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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated
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To: Apollo who wrote (1478)6/8/2005 7:34:38 PM
From: Mike Buckley  Read Replies (2) of 2955
 
Apollo,

OTOH, Eric points out nicely that the iTunes files that one downloads will only work on the iPod (AAC format, I think), and cleverly not on other MP3 players. That raises the switching costs, Mike.

I'd like to hypothetically test the extent that the switching costs are raised. Let's assume somebody comes out with software (the iTunes part of the business model) that is perceived to be just as good as iTunes. Let's also assume that the software and the music content is made available on all MP3 players except iPod. Let's also assume that one or two of the hardware manufacturers come out with an MP3 player that is considered to be stylistically as attractive as the iPod. With all of that being the case, I don't think the cost of switching will prevent consumers from doing just that -- switching.

I recognize that those assumptions assume a lot of "ifs." However, the discussion I'm promoting is not about whether those "ifs" will come to fruition. The discussion I'm promoting is whether the cost of switching in and of itself will prevent consumers from migrating to a competing software/hardware combination. My answer (open minded to the possibility of changing my opinion): no, the cost of switching is no more than the cost of a Christmas or birthday present that bought the iPod in the first place.

Add that concern to the less than totally open architecture and I still remain in the camp that the iPod might be playing a Gorilla game. I'm not convinced that it is or that it isn't.

--Mike Buckley
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