Call me cynical, but stories built around anonymous ‘people familiar with the matter’ are often contrived, by the subject, to gauge industry and public reaction. That’s not to say they’re wrong, of course. There are two Apple testers unleashed at the moment.
One seems to be asking: “What if Apple linked up with US cable giant Comcast and worked out some sort of QoS content deal as way to get a firmer hold on the video and music content market?”
We think this is unlikely but (as Nokia launching an Android shows) anything is possible in this market. A deal which did dirt on network neutrality would certainly be a heart-searcher for many Apple users and might not not be pursued on that basis. And then there’s the history. The Jobsian view tended to be fairly ‘anti’-carrier - he even (allegedly) considered not involving the telcos at all in the rise and rise of the iPhone. WiFi would have been his alternative, so linking up with a carrier (even a cable one) seems to go somewhat against the grain.
On the other hand, Apple’s concern over its ability to get into the streaming business today is understandable as it watches Netflix prosper (albeit with some trouble brewing with Comcast over peering arrangements) and Google launch it’s innovative Chromecast dongle internationally.
The PFWTM (people familiar with the matter) are only offering us a little to go on, but the outline is clear enough. The Wall Street Journal says the mooted joint venture would allow Apple’s set top boxes to bypass congestion and in doing so might be separated from the public internet traffic over the last mile.
If such an arrangement meant the traffic went direct from Apple’s data centres to an Apple set-top without touching the Internet in any way, could it be considered net neutral? What if the same cable company imposed caps on internet data traffic such that they couldn’t be used for any more than an hour or so of television from the Internet? Such a situation would clearly favour Apple and disfavour Netflix (supposing of course that Apple hadn’t bought it by then).
But it’s all a bit early. The discussions, the PFWTM confirm, are still at an early stage.
Apple is right to be casting about for options. Despite being the company that more or less created the online music market, it's is already watching the entire online market change. Just a few years back we were writing that people seemed attached to the idea of at least owning the file when they bought digital music, hence the popularity of iTunes over music streaming. But today that polarity seems to have reversed for many music fans with services like Spotify gaining millions of users and sales of iTunes plummeting by 13 per cent according to Nielsen SoundScan which measures these things.
Meanwhile services like Spotify and Pandora won revenues of $1.4 billion - an increase of 39 per cent from 2012.
What to do?
The buzz is that Apple is considering a slight hop into music streaming by adapting iTunes Radio to become its own stand-alone application. That would make sense and Apple could start transitioning its offer to take advantage of the streaming craze.
But here’s the big one - the move that could really get Steve spinning. Apple is mulling putting iTunes onto Android.
This strikes me as akin to Nokia adopting Android for the X and it marks a sort of tipping point in Apple's business model if true.
Until recently the advantage of preserving mobile iTunes just for iPhone was that it made a very good reason for people to buy (or keep buying) the iPhone. Apple, we were told, was a gadget company and everything it did was about making its gadgets more desirable.
So initially at least, iTunes and the AppStore were not there as money-makers but as gadget bait. And as gadget bait iTunes has been a boon. Not only did it get users on-board, its absence on Android helped keep them.
But now the numbers might tell a different story. The Apple services, iTunes and apps included, are big money-spinners in their own right. Adding Android to the roster will make them spin even faster (and spin Steve even faster in his grave).
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