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Technology Stocks : Apple Inc.

AAPL 273.25

-0.2%

Dec 26 3:59 PM EST

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To: Doren who wrote (69242)	9/26/2007 8:21:20 PM
From: HerbVic	Read Replies (2) of 213177

I would agree with everything in your post, except for the statement that it is bad news for AAPL shareholders. Actually it is good news. Even, very good news. The fact that a competing music download service has conceded the player market to Apple, as evidenced by their making their merchandise compatible with the iPods, is vindication for investors who believe Apple's dominance of the space is Teflon impregnable. The ITMS is an advertisement for the iPods and now iPhone. That there is now another online music store catering to iPods and the iPhone is another huge plus for the sale of iPods and iPhones. That the same music will also play on competing hardware is a plus for the iPods and iPhone as well, because suddenly it is obvious that they are not a closed system, like many were led to believe. As for your "but its one less reason to buy an iPod and one more to consider the competition ..." That the ITMS was the only Web source for legal downloads was NEVER a reason to buy an iPod. It was a reason many used to stay away. Apple could serve themselves and their consumers even better by offering iTunes browser purchasing capability at Amazon. Click the link and all music, onscreen ads and retail cash register are hosted from the Amazon site. This would not cost Apple anything and would subvert the imprecation of Apple as a monopolist. Click the link again and the customer is back in the ITMS. There is considerable product differentiation other than price. One store sells bandwidth hogging mp3s at 256kbps. The other sells 128kbps and higher AAC. One store has catalog that the other store does not. Combined, the catalog availability for Apple's consumers is protected from the selfish interests of the music labels. Given the potential for more online music download stores to be added as they develop, the iTunes software would then become the Netscape of music downloads into the foreseeable future. It's not a crack. It's potentially a cornerstone to build a stronger dam.

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