Amazon to kill iPod?
By Stan Beer
Monday, 20 February 2006 10:55
The announcement last week that Amazon is set to enter the digital music market sent ripples of conjecture through the analyst community that the online retail giant is getting ready to launch an assault on Apple and its all conquering iPod-iTunes franchise.
A report from analyst group Ovum says that Amazon has not only been talking with the world's biggest record labels but is preparing to launch a service based around a heavily-subsidised, and Amazon-branded portable music player, which will be sold with songs already preloaded on it. Users will pay a monthly subscription to Amazon for unlimited access to its music library.
Ovum says that Amazon's user base of 55m makes iTunes look like a village shop and has the kind of true mass-market reach that other players can only dream about. Amazon plans to offer heavily subsidised music players with fixed-term subscriptions - similar to mobile operators with handsets. Accoring to Ovum this is the best idea its heard for pushing the subscription model into the mass market.
Despite its enthusiasm for Amazon's move, however, Ovum is skeptical about its ability to challenge brand strength of Apple's iPod.
"We've said it before, and we'll say it again - people really love their iPods, and if you want to buy music for your iPod, you have to use iTunes," says Ovum analyst, Jonathan Arber. "Amazon's own-brand player is going to have to be pretty special to stand a chance of luring people away from Apple's ubiquitous music player and thus the iTunes store. Obviously, Amazon will be hoping that a combination of low pricing and its powerful consumer brand will give it the edge, and we think it has the potential to dominate the subscription market. But an iPod/iTunes killer? We just can't see it."
