Katie MarsalFollowing the termination of its exclusive deal with Apple Computer, Inc. to distribute re-branded iPods, Hewlett-Packard is preparing to reengage in the digital music business this January, and will likely do so without Apple's iTunes software, reports Macworld UK.
Bradley's comments corroborate an August AppleInsider report entitled "HP likely to stop bundling iTunes by '06," which quoted American Technology Research analyst Shaw Wu. In the report Wu predicted HP would abandon iTunes as its default music player by 2006 in favor of forming a new relationship with Microsoft and its Windows Media Player technology.
Similarly, Macworld UK also believes: "It's likely HP will now choose to deliver solutions based on Microsoft's Windows Media technology."
In January 2004, HP and Apple formed a strategic partnership where HP agreed to install Apple's iTunes music jukebox software on its computers in exchange for the rights to sell HP-branded iPods. Apple also sought the benefits of HP's 100,000-plus retail outlets world-wide, knowing they could quickly expand the iPod's reach.
Unfortunately, the partnership barely got off the ground. Almost immediately, the two company's began to quarrel over price protection on iPods and other business aspects. At one point HP halted orders to Apple for new iPods for several weeks, protesting a need for price protection which Apple failed to offer.
But by May of this year, it seemed as if the two companies had worked through their differences. HP began expanding its iPod offerings to include the iPod mini and iPod shuffle. At the same time, Apple was quietly negotiating its own presence in big box retailers such as Wal-Mart, which had previously sold only HP-branded iPods.
Only several weeks after launching a pilot prgram at Wal-Mart, Apple forced its foot in the door of another large HP iPod retailer: on July 21, AppleInsider reported that Apple had landed an iPod deal with RadioShack. Eight days later HP announced that it would stop reselling iPods.
According to Apple, HP iPod sales accounted for less than 8-percent of total iPod shipments during the last quarter in which sales results for HP iPods were released.
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31 Comments
Meh, it's HPs loss
Wonder if this is related to HP getting in bed with HD-DVD.
Ironically, before the "Great Culling" of Compaq branded products, HP actually had a well respected brand of MP3 players (don't think they were WMV specific) that sortof loosely tied in with the iPaq brand.
If I were HP, I'd look at seriously repositioning their PDA products as lifestyle devices; ie. stick 1.8" and 1" HDs in different models and position them as handheld photo viewers/vaults, audio players, and PocketPC devices. Phone functionality optional.
It would certainly be their strongest strategic move, as their PDAs I'm sure have some residual brand respect if not current brand respect?I'm not up on the current PDA market as it doesn't really tweak my interest. I'm willing to bet that professionals in the 25-50 year old range that PDAs are targeted at are also a large segment of the music player market still, despite the growing popularity in the "youth market."
Wonder if this is related to HP getting in bed with HD-DVD.
No. That has nothing to do with it. Apple doesn't care what HP does regarding HD-DVD. This is about righting what many thought was a mistake. HP not making their own player and accepting a bad deal from Apple. HP is a bit torqued by that according to my acquaintance from HP.
Even though it may seem as though Apple doesn't need Hp, it was bad business practice doing what Apple did.
You don't compete directly against your business partners.
I'm not saying that it was a bad move in and of itself for Apple to go to Walmart and RadioShack, but it was bad politics.
With Hp removing iTunes from their machines, Apple will lose the recognition of people who buy those machines. The fact that it has been on those machines has been responsible for many people coming in contact with the product for the first time. Hp sold 8.5 million computers in the 3rd quarter worldwide, almost as many as Dell.
Apple should have found a better way to end the relationship, if that was what they wanted.