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Apple Surpasses Microsoft In Valuation
May 28, 2010
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"Wall Street believes in Apple because Apple continues to put out new products that capture the imaginations of the press and tech pundits. Microsoft just hasn't been able to come up with a new multi-billion dollar business like Apple."
-- Matt Rosoff, lead analyst at Directions, an independent firm.In the newsletter back in December of 2003, I talked about the TV film "The Pirates Of Silicon Valley" in a commentary titled "Marketing: The Foundation." I wrote "The failure to recognize how critical a role marketing plays in laying the foundation for future success is now cited and studied in many of the country's finest business schools and two of the greatest marketing blunders in the past century are often discussed."
Those two blunders were Sony's failure to license its Beta videotape recording process to competitive companies (which resulted in Matsushita - Panasonic's parent - in developing VHS at a cheaper price), and Apple's failure in the home PC market back when IBM chose Microsoft's DOS operating system.
I mentioned "The Pirates Of Silicon Valley" (based on the great book 'Fire in the Valley: The Making of The Personal Computer' by Paul Freiberger and Michael Swaine) because if you've seen the movie, or read the book, you already know this incredible story.
Near the end of the film there's a scene when Steve Jobs says to Bill Gates (realizing now that Microsoft is his real enemy), "We're better than you are." Gates replies, "It doesn't make any difference."
And of course it didn't. Microsoft became the monolith it is today and with IBM as a strategic partner, Microsoft's Window became the dominant OS in the world. The big battle, the one for the home market and business desktops was won by Microsoft and it was the relentless (and yes, creative) marketing that the company used to defeat Apple.
But Apple (and I hate to use the old cliché, but it is so appropriate) rose from those ashes of a decade or so ago like the immortal Phoenix, and this past week Apple became the world's most valuable technology company when its market capitalization reached $227.1 billion, overtaking Microsoft's $226.3 billion valuation, The New York Times reported.
From the New York Times article: "Wall Street has called the end of an era and the beginning of the next one: The most important technology product no longer sits on your desk but rather fits in your hand."
Of course, it Apple's commitment to innovate (one of Steve Job's management tenets is to lead, not follow when it comes to developing products) that has made it the successful company it is today. The iPod is now synonymous with all digital music players; iTunes is the leading online music retailer; the iPhone is the smartphone every other company wants to emulate; the iPad is already primed to be the handheld tablet of choice. (See 'Track 3' below)
I think it safe to say that while many are still trying to figure out how to create new model(s) for survival in the future, Steve Jobs has taken a giant leap forward for his company by leading the way and showing just how much can be done with innovation, and an approach that's different than that of many of today's CEOs.
Back in 1984, in an interview about the release of new Macintosh home PC, Steve Jobs said, "We're gambling on our vision, and we would rather do that than make 'me too' products. Let some other companies do that. For us, it's always the next dream."
It's good to know Apple's "next dreams" have become so successful. It's good to know that any company, so dedicated to making products its customers embrace, continues to dream of what else might be next.
Read more about Apple's recent success here: http://tinyurl.com/2uhejtp or here: http://tinyurl.com/3ym3tb3
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THE 'A-SIDE' - TRACK 2
THE RIAA'S WASTED DAYS AND WASTED NIGHTS
Whitney Harper was between 14 and 16 years old when she was accused of file-sharing 37 songs. She was ordered to pay the RIAA $27,750 ($750 minimum per song as per the Copyright Act).
That decision reversed a Texas federal judge who had ordered defendant Whitney Harper to pay $7,400 ($200 per song). Whitney's attorneys said she didn't realize that file-sharing was violating copyrights, she thought it was like streaming Internet radio.
Now Whitney's attorneys are taking the case to the U.S. Supreme Court, citing the "innocent infringer's" defense, and hoping the judges will hear the case. (They could issue a ruling, or decline to hear the case) (Source: http://tinyurl.com/3a55r9t )
Whatever the outcome, it is these types of lawsuits that serve no purpose whatsoever in helping the music industry solve the problems at hand, created by the Internet and technology, a long, long time ago.
