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A iTunes expansion in the digital video space seems to be a no-brainer from a business perspective. The digital music market developed first, aided by peer-sharing sites such as Napster and Kazaa, and it is understandable that much of Apple's current focus through the iTunes store has been on selling digital music tracks and albums. However, the digital video market is growing significantly, and we can expect iTunes to provide even more robust video offerings in the future. According to the iTunes Web site, users already can download thousands of music videos and more than 350 television shows. In a sign that Apple is serious about growing its video services, the company recently launched a movie service that allows users to download feature films for $9.99 a movie. iTunes video services will only grow more as Apple faces growing competition from online music and video providers. As was discussed, Apple has faced significant competition in the online music space, and competition should grow in the online video market as well. Wal-Mart even entered the digital video market in 2007, partnering with Hewlett-Packard to offer an inline video service to compete with iTunes (Gohring and Ames). In short, iTunes has spent its early years being viewed as a digital music store and jukebox, but it is clearly evolving into a provider of multimedia content. Competition will force iTunes to continue in that direction.
We can also expect the iTunes technology to become more accessible to people who may not own iPod portable music and video players. Apple's decision to exclusively bundle the iTunes program with the iPod music and video players has caused a great deal of frustration among the public, and has led to the previously discussed lawsuits in the United States and in European countries. Signs indicate that more lawsuits can be expected. Quite simply, there is too much pressure being applied to Apple for it to continue conducting business as usual. Further, it is bound to eventually lose a lawsuit in one of the countries in which it is facing (or will face) litigation. Europe is notoriously aggressive when it comes to antitrust issues.
Whether Apple loses in court or simply sees the handwriting on the wall and decides to change its business practices, we can expect a decoupling of iTunes and the iPod to occur. The end result could be positive for iTunes - people who own portable music players other than iPods will now be able to use iTunes, although Apple will have to work hard to keep current iPod owners from migrating to other content providers. Perhaps the de-coupling will even be positive for iPod sales. The fact that iPods will be compatible with music services such as Napster could increase their appeal to some consumers who were not enamored with iTunes.,
In conclusion, iTunes has been a hugely successful product for Apple, as it has integrated well with other Apple products and has helped revolutionize the digital media market. While Apple was an early and aggressive entrant into this market, it has become crowded and there are numerous market and regulatory forces that are presenting challenges for the iTunes product. We can expect Apple to respond to these challenges by evolving iTunes into a supplier of diverse multimedia content that can be accessed by people using a wide variety of communications devices. The bread-and-butter philosophy behind iTunes, which has focused on music and a lack of cooperation with other suppliers, has carried iTunes through its first six years, but it will not carry iTunes through the next six.
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