txlaw

Absolutely. The point remains, though, that it is quite possible to create a PaaS solution that runs on data centers not owned by the PaaS solution developer as long as the data centers have hardware that it is optimized for the platform. One thing to note, too, is that just because an Apple PaaS platform is not successful with enterprise does not mean that its client-side OS's will be unsuccessful with enterprise. My understanding -- and I could be wrong about this because it's been a long time since I've really done any real coding -- is that Windows Azure is far more turnkey, designed to take out whatever hard lifting there is of developing and maintaining on a LAMP stack. That's why it's a PaaS solution. Also, I'm pretty sure Windows Azure supports development using a number of languages that are popular with web developers (e.g., Ruby). I have no problem with enthusiastic posts about MSFT. I'm just suggesting we try to be rational about our investee companies. When one is invested in MSFT, it's easy to fool oneself into believing that AAPL is behind in the cloud or that WinPhone is just as user friendly as iOS and Android. If you own GOOG, it's easy to fool yourself into thinking that Bing will never make inroads and that it poses no threat to Google's search engine. Better to have an objective view of the risks and rewards of MSFT, right?

You are assuming that owning data centers is necessary to be a successful "cloud" provider. Keep in mind that there are different aspects of the cloud computing experience that these guys (AAPL, MSFT, GOOG, AMZN, etc.) are involved in. There is the cloud application development platform side (e.g., Google App Engine, Windows Azure), the UI/client side (e.g., Android/Chrome, Win 7/WP7, OSX/iOS), the application/service side (e.g., YouTube, iTunes, Google.com, Bing), and probably other aspects I'm forgetting to note. The data centers that MSFT, GOOG, and AMZN are building are all being built for various reasons. Amazon builds data centers in order to provide IaaS services and their own apps/services (vertical integration). GOOG builds data centers to provide a PaaS product and to run its own apps/services like Search and YouTube (vertical integration). MSFT builds data centers to provide a PaaS product (Windows Azure) and possibly to run its own apps/services like Office365 and Bing. AAPL appears to be out of the game because they don't own as many data centers. However, it is not necessarily the case that these cloud-focused companies must own their data centers, with the exception of IaaS providers (who by definition must own the computing infrastructure). Vertical integrations has been great so far with because PaaS providers and app/service developers have been able to innovate and experiment with their platforms, apps, and services on their own data centers in secure ways, ensure QoS, and innovate with respect to the data centers themselves, driving efficiencies that benefit the platform, app, and service providers themselves. But there is a growing movement to make data centers more efficient by open sourcing innovations such that the software providers can outsource their infrastructure without giving up a competitive advantage (e.g., the benefits of vertical integration for a PaaS product). Indeed, Facebook's OpenCompute project is aimed precisely at removing any competitive advantages of vertical integration -- Facebook wants data centers built by various potential outsourcing partners that are just as good as the in-house data centers built by GOOG and MSFT. Do we really know that it will be necessary for GOOG, MSFT, and AAPL to have their own data centers in order to provide their cloud platforms and apps/services in a couple of years? It is notable that MSFT is going to offer Windows Azure as an appliance that can be run in non-MSFT datacenters (e.g., HP and MSFT data centers). There is no reason to believe that Apple will not do the same thing with its own cloud OS, which I believe they are working on. MSFT fanboys should resist dismissing Apple at every turn, claiming that they are not innovative or that they will be relegated to irrelevance in the "cloud." Owners of MSFT are doing themselves a disservice to underestimate the competition. By the way, it wouldn't be a bad bet to go with companies that could potentially sell these big cloud computing providers the equipment and space needed to run their platforms, apps, and services, provided that these companies are being priced cheaply by the market. Communications services providers as well, especially backbone providers like T, VZ, and the company who must not be named. ;D To conclude, I will see your MSFT and raise you some DELL! ;D Note: I am mildly long MSFT, long GOOG, and verrry long DELL. No position in AAPL.

