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Get Ready for the Great Assault on the iPod

The phrase “iPod killer’ may be among of the funniest of the last few years. It has been applied to every new MP3 player that some technology pundit felt would give the iPod its comeuppance. Well, as we all know, the only things that got killed were those competitive products, which failed in the marketplace. But nothing lasts forever, and 2006 may signal the biggest effort yet to unseat the iPod from its dominance.

As you might expect, the assault was ushered in this week at the CES trade show in Las Vegas. Except for Apple Computer, which never participates, hundreds of technology companies were on hand to show off their latest gear. Among the hot properties were new portable video devices, more advanced high definition TV sets and lots of other stuff. Even iPod accessories were in evidence, and the fact that Mac-oriented Web sites now include CES in their travel plans show how things have changed.

But the big story comes from companies who are trying harder to get a presence in the digital music arena. Take HP. In the wake of its failed deal with Apple to sell rebranded iPods, it has announced that it plans to zap iTunes from the desktops of its PCs in favor of Real Rhapsody. Starting this spring, the deal will include a complimentary 30-day trial subscription to Real’s subscription music service. It’s also reported that Cox Communications will offer Rhapsody to its cable TV subscribers, and even include the price on its monthly bills.

Even after burying the hatchet with Real, Microsoft and MTV are moving ahead with URGE, a new music service that will, like iTunes, offer two million tracks, but will add a subscription-based service to the mix. So much for that partnership with Real.

Without mentioning specifics, there were a slew of new digital music players on display at CES, all from makers hoping to gain traction against the iPod. Many carry a “Plays For Sure” logo, which means they support Microsoft’s digital rights management scheme.

Of course, keeping up with Apple will be no mean trick. The iPod, as we all know, is far more than a music player. It’s almost a lifestyle, and that’s a concept that Apple’s rivals have yet to comprehend. They still feel that offering more features, or a lower price, or some combination of the two, will move product. It’s not that simple, and as yet no third-party device can offer the seamless integration between the player, the software and the service.

Where the competition might gain ground, however, is in subscriptions. So far, most of you have opted to buy your songs and videos from iPod, rather than rent from Rhapsody, Napster-to-Go, Yahoo Music or any of the other services. Except for the online version of Real’s music service, none are available for Mac users, at least not yet! However, whether you want to believe it or not, Apple makes most of its iPod and music income from Windows users.

Now I’m not about to suggest that Apple will never offer a subscription option. As often as Steve Jobs says that people want to own their music, and I agree with him for the most part, there is one valid reason to embrace subscriptions: Sampling! Yes, you can hear 30-seconds of a song from iTunes before you buy it, and that’s been sufficient so far. But renting can give you a better chance to develop a taste for music you’re not yet ready to buy. Quite often a song has to grow on you, and the brief sound clip may not be enough to reach a purchase decision. This is particularly true when it comes to albums, where far too many artists and music companies add songs as filler, and rely on a couple of hits to move product.

In the end, of you still want to keep the song, you can buy it. At the same time, I wonder how many of the folks who rent their music from those other music services end up buying anything. That would be the real indicator of whether this scheme works. At the same time, Apple doesn’t really make a whole lot of money from its music store, and the software is just given away. It’s all done to create a smooth ecosystem to move iPods, and whether people want to own or rent music shouldn’t make a difference in the end if sales continue to soar.

Of course, the also-rans may enjoy the limelight this week trumpeting their new products. Next week, it’s Apple’s turn, and the fact that Real is gaining some traction and HP will no longer bundle iTunes with its new computers may make no difference whatever.

At the same time, I’m pretty sure that Steve Jobs is watching the developments at CES carefully, and if he sees a genuine competitive threat, he’ll act real fast!