Monday, February 20, 2006

More on Amazon's rumored music service

More analyst commentary regarding rumors that Amazon Will Take On iPod With Its Own Music Player. In the San Jose Mercury News, analysts wondered if Amazon's discussions with the music industry was "nothing more than a negotiating ploy for the record labels, which want Apple to change its one-price policy of 99 cents a song to allow them to charge more for new and popular material."

Richard Doherty at Envisioneering Group said, "The labels have been talking to Amazon for several months," and speculated Amazon might partner with Microsoft as well. He added,"With Microsoft exploring their own players, Amazon might be the biggest retailer of that player: the `A-Pod."

Noting the lack of "alternative portable music players to the iPod," Stephen Baker at NPD Group said, "From a retail perspective, if anyone on the net can challenge iTunes, it would be Amazon."

Pointing out Amazon's more than 55 million customer accounts, Doherty said, "They are the gold standard in customer satisfaction for online shopping. No one has ever boasted they are better than Amazon."

However, "Apple's ability to provide a harmonious experience for music lovers by designing and linking the software, hardware and service would be tough to beat." American Technology Research analyst Shaw Wu said, "And Apple already has an installed base of 42 million iPods."

Chris Crotty at iSuppli remarked, "I would have to think that Apple would not take kindly to Amazon if it got into competition with iTunes and the iPod." Crotty added, "It would also be a dramatic departure for Amazon, which does not sell its own branded products."

Crotty said, "This could be a giant bluff. The record labels are renegotiating with Apple this year. They may be looking to strengthen their position."