Sharper, aren't you describing the bad form of finite reinsurance, whereby the transaction is used to smooth earnings and as a form of regulatory arbitrage, rather than as a way to transfer the risk of uncertain timing of claims payout, which could create a liquidity crunch, and uncertain total amount of claims payout? I believe analogizing to an agreement to repurchase agreements with a defined repurchase time and amount is essentially saying that side letters are always created in these transactions that effectively create a loan rather than a real transfer of risk. Gen Re got busted for this with AIG, didn't they? And MBIA also got slapped for a sham finite reinsurance deal that allowed them to reduce their liabilities improperly.

I'm referring to Apple's share of the OS layer for Internet-connected devices that require a robust user interface. So, I'm talking about mobile phones, tablets, PCs, TV boxes, embedded computer surfaces, etc. There's huge potential here. All these guys -- MSFT, GOOG, and AAPL -- are battling it out to become a vital part of the OS layer. That's my take on it, anyway.

Yup, just brand, the curated experience, and possibly any supply chain advantages that allow them to secure the highest end hardware. That's why Apple needs to manage this trade off between the curated experience and the openness/choice factor over time if they really want their products to be in the hands of the most users possible. They also have to lessen the control aspect over media/app distribution so that it becomes less draconian for publishers over time. Otherwise, they will be constrained to low market share going forward. That's also why I think Apple would be stupid to forego making iTunes into the Netflix/ultimate storefront of music. Because the media business is inherently a lock-down sort of business due to the copyright monopoly that is granted by law, it fits well with Apple's DNA. If they can focus on being the major intermediary between content owners and users, that would be pretty lucrative and they wouldn't have to bet the farm on just selling their OS based on the curated experience. Will they go that route? Who knows? I suspect that Jobs, who has lots of experience in the media field due to Disney/Pixar, has thought about this. Very interesting. It looks like Apple is treading that fine line and is willing to give in upon push back by its publisher partners. That's a good thing for Apple shareholders (I'm not one, btw). It also suggests that Apple understands the threat that web-based apps, as opposed to client-side apps, pose and is managing that risk accordingly as the competition heats up.

I guess the way I reconcile iCloud with the all-you-can-eat audio streaming future that I believe is right around the corner (with "old content" and "new content" catalogs that are priced differently) is by chalking up this incremental improvement to Apple's relationships with the record companies and the wireless last mile providers. With respect to the record companies, I think they're probably still working out amongst themselves how to go about doing this sort of service in the US. There are so many constituents involved: radio broadcasters, online radio providers, TV music channels, retailers, artists, etc. It could take a while to line everything up. With respect to the wireless providers, any real music streaming service would have to work with our mobile devices, and the carriers simply cannot handle that data traffic at this time. The carriers are a big bottleneck for getting an audio streaming service going. I guess I don't view it as a "dick move." To some degree, I think it's what the first mover is entitled to until the market adjusts accordingly. If an app provider is going to make multiples of revenue on their upfront development costs and relatively small maintenance/improvement costs, and in large part due to the distribution channel of the top platform, I think it makes sense that the top platform provider requires that its app providers not sabotage the platform's lead by allowing competitor platforms to undercut on pricing of apps to the end user. Especially since your major competitor could very well make the rev share of purchasing apps 0% since it works on an ad-based business model. The reason that the percentage fee is higher is because Apple's essentially claiming that the ROI (i.e., the return on upfront development cost) on the iOS version of the app will be a higher multiple than the ROI for the Android version. So the higher 30% fee shifts part of that excess return on the fixed cost of development to Apple. It's just the pricing power of having the top platform. Also, to some degree, the pricing power results from having access to "higher end" users. Apple products are expensive and most people in the world won't be able to afford them, so Apple's user base could be more valuable on a per user basis. I believe the iAds rev share is also larger than AdMob's rev share for the same reasons, although I've heard that iAds sucks. It will be interesting to see how all this changes if Android gets a much larger market share than iOS. Haha, fair enough.

