John Lockwood's Profile

With regards to the Europe iTunes issue. Apple is not at fault here, it is the record companies. There is already precedent over this in Europe. A while ago the European car manufacturers and in particular VW were preventing dealers selling to customers IN EUROPE but not in the dealers own country. This is a clear breach of European Free Trade laws and VW (not the dealer) eventually were heavily fined. If we use this example and compare it to the iTunes case, then the record companies play the part of VW and Apple is the dealer. So in this case I do not believe Apple have anything to worry about but the record companies do. Note: Two and half of the four big record companies are European and should know better. With regards to pricing and VAT. The UK iTunes price will be dependent on the wholesale price Apple got from the record companies. I don't think anyone believes it is not the case that the record companies charge Apple a higher wholesale price for the UK, i.e. the record companies are ripping UK customers off. This theory is supported by the fact that irrespective of VAT, CDs also cost more in the UK than the rest of Europe (or the US). Note: UK VAT is 17.5% which is not the highest nor the lowest in Europe. US sales tax seems to average about 8%. Therefore all other things being equal, UK prices should be about 9.5% higher than US prices, this is obviously not the case. While it does not apply in this iTunes case, I can illustrate an example as to why often UK prices are much higher than US prices. In the US a manufacturer, might sell directly to a reseller, who then sells on to the customer. The reseller might as an example get a 25% margin (the exact figure does not matter). The same US manufacturer would also be selling internationally, but this time they sell to a distributor (importer), who then has to sell to a reseller, who then sells to the customer. Now, logically, the importer (distributor) is going to have much higher costs than a US reseller, the importer is going to have to pay international shipping, customs duty, and still give a margin to the reseller, they also often take on the local marketing, support and warranty burden as well, so you would logically expect the manufacturer to recognise this and give a bigger margin to them. The sad reality is that many/most US manufacturers give that importer the same exact margin as a US reseller. Now the importer needs to make SOME money and its costs are much higher so what happens is as follows. US manufacturer -> US reseller 75% of US retail (25% margin) -> US customer 100% of US retail US manufacturer -> Intl Distributor 75% of US retail (25% margin) -> UK reseller 100% of US retail (25% margin) -> UK customer 125% of US retail and then after that you get charged VAT at more than double the typical US equivalent. So to summarise a UK distributor is charged the same as a US reseller even though their costs are much higher and they are doing more work, they than ADD a margin (e.g. 25%) on top of their cost and charge that to the UK reseller, the UK reseller then adds their margin (another 25%) on top of THAT, and charges the customer that (plus VAT). Now one could argue that the costs of supplying the product to a UK customer are higher (they are), but one could also argue that the US manufacturers are also being very unfair as well (since potentially their costs are actually a bit less since they are typically doing less support for international customers). Now this does not cover all eventualities. There are indeed cases where manufacturers are ripping UK customers off over and above this distributor problem. For example, look at books. Books are zero VAT and duty rated in the UK but actually do get charged sales tax in the US. Nether the less, the US edition of a book bought from Amazon UK, is almost always cheaper than the UK edition of the same book also bought on Amazon UK. Since the shipping costs to Amazon are going to be less for the UK edition, and there is NO tax at all, the only conclusion is that UK publishers are ripping UK customers off. This applies to many other products as well (e.g. CDs, DVDs, etc. etc. etc.). There are also manufacturers who make/assemble products in Europe (e.g. Ireland) and don't make any in the US, and yet still the US price will be cheaper.

Microsoft would never in a month of Sunday's do a version of their rumoured MP3 player/software that would work with a Mac (more fool them). Google PROBABLY would do a version of their store that would work with a Mac. Some Google products are already available for the Mac (Google Search, Google News, Google Earth, Google Maps, and even Google Video), others like Picasa and Google Talk are not. Two ways Google could differentiate themselves from the horde of 'me too' music stores (i.e. everyone except iTMS) would be first to support Macs as well as PCs, and secondly to offer music in a loss-less format (FLAC, Apple Loss-less, AIFF, WAV, etc.). Google certainly have the infrastructure to do this. While it may be likely that Google would do the former (assuming they do not emulate the horde of other also rans and use WMA format downloads), I cannot see the brain dead music publishers allowing them to do the second (loss-less format downloads). In conclusion I believe Apple will remain unassailable. Regarding Creative, their last figures showed a(nother) drop in profits due to price pressure from competitors (iPod). Perhaps they should instead be switching to selling just iPod accessories ;-) That seems a profitable and growing industry!