does have an iTunes Plus feature with select music available without copy protection. But Apple charges a 30% premium for these more flexible, better-sounding tracks ($1.29 a track) and they are few and far between in the store. All of Amazon's admittedly smaller library is unprotected and it all comes at a delicious 256K bit rate. "Dark Side of the Moon" sounds incredibly clean and deep at this quality level --makes me wish I still smoked pot.

Amazon's store may not be pretty, but that recommendation engine is astonishingly powerful. After just a few browses and order, it was pushing at me very well targeted music. One of the real weaknesses of the iTunes store is its lack of real personalization. In fact, this is the same problem most mobile music stores have as well. Music covers a very broad range of tastes, and very few digital download storefronts keep the country away from the hip-hop audience, or my daughter's screaming heavy metal away from me. If Amazon can really leverage its recommendation engine at the music store, it will do all of us a service and perhaps force Apple to up its game.

Finally, Amazon is device-agnostic, a feature that does not bode well for Apple. The download application automatically pushes its track either into my iTunes Library for automatic synching with my iPod or iPhone, or into Windows Media player for those using most other devices. Amazon has made it as easy to order from them as to order from iTunes, and with a superior result. It's also as easy to order a tune for any other media player as it is to get an iTunes track for an iPod, which is something Apple really doesn't want to see. The Windows Media Player 11 software that many non-Apple MP3 players use for synching is much improved in this version, both as a library and a synching tool. Amazon makes it less of a pain in the ass to own a non-Apple player.

But what really interests me in the long run is Amazon in the mobile phone eco-system. For the time being, Apple iTunes seems tied to its own players and the iPhone. All non-iPhone owners will need a cheap and easy supplier of digital downloads that seamlessly ties a desktop library to a mobile handset. Unbeknownst to many, Amazon actually does have a mobile storefront, accessible by WAP or (ironically) via a superb iPhone Web app. As the phones and deck open up, it certainly is conceivable that Amazon's mobile store could become an over-air music download service with better audio, better prices and a better personalized engine than Apple.

Whether Amazon can execute such a plan is anyone's guess. But the company is clearly an entity that is large, smart and comprehensive enough to do an end-run around both the carriers and Apple.

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