Okay, if you're talking about making the sale and gaining mindshare, as opposed to keeping us locked in for all of time, I agree that the media deals help. I especially agree that the innovation gap is closing swiftly. Also agree that the OS+hardware cannot support 60% gross margins over time when you're dealing with the Android business model. Okay, well then let's talk about it at the higher level instead of nitpicking about whether there really is a complete lock down of music or video consumption by Apple, which I do not think is accurate. I disagree on how big an effect existing collections of music, video, and apps will have on keeping users from migrating from Apple devices to non-Apple devices. Most music purchased from iTunes can be upgraded to DRM-free, I believe. So it can be moved to other devices. Video protected by DRM may or may not keep people from migrating, though I suspect not in a world where Netflix and other services increasingly have much of the content you want to watch anyway. Your point on apps, which I don't consider media, is well taken. However, whether your app collection will deter you from migrating is going to depend on how much you paid for the apps and whether you have data stored locally that cannot be migrated to a different device. If all your apps are only $1 or free apps, it won't cost much to migrate over to a different ecosystem. The data problem, however, is a real one, and I recognize that that could be the big lock in proposition. But most apps with data you would want to take with you appear to store the data with the web services rather than locally. Not all, but most. Perhaps it is cheaper to develop an app for Android versus for iOS. I have no idea. If somebody reading this post does, I'd love to hear their thoughts. But we also have to ask: what's the return on investment per unit for an Android app versus an iOS app? If more people buy your app because of the curated nature of the iOS platform, giving you ridiculous incremental net margins on each additional unit sold, then maybe it makes sense that Apple gets a bigger cut than Google and that they try to set their price. Clearly, developers are willing to pay more for access. Of course, if Apple becomes the dominant power in the market, they will have to watch what they do to make sure they aren't running afoul of the antitrust laws. Netflix doesn't have to pay the 30% because they're a big dog and Apple needs to have them on the iPhone. That seems fine to me. I really hope Apple doesn't buy Netflix.

I have never downloaded any song illegally. Apple's upgraded audio files would be a downgrade in quality for my 50,000+ songs. I don't think many people care about audio quality any more or the mp3 craze would have never happened. I don't see it as a prod to sign up for this pickpocketing. Clearly you are in the minority. Or maybe you're just old. (Just kidding, just kidding :P). Seriously, though, how many ordinary people are going to set up a media server in their house where they can stream their music anywhere they want? And how many people own 2TB of lossless digital audio files! You seem to be an audiophile. I have lots of songs that are pretty crappy quality back from my college days. I would actually like to have new versions. I am also one of those suckers who wouldn't mind paying $25 to the record labels for my past indiscretions. Unless they're keeping dibs on me. We'll see when the TOS comes out.

How can you listen to it anywhere? Do you carry around a 2TB drive with you? Slingbox I am heading in a different direction, outsourcing my home IT to these cloud service companies. I don't need to back things up, and don't need to keep the physical backup in a different location (safe from fire and theft). I am paying for making it simple. Same here.

except he isn't going to be storing much of your data. he isn't going to store your entire music library and he isn't storing your video. he is giving you all of 5g free. he is going to store pointers to the one copy of a song he needs to serve everybody. See if he did store all your data in the cloud you would have no need to buy a 64g iphone. How's that? Is it really the size of the hard drive that causes people to buy their iPhones? Almost nobody I know that has an iPhone has it filled up with data. And most people I know also have the 16 GB version, not the 32 GB version.

There's that bit about Apple making gross profit margins of 50-60% on the iPhone, iPad, and iPod devices. Releasing their grip on media will only serve to commoditize the hardware business. Apple knows today that they can't continue to out-innovate everyone forever. If they can lock you in with your media (again, cost of switching), it won't matter if the devices cost more for the same feature set. You'll buy them anyway. The profit margins are a result of vertical integration. A large percentage of the 600 basis point gross margin comes from their software, not the hardware. By tying their software (OS and bundled apps) to high end hardware, they are able to deliver a premium product that extracts large margins from consumers who are able to pay for the premium product. iTunes is just part of what draws people to Apple devices. As I said before, the long term trends will keep Apple from locking you in with your media. In a world where media streaming is the norm, Apple will not be able to lock you into their device -- the best they can do is get you to adhere to them in the short run and then try to lock you in by having you get used to their UI. They already lock down video - all of their video content employs the same DRM scheme as music. You can only play it on Apple devices. iCloud for video is probably still a ways off. Pay-per-play is more to Apple's liking here, I bet. How can video be locked down when the vast majority of people consume their video through MVPD, broadcast, theater-going, Netflix, and ad-serving sites (e.g., YouTube)? The number of people who will be paying iTunes for movies/TV episodes will dwindle as others (YouTube, for example) launch competing services. The movies people bought from iTunes are not keeping them from switching to Android or Win Phone. Pass the savings? What publisher is going to pass the savings onto their customers? Publishers are going to offer the same apps with in-app subscriptions at the same price point on Android, make higher margins, and keep that profit. They have to be on Apple devices. But they also have to be on Android devices. Subscription pricing will be set uniformly across the entire ecosystem (Android, Win Phone, and Apple) to maximize their profit. Sure, they're trying to do everything they can to lock us in, but ultimately, they will only be able to keep people coming to Apple if they out-innovate, not because of media or app lock in. Unless they become a monopoly, in which case they may be able to throw their weight around in ways that do not lead to innovation. But in that case, we'll just see whether the feds have something to say about their deals with the record labels.

