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Mon, 09 May 2005 Apple to launch iPod clones and iTunes video services?

Macworld staff

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The iPod may be raising Apple's star today, but tomorrow's world may belong to the firm's iTunes Music Store.

Apple's iPod offers the company a decent profit margin, but because it is a solidly consumer product the company must deal with constant pressure to reduce price.

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While low prices may drive sales, technology journalist Robert Cringely predicts that at some point profit margins will have shrunk to such an extend that Apple may license iPod manufacture to other companies.

If music feeds the ears

The argument follows that Apple will then sit back to enjoy the exponentially expanding sales through iTunes Music Sales.

"Apple wants to ...make its money through iTunes, where the profit margins are better in the long term and the system is easily scalable," he writes.

"Licensing clones AT THE RIGHT TIME (capitalization, Cringely's) would lead to huge clone sales, effectively killing any significant iTunes competitor. And in the long run, iTunes is where the money is," he speculates.

Apple likes options

He also notes that the iTunes icons included within Mac OS X 10.4 include unused icons for Windows Media and Ogg Vorbis, "as well as several others, including video formats".

In the column Cringely also touches on the HD (High Definition) capabilities of Microsoft's future Xbox, which company founder Bill Gates described as an ideal offering for the 'Year of HD'.

"Why would Bill Gates use Apple's expression? It's because Microsoft has an inkling of what's shortly to come from Apple and wants to at least appear to have a horse in the race, which it doesn't," the columnist writes.

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