This kind of press neither frightens the tens of thousands still file-sharing, nor will it stop tens of thousands more from doing it in the future in a myriad of ways the RIAA cannot detect. The technology that exists today cannot be legislated away in Washington, D.C. by politicians and by the lobbyists the RIAA employs.
I will say yet again, I do not condone illegal file-sharing or downloading. But after almost a decade of dialogue with hi-tech people, I am wise enough to know it will never cease despite the RIAA's best legal efforts.
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THE 'A-SIDE' - TRACK 3
iPAD HURTING NETBOOK SALES
Last week I included a short new piece about how tablet sales are expected to explode from 7.6 million units in 2010 to more than 46 million units in 2014, representing a compound annual growth rate (CAGR) of 57.4%.
Since Apple announced the iPad in January there's been widespread speculation about what impact it would have on the netbook market. A Morgan Stanley report released earlier this month suggested the Apple tablet has indeed cannibalized netbook sales, plummeting in January, and again in April, when the iPad was launched. It is estimated the iPad has already grabbed 30% of netbook buyers. ( http://tinyurl.com/3a2phxf )
And Now For Some News ...
The DOJ Inquiring About Apple's Digital Music Lead
CNETThe U.S. Department of Justice has begun asking questions about Apple's role in the recent scaling back of special music discounts and promotions at Amazon, according to two high-level music industry sources.
The sources said investigators have begun speaking to a number of digital music retailers and top record labels about Apple's response to the "MP3 Daily Deal," an Amazon promotion that involved slashing prices on specific titles and pushing them heavily the day they were released. Amazon sometimes negotiated with the labels to get exclusive access to the music for a day, and the labels and their artists would often support the Daily Deal by promoting it on their websites.
Read more about it by clicking here.
Amazon Ties WalMart In U.S. Market Share
NPDWhile Apple continues to lead U.S. music sales with 28% of the market, Amazon.com crept 3 percentage points over the past year to tie Wal-Mart for second place, with 12% of the market, according to a report from market research firm NPD Group.
Read more about it by clicking here.
The Noise And The Sounds Of Silence
CNETIt's a noisy world and getting noisier all the time. No wonder sales of noise-canceling and noise-isolating headphones are booming. Dwight Garner's New York Times article, "Meditations on Noise" ( http://tinyurl.com/2b7lemr ) reports on three books covering the impact of sound and noise on our lives.
Noise is usually classified as unwanted sound, but one person's noise is another's bliss. Musicians such as Link Wray, Jimi Hendrix, Neil Young, and Jonny Greenwood mastered the art of noise. Indulging in loud music can be risky business; if you occasionally experience "ringing in the ears" after exposure to loud sounds or concerts, you may be losing your hearing.
Read more about it by clicking here.
SoundExchange Has Some Cash On Hand From Unpaid Royalties ... $200 Million
WiredSoundExchange, the entity that collects and distributes royalties from streaming music services, is holding at least $200 million in royalties owed to artists, according to a review of the agency's tax returns -- but says just around $39 million of the sum is owed to artists it has so far failed to locate, Wired.com reports. (Huh?)
Read more about it by clicking here.
BlueBeat Now Available On iPhones
WiredBlueBeat.com, a website that was ordered last year by a judge to cease selling or streaming songs from the Beatles and other artists for which it said it had created copyright-exempt, "psychoacoustic simulation" versions, has now expanded the service to the iPhone, The Register reported.
Read more about it by clicking here.
Verizon Customers Would Love iPhones
DigitalDailyNearly 17% of Verizon's customers would upgrade to an iPhone, according to a research note from Morgan Stanley analyst Katy Huberty, citing an Alphawise U.S. consumer iPhone survey.
"There is substantial pent-up iPhone demand within the Verizon installed base as 16.8% of Verizon subscribers said they are 'very likely' to purchase an iPhone if offered on the Verizon Network," writes Huberty. "This 16.8% is higher than AT&T subscriber's 14.6% extreme interest in the current AT&T iPhone ... and well above the overall iPhone extreme interest of 7.5%," Huberty adds. If survey takers stick to their word, Verizon would stand to sell between seven million to eight million iPhones annually.