All interesting thoughts. Yeah, I would suspect there will be file sampling plus ID3 tag scanning. However, does it really matter? Why would a hacker actually download songs for the purpose of replacing with better quality AAC files? More likely, the hacker/college kid will refuse to pay the $25, continue to download even better quality versions of the songs they want for free, and use Grooveshark or some app that combines Grooveshark functionality with their own library. They might even decide to subscribe to whatever streaming music service comes out when the 4G build is in full effect, although maybe not. I see iMatch as being for the regular public and for people who really want to take the labels up on the amnesty idea. Why do people need amnesty? the music is on their drives. how are they in danger now? these people are going to think twice about the TOS, which will be scrutinized carefully when the service becomes live. most people buy their music now that the industry has given consumers the right product at the right price. Nobody needs amnesty. It is insurance for people who are extremely risk averse, and it is also a way to extract money for people who think they should pay some amount for whatever they have downloaded in the past. I know some people think that nobody in their right mind would retroactively pay for the music they have downloaded illegally, but I bet you'll be surprised at the number of people who actually take Apple up on the offer. It may not be the majority of iTunes users, but it will likely be a good amount. Are they suckers? Depends on your point of view. Now, if Apple and the labels keep track of what you've downloaded in order to hit you over the head later for music that does not qualify for iMatch, that would be troubling. But do you really think the labels and Apple want to go there? insurance for people who are "extremely risk averse" at the same time being downloaders of illegal content? Is that a large group you are talking about? This service will appeal the hardest of the hardcore in the cult. Those that pretty much do whatever Steve tells them too. But as products get more complex, they sell "less". Hey, there are plenty of people who downloaded tons of music in the past (shoving skeletons back in the closet a la VAL) that would be happy to pay some sort of penance. A large group? Dunno. But I suspect a large percentage of people who use iMatch, which may not be a large percentage of iTunes users, will not do it for the "amnesty" but instead for the upgraded audio files. But now I see where you're coming from. I guess you think that anyone who would actually pay money for that that is an iIdiot, like misterstockwell does.

All interesting thoughts. Yeah, I would suspect there will be file sampling plus ID3 tag scanning. However, does it really matter? Why would a hacker actually download songs for the purpose of replacing with better quality AAC files? More likely, the hacker/college kid will refuse to pay the $25, continue to download even better quality versions of the songs they want for free, and use Grooveshark or some app that combines Grooveshark functionality with their own library. They might even decide to subscribe to whatever streaming music service comes out when the 4G build is in full effect, although maybe not. I see iMatch as being for the regular public and for people who really want to take the labels up on the amnesty idea. Why do people need amnesty? the music is on their drives. how are they in danger now? these people are going to think twice about the TOS, which will be scrutinized carefully when the service becomes live. most people buy their music now that the industry has given consumers the right product at the right price. Nobody needs amnesty. It is insurance for people who are extremely risk averse, and it is also a way to extract money for people who think they should pay some amount for whatever they have downloaded in the past. I know some people think that nobody in their right mind would retroactively pay for the music they have downloaded illegally, but I bet you'll be surprised at the number of people who actually take Apple up on the offer. It may not be the majority of iTunes users, but it will likely be a good amount. Are they suckers? Depends on your point of view. Now, if Apple and the labels keep track of what you've downloaded in order to hit you over the head later for music that does not qualify for iMatch, that would be troubling. But do you really think the labels and Apple want to go there?

