Apple has become "the Microsoft of music stores" quipped Apple CEO Steve Jobs last night, speaking to analysts.

Jobs said: "There's no reason to make iPod work with other (online music) services right now. It's the number one-selling MP3 player in the world, even compared to little cheap devices like Flash MP3 players that hold seven songs."

He added: "iTunes Music Store works with the number one music player around; conversely, the iPod works with the number-one music store."

He confirmed that SoundScan, which assesses digital downloads, has declared that iTunes Music Store took 80 per cent of the market for legally downloaded music last week. "Why should iPods work with another music store when they work with the Microsoft of music stores?" he asked.

iTunes Music Store exists as a Trojan Horse to help Apple sell iPods, a strategy that's proved succesful so far, but how financially-rewarding is the iTunes Music Store itself?

Jobs explained: "With iTunes Music Store, most of the money goes to the music labels – we'd like to break even; make a little money. That's why when I look at Roxio/Napster and all these other companies, I think they’re spending money on a business that can't make money.

"I'm kind of puzzled why these companies want to get into a business like this. It makes no sense," he said.


Jobs was buoyant about progress so far: "Right now, we're number one in units and revenue. We’re investing a lot of money in that, and we have some great stuff coming out over the next time-frames," Jobs promised.

"I'd rather spend engineering dollars on enhancing the iPod and Music Store, as we did in recent weeks." Apple is prepared for a change in market conditions, though – "we're flexible" said Jobs.

With new manufacturers – Dell for example – preparing to release MP3 players in combination with other third-party music stores (in this case, Apple's former partner, MusicMatch), analysts asked what Apple’s response is.

Jobs replied: "Apple is as good or better a manufacturer as Dell. We beat them every quarter on operational metrics. We aren’t worried on being beaten on manufacturing or operational efficiency.

"We can be as aggressive as the next guy, and more aggressive than most. And we think the iPod is the gold-star product out there. We’ve been competing against other products since iPod came out."

An audio webcast of the audio call in QuickTime format is available from Apple.