Strengths+&+Threats

iTunes currently dominates the market of digital music sales industry, holding 57% of the market (Joyce, 2008). No other competitor is within reach of iTunes’ market share with the second and third largest market share going to Amazon.com and Napster at 9% and 8% respectively (Joyce, 2008). Since the demise of album sales, record labels have been looking for new ways to distribute their artists’ music. Apple’s dominance in the digital music sales market have established a strong and loyal customer base which allows them to appeal to record labels looking to distribute their music digitally. Also with its established customer base, the power of word of mouth plays a big part in luring even more customers, thus further solidifying iTunes as the powerhouse in comparison to its competitors.  The interface of iTunes is also very user-friendly. All functionality and features are clearly labelled and located strategically for the highest efficiency. The ease of use of iTunes is very high and most casual computer users would have no problem with the software. Ease of use is a very important factor as consumers want to be able to master the software in a short amount of time to actually use it to the fullest extent.
 * Strengths **

Not only is iTunes an online digital media store, it doubles off as a multimedia player. Consumers can buy the media and immediately use it in the same software instead of having to need a separate software to play the media.

iTunes currently holds the largest music library in the industry, with more than 8 million titles and growing each day (TopTen Reviews, 2008). But music is only a portion of what iTunes has to offers; it also sells movies, TV shows, games, audiobooks, podcasts, music videos, applications for the iPod Touch and iPhone and more. With its extensive range of media, there is no surprise that iTunes leads the industry. Consumers are looking for an extensive multimedia library for a wide selection and the converging of media makes it a one-stop location for the purchase of all sorts of different media. To top things off, iTunes also provides a preview option for consumers which is an absolute strength. //Previewing allows consumers to expect what they are getting before actually purchasing the media. (need a little help to be clearer bout this part) //  Media from the iTunes store can be bought instantly at the click of a mouse along with a valid credit card and an iTunes account. For consumers without a credit card, Apple has iTunes gift cards which are readily available for purchase in many retailers all over the country. Just to name a few, the list of retailers include: Wal-Mart, Best Buy, Future Shop, and Apple retail stores (Apple, 2009). Being able to buy music and other sorts of media through the internet eliminates the need to physically visit a retail store, saving consumers a lot of time.

Apple has released iTunes on both the Mac and Windows platforms capitalizing on both the Mac and PC market. Combined, the Mac and PC market takes up the majority of operating systems (approx. 96%) that computers run on (MarketShare, 2009).  iTunes is also regularly updated, which at the moment is running at version 8. With its innovative nature, Apple constantly adds new features and modifies existing features to cater to the users’ needs and to stay competitive. Regular updates ensures that iTunes stays on par with the latest technology. In iTunes 8, Apple introduces a new feature called the genius playlist; it basically allows iTunes to recommend songs from analyzing your existing music library (Mcnulty, 2008). Most consumers may find it very useful as they are constantly looking for new music to listen to but do not have the time for manually search for music; for others this might come off as threat of invasion of privacy. Apple realizes this privacy issue and therefore made the genius playlist is an optional feature that can be enabled or disabled by a single click on the on/off option in the genius sidebar.  All these strengths that iTunes possess provide it with an edge over all its other competitors; with its innovative state of mind, iTunes will remain dominant in the digital music industry with many years to come.   Threats ** iTunes’ biggest threat remains to be Peer-to Peer (P2P) programs like LimeWire, BitTorrent, etc. Since downloading music via P2P programs are free, the iTunes is no match for this juggernaut. Even though iTunes is the largest market share holder in the digital music sales industry, it hardly reaches the number of songs downloaded via P2P programs. Even though iTunes has a greater selection of music, downloading music via P2P program remains to be a better economic choice to attain music.

iTunes’ dominance in the digital music sales industry makes it an easy target for new competitors to enter the market. As for existing competitors, they are constantly looking for ways to gain a higher market share by offering something that iTunes does not. Existing competitors could also resort to partnership with another competitor to combat against the industry powerhouse, iTunes. Exisiting competitors consist of Amazon, Napster, RealNetwork Inc.'s Rhapsody, Yahoo! Music, MySpace, WalMart, and many others (Joyce, 2008). As stated as one of the weakness, iTunes has most of its music in DRM format. Many of its competitors have offered their music in DRM-free formats which allows the users to play the downloaded music on any hardware that they desire. The market demand is currently slowly shifting into the DRM-free formats since the DRM format files that iTunes offers can only be played on the iPod, also a product of Apple (Kravets, 2008). Amazon MP3, launched last September, which features DRM-free music, now holds the second largest market share in the industry (Glazowski, 2008). Even though it is still a far way from iTunes’ market share, the growth since the birth of the service has been exponential (Glazowski, 2008). Other competitors like RealNetwork Inc’s Rhapsody, which holds the fourth largest market share in the industry has also taken the shift to DRM-free music ( Yoskowitz, 2008 ).

The four biggest labels in the music industry, namely Warner Music Group, Universal Music Group, EMI Music, and Sony BMG have all moved to support DRM-free music (Kravets, 2008). The DRM-free music might not appear to be a big threat to iTunes at the moment but it could develop into a bigger threat and potentially hurt iTunes’ existing market share in the near future. The recent recession could also play a vital part in the sales of iTunes. Since the economy is currently on a downfall, it is predicted that there would be less sales made. At an economic time like this, music would likely decrease the demand in the purchasing of music, encouraging music listeners to seek alternatives like downloading songs illegally via P2P programs. This action could potentially become a big threat and hurt iTunes’ market share in the industry. Apple. “ Gift Card and Gift Certificate FAQ”  Apple Inc. 2009. Glazowski, Paul. “ Amazon MP3 Sales Only 10% Of iTunes; Little Turnover, Says NPD”. . Mashable. April 2008. Joyce, Karl. “ Amazon and Rhapsody Show Strong Gains in Digital Music Market While iTunes Remains Dominant”. <http://www.ipsos-na.com/news/pressrelease.cfm?id=4089>. Ipsos News Center. Oct. 2008 MarketShare. “Operating System Market Share”. <http://marketshare.hitslink.com/report.aspx?qprid=10> Net Applications. Jan, 2009. Mcnulty, Scott, Breen, Christopher, Frakes, Dan. “iTunes 8.” Macworld; Dec2008, Vol. 25 Issue 12, p96-98. Dec. 2008 TopTen Reviews. “iTunes” <http://music-download-review.toptenreviews.com/itunes-review.html> TopTen Reviews. 2008. Yoskowitz, Andre. “iTunes gains market share, so does Amazon, Rhapsody”. <http://www.afterdawn.com/news/archive/15644.cfm>. Afterdawn. Oct. 2008 Kravets, David. “Death of DRM Could Weaken iTunes, Boost iPod”. <http://www.wired.com/entertainment/music/news/2008/01/rip_drm>. April 2008.
 * Works Cited **