We'll have to see, but I'm not getting that cloud-utopia feeling from our friends in Cupertino. The iCloud thing, to me, looks like a move towards Apple as a gatekeeper of media, rather than a move towards streaming. Ignoring piracy, this service is all about moving your media ownership idea from the local disk to the Apple ownership model. I don't see any indication that Apple wants to move away from the a la carte model and towards an all-you-can eat model. As for apps, HTML5 applications will probably still need to get routed through the AppStore to qualify for presence on the device (i.e. to get an icon, local settings, etc.). So, again, this same ownership model is applied: Apple is the sole provider of rights on media/apps for users of their devices and software. Hopefully competitive pressures will change Apple's tune (hah) but who knows how long that will take. I agree -- there's definitely no cloud-utopia feeling from Cupertino. I also agree that Cupertino likes to keep things controlled. However, I just don't think that the a la carte w/o all-you-can-eat model is sustainable in the long run. Netflix has shown the value of having an all-you-can-eat catalog of content. I believe Apple gets it and will eventually release such a service. Now, you might be right that your access to music rights will depend on which OS layer you use (all-you-can eat only available on Apple devices via iTunes, Google Music/Spotify on Android, and Spotify/Amazon/MSFT equivalent on Windows), but I don't think Apple can get away with keeping the labels from offering access to their music on non-Apple devices. If that is the case, why wouldn't Apple want to divorce iTunes from their OS'es and try to get their music storefront/service on every single device? Note that Apple can't get rid of YouTube or Netflix, and they're not going to try to lock down video. So the only other media they can lock down (remember, I don't consider apps media) is music, and I'm suggesting to you that they will want iTunes to be the music equivalent of Netflix and YouTube such that it can be present on any device. They would gain a huge market share by having an iTunes streaming service available on every device. Indeed, they would become the de facto storefront/service for Big Music. Regarding HTML 5 apps, I agree that Apple will keep the "curated" experience for as long as they can and they will also want to take a cut of every app as long as they can.

All interesting thoughts. Yeah, I would suspect there will be file sampling plus ID3 tag scanning. However, does it really matter? Why would a hacker actually download songs for the purpose of replacing with better quality AAC files? More likely, the hacker/college kid will refuse to pay the $25, continue to download even better quality versions of the songs they want for free, and use Grooveshark or some app that combines Grooveshark functionality with their own library. They might even decide to subscribe to whatever streaming music service comes out when the 4G build is in full effect, although maybe not. I see iMatch as being for the regular public and for people who really want to take the labels up on the amnesty idea.

This depends on your cloud philosophy. Apple is firmly in the cloud-extends-OS camp. Google, on the other hand, is more of a pure cloud provider, or maybe a cloud-as-OS provider. With Apple, the applications and media are stored locally. The advantages are low-latency access, native code (faster and device-optimized), higher quality media, and traditional "ownership" of media. The disadvantages are things like requiring synching, "buffering" (having to download your stuff before you use it), and platform dependence. With Google, almost everything you do is in the cloud. The advantages here are broader platform support, no buffering, no synching. But the biggest disadvantage in my mind is the native device thing. I'm not 100% up on my HTML5 spec, but I think there are complications related to accessing mobile device peripheral capabilities: camera, gps, accelerometer, light sensor, etc. And then when new bits get introduced, you have to rely on a broadly accepted spec to get these features to work on all devices. One way of looking at this is to say that Google applications have greater breadth, but less depth. Microsoft will probably be somewhere in between. The Xbox and Win Phone and Windows 8 will all be core native application devices, but Windows 8 supports HTML + javascript as a native language, so there's a bit of that cloud-as-OS at work. One caveat, I would add, though. Android is a hedge against the "everything in the cloud" vision that Google ultimately wants to occur. This is what pisses Steve Ballmer off so much. He wanted Google to just pick one view and go with it. Unfortunately for Mr. Softie, Google is developing both Android and Chrome/Chrome OS. Apple is all about client-side apps (media, I believe will be delivered from the cloud in less than two years). But my guess is that they believe HTML 5 and the next iterations will eventually become robust enough to run everything off the cloud. Just not anytime soon. Even Microsoft has stated that HTML 5 is the web's future.

