Quote:
Not Rio nor Creative will topple Apple's market lead, even if they sold their (comparable) players at HALF the cost of an iPod.


Not by playing by Apple's rules. Why did Apple get where it did? They weren't first to market. DNNA aren't gaining market share from Apple - in fact, the opposite continues to happen (in spite of Carbon). The way to get market share is to get the next big entrant to the market using your technology at the heart of their device. To get your technology into mobile 'phones and PDAs.

Quote:
As a developer I also don't see the incentive to develop something I will open source as a marketing strategy.


Never been asked in a job interview if any of your code is used in commercially available products? When I worked at NetProducts, I rewrote a piece of IR driver code (back when such things were rarely to be found outside TV firmware) and got management to agree to give the source to Acorn (easily done back then). To the best of my knowledge, that code is still used in every Pace set-top-box and E-Note mail client that is made. Unless the other candidate used to maintain the Linux IDE driver or made some other contribution to a large OpenSource project, that point will be mine!

Quote:
Now try duplicating the software.


How precisely does it need to be duplicated? There is nothing technical stopping a competitor duplicating the hardware, then putting the binaries on it. What stops them is the legal framework that Rio has put in place. A very similar framework could be put in place for the sourcecode. We have already said that Creative and Apple have products that approximately duplicate the software.

Quote:
That's where we are with the empeg (and Rio's other products). The software, not the hardware, is just about the most valuable asset.


Market share is more valuable. (not intended as a cheap shot, read on...)

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...a company with valuable IP built on whatever OS, deciding to open everything up. I don't see how that will have any meaningful effect on their market share.


Why is the IP valuable? Because competitors would like to get their hands on it and use it in their own products. But I think we are agreed that Apple wouldn't touch it, so that just leaves everyone else. If DNNA technology is being OEM'd to other parties and direct sales don't fall (or fall by less than the OEM segment rises), then overall the DNNA market share has gone up.

<scenario>
Let us just for agument's sake assume that DNNA has only one competitor (other than Apple, with 92.1%), called C and they have 4.7% of the market and DNNA has 3.2%. All three companies regularly introduce new products and their market shares remain stable. Then DNNA opens their player and a short time later, C dumps their player module in favour of the DNNA OpenPlayer.

Now, to save embarrassment (because both companies know that C's player module is rubbish and the license requires C to carry the RIO logo on C's products and TV advertising), C makes a big play of the fact that they have entered a strategic partnership with DNNA: using the RIOengine in new C products and licensing C's advanced battery technology to DNNA. This is good for DNNA - they got masses of publicity when they decided to open their player and now have a new round as the analysts try to predict how the market might change and whether this will threaten iPOD sales. Plus improved battery life in their next generation products.

DNNA get a revenue stream from providing an engineer to help them integrate the player into C's firmware - at top consultancy rates.

It takes C 3 months to do the work, but C used the stable branch which is 3 months behind the development branch and DNNA only commit their latest features to the public CVS when the product begins to ship. C will always be playing catch-up with DNNA if they rely upon DNNA to do the new product development, but will always find it more difficult than DNNA to implement any given feature. DNNA still has 3.2% direct market share, but analysts start counting the number of RIOengine powered units: 7.9%. Plus DNNA has that consultancy revenue stream.

Then the market begins to change. New entrants take advantage of the lower barrier to entry by choosing to use the RIOengine in their products. Individually, they are niche players but replace 0.2% of DNNAs market and 1.8% of the iPOD market share. DNNA are actually selling more players as the market has grown. Total market share: 9.9%

A large Japanese electronics manufacturer enters the market with a RIOengine powered player and a huge TV advertising campaign. Every advert ends with the RIOengine logo and a little jingle. They take 30% of the market almost overnight - mostly from iPOD. Forbes reports that the RIOengine brand is as strong among the average consumer as the Java brand. Unfortionately, also like the Java brand, only 25% of respondents could correctly identify the owner. Total market share: 39.9%

DNNA continue to sell their own players, but their main business is now the design and consultancy for digital audio products (home, car and portables) - their technology powers 91.2% of consumer digital audio devices.
</scenario>

Okay, a somewhat improbable and tounge-firmly-in-cheek scenario, but I hope it makes you think about the possible ways that an open-source player could lead to stronger market and brand share for DNNA without loss of revenue. I didn't even touch upon mobiles and PDAs.
_________________________
Michael
Ex-owner of stolen empeg #030102741