Now the only question is with that kind of market growth potential, how long before Apple bites and pacts with Verizon?
Read more about it by clicking here.
Forbes Ranks The Top "American Idol" Earners
VarietyForbes has put together a list of the top-10 money makers from "American Idol."
Who made the most money so far? If you guessed Carried Underwood, you're right of course. Kelly Clarkson is #2 on the list, and Chris Daughtry #3.
Read more about it by clicking here.
Film Studios Look To Shorten Home Video Release Date
VarietyThe Hollywood movie studios are looking to experiment with shortening the traditional four-month window between when a movie is released to theaters and when it becomes available on home video, in a bid to generate more revenue from new video-on-demand and other services, Variety reports.
Lots of big screens out there in America's home and $20 for a movie at home (that's the low price being talked about for movies only 30 days after they bow in theaters) is a whole lot cheaper than going to the movie theater, paying for parking, popcorn, etc.
Read more about it by clicking here.
The Music Industry Past, Present & Future, And The Internet
I answer questions on EconTalkI did an interview about the industry and the Internet at EconTalk with host Russ Roberts. Russ is also a professor of economics at George Mason University, blogs at Cafe Hayek, and has written three novels that teach economics. He's also the co-creator of the Keynes-Hayek rap video. (And if your understanding of the economic meltdown that occurred needs to be enlightened, this video will do it)
In the interview we talk about the evolution of the music industry, the impact of the digital revolution, and I give my reasons for believing in the virtues and potential of the Internet in enhancing the music industry. I point out, as I have many times here in the newsletter, that the internet allows numerous artists to make money from their music and it can enhance revenues from live performances by expanding an artist's base. We also discuss the challenges facing record companies and I suggest that the full potential of the Internet as a distribution channel has yet to be fully exploited. There's a lot of ground covered, but based on the comments already posted of those who have tuned in, they've enjoyed it.
Read more about it by clicking here.
BMI HONOREES:
Taylor Swift, Lady GaGa producer RedOne and John Fogerty were the big winners at last week's BMI 58th annual Pop Music Awards at the Beverly Wilshire Hotel.
iTUNES BIGGER IN 'O9:
Billboard analysis reveals that iTunes' market share amongst U.S.-based retailers expanded to 26.7% in 2009, from 21.4% in 2008.
MACCA GETS GERSHWIN AWARD:
On June 2nd, Paul McCartney will be honored by Pres. Barack Obama at the White House when the former Beatle receives the Gershwin Prize for Popular Song from the Library of Congress. The ceremony will also include an all-star concert featuring tributes from Jack White, Stevie Wonder, Dave Grohl, the Jonas Brothers, Elvis Costello, Emmylou Harris and Faith Hill.
AEROSMITH BUX:
Aerosmith will make New York State Fair history in August by becoming the first act to command a $1 million performance fee. According to Syracuse.com, fair bosses have guaranteed the rockers $1 million -- $200,000 more than the fee they paid to both Rascal Flatts and Taylor Swift in 2008.
PAULA TO DANCE:
Former "American Idol" judge Paula Abdul has finally revealed that her return to primetime television will be as lead judge, executive producer and mentor on the new CBS dance show 'Got To Dance.'
KISS ON THE ROAD AGAIN:
Kiss will tour North America this summer with their Hottest Show on Earth Tour. The 28-date trek celebrates the 35th anniversary of their 1975 breakthrough record, "Alive!"
iPHONES AT A GREAT PRICE:
As Apple prepares for an event next month at which it is expected to introduce the iPhone 4G, retail giant Wal-Mart is looking to unload its current inventory by offering an iPhone 3GS for just $97, with a two-year contract.
BYRNE SUES:
Add David Byrne to the growing list of musicians who are suing politicians for using their music without permission on the campaign trail. The Talking Heads frontman is taking legal action against Charlie Crist after the Florida governor used the group's 1985 hit "Road to Nowhere" in a campaign ad.