Nothing visionary with Jobs, in general? Or nothing visionary about streaming music? I would agree that streaming music itself is not visionary. But creating a workable business model for the music industry in the US is a big deal. It's possible that we might actually have one that consumers, artists, and copyright holders (big labels, in many cases) will be satisfied with in not too long of a time. I think you're taking the stance that the music you have is your own music. Maybe it all is. I can tell you, though, that my generation in the US was one of the first, if not the first, to have a large amount of our music library filled with unpaid-for music. I'd be quite happy to pay a monthly fee to stream a comprehensive catalog of music. I used to subscribe to Rhapsody, actually, but now I usually just use Pandora or YouTube.

if every device is connected to the internet, at increasingly high speeds, why do we need to sync again? At some point, I'm hoping we won't. Why do you think I'm invested in GOOG and LVLT? ;)

Check this article and WWDC video out. http://gigaom.com/apple/think-icloud-is-reactionary-think-again/ Just makes you realize how visionary Jobs is. You should also read the Steve Jobs Playboy article and watch the joint interview with Jobs and Gates at the AllThingsD conference to see how forward thinking both those guys are. Clearly, the partnerships with the carriers and music labels are helping to determine when Apple releases certain functionality. These partnerships have served Apple well in the recent past, so it seems unlikely that they would rock the boat, especially since Jobs has stated in the past that they could have been a contender against MSFT in the past had they just done a better job with partnerships.

Sure, but remember that Apple has very close relationships with the carriers. Apple is not going to release a fully functional music streaming service -- one that doesn't just involve streaming the music you already have in your library -- until you can do it on every Apple device without many technical problems. I mean, there is very little functional difference between streaming your existing music library and syncing your existing music library between devices. The only real difference I can see will be for people who want access to their music library on their work computer or on someone else's computer. With respect to the work computer, if somebody already has an iPhone or iPad, they won't need to stream their existing library onto their work computer. And how often are you streaming your music on someone else's computer? Furthermore, what will the carriers have to say about streaming all your music to your mobile devices using Google Music and Amazon's service? Time to institute more draconian caps on their data services? That's why I think Apple will roll out streaming when the 4G networks start being deployed in full force and after the carriers give their blessing. By the way, I don't like that the carriers have such power. I just think that's the way it is . . . for now. With respect to the service being hard to understand . . . this was WWDC. Rest assured that before the services actually release, there will be a barrage of iAdvertising spelling out what the services actually do (or purport to do).

You're paying Apple and the record labels for the portion of your music collection that is not legit, so to speak. The carrot is the ability to legitimize your existing music collection and to replace the audio files you have with higher quality versions. The vast majority of people do not have "high quality lossless" versions of all their music. At least, that's my experience. Eventually, perhaps even after just one year, the $25 annual fee becomes a catalog subscription a la Spotify. I'd like to see this, actually. Can you provide a link to the presentation?

I should have said, you will no longer be able to sync your music on your devices that run iTunes (Apple devices and PCs).

