Apple Claims Music Crown

LONDON -- Apple Computer has become "the Microsoft of music stores," quipped Steve Jobs, the company's chief executive officer, on Wednesday night while speaking to analysts.

"There's no reason to make IPod work with other [online music] services right now. It's the number one-selling MP3 player in the world, even compared to little cheap devices like flash MP3 players that hold seven songs," Jobs said.

"ITunes Music Store works with the number one music player around; conversely, the IPod works with the number one music store," he added.

He confirmed that SoundScan, which assesses digital downloads, declared that ITunes Music Store took 80 percent of the market for legally downloaded music last week. "Why should IPods work with another music store when they work with the Microsoft of music stores?" he asked.

ITunes Music Store exists primarily to help Apple sell IPods, a strategy that has proved succesful so far. But how financially rewarding is the ITunes Music Store itself?

"With ITunes Music Store, most of the money goes to the music labels," Jobs said. "We'd like to break even, make a little money. That's why, when I look at Roxio Napster and all these other companies, I think they're spending money on a business that can't make money."

He added, "I'm kind of puzzled why these companies want to get into a business like this. It makes no sense."

Lucrative Music

Jobs is buoyant about progress so far. "Right now, we're number one in units and revenue. We're investing a lot of money in that, and we have some great stuff coming out over the next time frames," Jobs said.

"I'd rather spend engineering dollars on enhancing the IPod and Music Store, as we did in recent weeks," but Apple is prepared for a change in market conditions, he said.

With new manufacturers--such as Dell--preparing to release MP3 players in combination with other third-party music stores (in Dell's case, Apple's former partner, Musicmatch), analysts asked for Apple's response.

"Apple is as good or better a manufacturer as Dell," Jobs said. "We beat them every quarter on operational metrics. We aren't worried on being beaten on manufacturing or operational efficiency. We can be as aggressive as the next guy, and more aggressive than most. And we think the IPod is the gold-star product out there. We've been competing against other products since IPod came out."

No Intel Inside

Jobs also revisited an earlier discussion about the viability of running Macintosh software on Intel chips.

Mac OS X could "easily run" on Intel chips, but the company has "little interest" in changing processors, Jobs said.

"It's perfectly technically feasible to port Panther to any processor," he said. However, Apple is happy with IBM's PowerPC 970 processors, which the company feels are "quite competitive."

"We don't see a compelling need to switch processor families," Jobs said. "We have all the options in the world, but the PowerPC road map still looks very strong."

In a recent interview, former Apple CEO John Sculley said Apple should have switched to Intel architecture in the late 1980s but opted for Motorola RISC chips instead.

Longhorn Broadside

Jobs was critical of Microsoft's Media Center products, which combine TV and video-recording facilities with common PC features, based on Windows XP. Dismissing consumer need for such products as a "small audience," Jobs added, "Generally what [people] want to view on television has to do with turning their mind off." He observed that recording video on a computer is processor-intensive, so is best left to a device dedicated to such tasks.

Jobs also fired another salvo at Microsoft, pointing out that Apple is out-innovating the rival software company, which will not release its next operating system upgrade, Longhorn, until 2005 or 2006. "They hope to be in 2006 where we were with Jaguar," he said.

Apple remains committed to delivering the best system to its customers, he said. "We're going to have a few more releases by then."

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