FACES ON:
The Faces will no longer wait for Rod Stewart to reunite, announcing on their website yesterday that three of the original members of the legendary British band - guitarist Ronnie Wood, drummer Kenney Jones and keyboardist Ian McLagan - will team up with Simply Red singer Mick Hucknall and Sex Pistols bassist Glen Matlock. The group is set to perform as the Faces at this year's Vintage at Goodwood festival in England on August 13th.
FOGERTY NOW IN THE BASEBALL HALL OF FAME:
This summer, John Fogerty will become the only musician ever enshrined in the Baseball Hall of Fame when his classic ode to the sport, "Centerfield," gets inducted into Cooperstown.
ELLEN NOW A LABEL HEAD:
"American Idol" judge Ellen DeGeneres is launching a record label. Aside from discovering untapped talent on "Idol," "The Ellen DeGeneres Show" host scoured the Internet for a stand-out artist. A star was born two weeks ago when Ellen introduced Grayson Chance. His interpretation of Lady Gaga's hit "Paparazzi" attracted 30 million views of his YouTube clip. He told Ellen, "Just thinking of 30 million people just makes me happy and it really hasn't sunken in yet."
BONO GETTING BETTER:
Bono has reportedly been released from a Munich hospital following an emergency back procedure, and will begin a rehabilitation program for the next eight weeks.
NO MORE MILKSHAKES IN THIS MARRIAGE:
Court filings show a judge on Friday dissolved the union between singer Kelis Rogers and rapper Nas, whose full name is Nasir Jones.
Quotes of the week
"We were young, good-looking and stupid then. Now we're just stupid"
-- Mick Jagger, talking about the documentary 'Stones in Exile' about the making of "Exile on Main Street""Watching 'Lost' is what I imagine it must be like to be trapped inside the brain of Paula Abdul."
-- Jimmy Kimmel"I've always wanted to be a woman. For five minutes."
-- Sting, who got his wish when he appeared in drag for a rendition of "Big Spender" at the Rainforest Fund's 21st birthday celebration
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
White House Jester Beheaded For Making Fun Of Soaring National Debt
WASHINGTON-After serving 12 years in the position, Motley, the official White House Jester, was beheaded Tuesday after delivering a poorly received jape about the spiraling national debt before President and Mrs. Obama.
"For crimes of great arrogance and cheek, His Idiocy the White House Jester has been sentenced to a swift demise," White House Press Secretary Robert Gibbs said following the death sentence. "Let it be heard over every city and suburb of this land that the National Debt is no topic for frivolity, and the mailed hand of Obama shall smite all offenders."
Motley, who used his last words to beg in vain for Obama's mercy, was executed on the North Lawn at the strike of noon.
Read the rest here and laugh: oOLINKOo.
THE RADIO INTERVIEW on 'THE AMERICAN PERSPECTIVE' - From newsblaze.com
"Steve Meyer is on the front line of global music sales and distribution which he expects will soar to pocket-bursting levels. What's more, he shares his insight and ingenuity with us. Steve gives us both historical perspective and futuristic vision as he chats with Judy about the love of his work, trends of the business and his personal points of view about success, happiness and blending life with the lust for life. Steve joins Judy and helps us discover the thrill of having it all with a sense of balance and purpose. "
You can listen to an interview I did with Judy Piazza of 'The American Perspective' by clicking here: (It runs about 15 minutes)
http://www.thesop.org/index.php?id=10306.
The Blogs
Check out Jerry Del Colliano's (the founder of INSIDE RADIO) daily blog, by clicking here: http://www.insidemusicmedia.blogspot.comWebsite
Check out attorney Ray Beckerman's website at: http://recordingindustryvspeople.blogspot.com where he prints news about the RIAA's ongoing activities
TinyURL
Check out www.tinyurl.com where you can make a smaller URL that will work for any webpage you wish to link to or reference. (As you can see, I'm using it in my news stories above!)
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