The point really is that, going forward, users pay for access to music on an individual or household basis. Therefore, I believe the DRM vs. DRM-free paradigm gets discarded over time since it all is essentially delivered or monitored via the cloud where the record labels know who is accessing the music. In other words, I believe that in two years or so, you will always pay one price if you want to "buy" a "new song" for all-the-time access, and that access right will essentially incorporate DRM (whether network-based or file-based). Alternatively, you will be able to access "new music" through ad-supported and subscription-supported services like XM, Pandora, etc. Whether "new music" will eventually be moved to an "old music" subscription catalog is an open question, but I suspect they will have to go that route at some point. An important question that Peter Burke and VAL have brought up is whether there will be alternative music services or ways to get access to your music services on whatever device you choose. My understanding is that your locally stored copies of non-iTunes music do not get removed upon use of iTunes Match; instead, they get replaced with DRM-free files. If I'm right about that, then if you switch to a Google device instead of an Apple device, you can upload all your DRM-free music that is locally stored to Google Music (or to Amazon's music storage service, for that matter). If Apple actually removes locally stored music, then we have a problem. I doubt that will happen because we will all cry bloody murder. Essentially, there is a one-shot $25 upfront payment to legitimize your pirated catalog. If you stop paying the $25, you will no longer be able to sync your music via iCloud on your various Apple devices. However, with the transition to a catalog subscription model, Apple is likely betting that you will pay $25 next year to have an expanded catalog of "old music" that includes music you have not downloaded illegally. That's my guess. If Apple doesn't release a streaming version of iTunes, then I'm wrong. But I think they will once all the carriers are well into the 4G buildout. In other words, iTunes Match is a way to get people used to paying $25 on an annual basis for a catalog of music. iTunes wants to be the Netflix of music. With respect to "new songs" bought from iTunes, Apple has not indicated that you will no longer be able to buy DRM-free locally stored copies of your music. Unless they're planning otherwise, you should be able to transfer the local files to your new Android or Windows device without any problems. Eventually, though, we get to a world where music is streamed or verified as paid-for over the cloud. At that point, the streaming iTunes service could be on more than just Apple devices. So, just like the iPhone has Google Maps, Android will likely have iTunes, which you will be able to access via the browser or via an app. Again, iTunes becomes the Netflix (or Spotify) of music in the US. Alternatively, if streaming iTunes is only available via an app on Apple devices, then the labels will likely allow a non-iTunes service to have the same functionality. Otherwise, the record labels and Apple are looking at major antitrust actions, especially given that the EU has already gone after those guys before regarding iTunes. ------ I'm speculating on all this, of course.

It's a philosophically different way of doing it, but I see what you're getting at. My take is that this has a very low user benefit and will result in a very high cost to the user. Apple has done a very smart thing here. There are basically two music formats in use: AAC (with DRM) and MP3 (no DRM). Apple is offering you the capabilities to supply a full MP3 library and convert that library to an AAC-based, Apple managed library. All competitors, however, are unable to offer the same switching solution. Apple's DRM restricts non-Apple devices from playing those files. So, anything you buy non-Apple can be Appleized. Anything Appleized cannot be un-Appleized*. Uh oh. * You can remove DRM for $.30-$.60 per track. Not true. iTunes Match upgrades your old songs to 256kbps AAC DRM-free. Furthermore, you do not have to have an Apple device. If you have iTunes on Windows 7, you will be able to use the service. If you have an Android device, on the other hand, you are out of luck. Unless Google can negotiate the same sort of deal with the record labels. we don't know the TOS yet do we? This guy, who knows the business, says it is DRM in the cloud. one thing we do know. it is not a streaming service. and it's a ball of confusion. There are more questions than answers. http://www.michaelrobertson.com/archive.php?minute_id=292 According to Apple, your existing catalog of non-iTunes bought songs, if available through iTunes, will be upgraded to DRM-free AAC files. In any case, it doesn't really matter. The point is to get people to start paying for access to both old audio content and new audio content by making things easier for users. Basically, the 80% of your catalog that you got by using Napster, Limewire, BitTorrent, etc. will be monetized by the record labels. Will new songs be DRM-free? Yeah, you can buy DRM-free songs. But in a world where everyone is streaming music rather than listening to client-side copies, who cares about DRM? That's where we're going, after all.

It's a philosophically different way of doing it, but I see what you're getting at. My take is that this has a very low user benefit and will result in a very high cost to the user. Apple has done a very smart thing here. There are basically two music formats in use: AAC (with DRM) and MP3 (no DRM). Apple is offering you the capabilities to supply a full MP3 library and convert that library to an AAC-based, Apple managed library. All competitors, however, are unable to offer the same switching solution. Apple's DRM restricts non-Apple devices from playing those files. So, anything you buy non-Apple can be Appleized. Anything Appleized cannot be un-Appleized*. Uh oh. * You can remove DRM for $.30-$.60 per track. Not true. iTunes Match upgrades your old songs to 256kbps AAC DRM-free. Furthermore, you do not have to have an Apple device. If you have iTunes on Windows 7, you will be able to use the service. If you have an Android device, on the other hand, you are out of luck. Unless Google can negotiate the same sort of deal with the record labels.