Consumer Electronics

Apple: The Market Reacts To New Competition

It must be humiliating for MTV and RealNetworks (RNWK) to say they will compete with Apple (AAPL) iTunes and watch the AAPL shares spike up almost 6% to $129. RNWK were up only slightly more, and they should be the big beneficiaries of the news.

What the market’s reaction says is simple. Even with Viacom (VIA), Verizon Wireless, a joint venture between Verizon (VZ) and Vodagone (VOD) , behind  a deal to sell and distribute music over one of the largest cellphone networks in the world, AAPL can’t be touched. MTV is a global brand. It doesn’t matter. RealNetworks has outstanding technology.

The new music store initiative is being viewed as a loser before it is even launched. And, that is probably right. It is hard to see what someone with an iPod (almost everyone), using iTunes, would switch to the new platform. Using cellphones to play music may become a big business, but it is not today.

In addition, that market does not like four-way deals among big companies. Each one has a different goal, and no one runs the thing. The promise and the problems end up in a committee.

Douglas A. McIntyre

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