The problem with trying to sell people the idea of paid digital downloads is convincing them that PC is where they want to listen to music. The PC may well be evolving as an entertainment hub, but ultimately music fans donít want to be tied to their desktop or laptop. Which is of course, one key reason why Appleís i-Tunes service has been so successful to date. Portability has been a central feature of music consumption for the last couple of decades and is even more important for digital services where no physical product as such exists. Essentially what a la carte services should be selling to consumers is the ability to listen to music when and where ever they choose. It is a subtle but fundamental shift from the concept of selling a physical product which will typically spend its life residing within a 10 metre radius of the home hi-fi.
Digital music portability is evolving as a distinct and complimentary pattern of behaviour to static CD listening. Though relatively niche at present, as portability becomes more widely featured in digital music services so the symbiotic relationship between downloads and portable music players will push itself towards the mainstream. No surprise then that a whole host of technology vendors are jumping onto the I-Pod bandwagon. The challenge for Apple though, will be to translate its first mover advantage into established market leader and not slip into the role of cool but niche also-ran. Central to that success will be this and the following quarter.
There are of course, many strata to the digital music device market and I-Pod will have not only have to face challenges from mainstream players, but also niche devices, the latest being Sonyís integrated music and gaming device. The trend in the mobile phone handset market has been towards a plethora of targeted devices. I donít think there is as much scope for this in the digital music device market place. Thatís not to say that there isnít a market for devices like Sonyís PSP device, but that consumers will primarily select devices upon the basic criteria of cost, storage capacity and UI. (A slick, fully integrated online service of course helps).