10.27.04 - Reuters
By Duncan Martell
SAN JOSE, Calif. (Reuters) - Apple Computer Inc. rolled out on Tuesday a new iPod that allows users to view and share photos as it opened nine new iTunes music stores in Europe, spurring its rivalry with Microsoft Corp. and others.
Apple also has hooked up with Irish rock band U2 to announce the iPod U2 Special Edition, a black model with a bright red click-wheel and holds up to 5,000 songs.
The new iPod Photo, which had been widely anticipated, is a multimedia device with a color screen and comes with 40 gigabytes or 60 gigabytes of storage -- two to three times more than the storage available on its most used music player.
The iPod Photo, partnership with U2, which appears in the most recent iPod television commercial, and a Digital Box Set of more than 400 U2 songs, underscore how digital music, and, arguably Apple, are transforming multimedia and music.
"You're seeing bits of the future here in how the leadership power centers of media are shifting," said Mike McGuire, an analyst with research firm GartnerG2.
"These are the companies that are going to be the next media titans. Does that include Apple? Yes. Does that include Microsoft, Starbucks and others? Yes."
In Europe, where Microsoft was first with online music sales, Apple expanded its iTunes store, the world's most popular online music store which has fueled demand for iPods. Online stores opened in Austria, Belgium, Finland, Greece, Italy, Luxembourg, the Netherlands, Portugal and Spain on Wednesday, allowing consumers in these countries to pay with their local credit card.
The iPod Photo 40-gigabyte version sells for $499 and the 60-gigabyte model for $599. Both immediately available.
"We think photos are the next big thing. Everyone has the content" because of the rapid proliferation of digital cameras among consumers "and there are no copyright issues," Apple Chief Executive Steve Jobs (news - web sites) said at a news conference. "We think music plus photos is the next big thing."
"If you look at Apple's customer base they absolutely are focused around two major areas, one is music and one is photos," said Creative Strategies analyst Tim Bajarin. "This was purely a natural evolution."
The timing of Apple's U2 iPod release coincides with the upcoming Nov. 23 release of the Dublin-based band's new album "How to Dismantle an Atomic Bomb."
The U2 iPod will sell for $349 and is expected to be available in mid-November.
"EVEN BETTER THAN THE REAL THING"
The Cupertino, California-based computer maker also said it created the online music industry's first-of-its-kind "Digital Box Set." The set, "The Complete U2," will contain over 400 tracks including all of the band's albums. Fans will be able to buy and download it with just one click on the iTunes Music Store in the United States and Europe beginning in late November for $149.
Since the iPod's introduction in October 2001, Cupertino, California-based Apple has sold more than 6 million iPods, 2 million alone in Apple's most recent quarter.
Apple remains the undisputed leader in digital music players and online music sales with the iPod, iPod mini and the iTunes online music store.
But rivals are converging on the market, with No. 1 software company Microsoft earlier this month officially launched its own music store. Also earlier this month, Dell Inc. announced a slimmed-down player and Virgin Electronics has weighed in with its own tiny player.
Bono told reporters after he and U2 guitarist The Edge performed two songs from the new album that U2 was not paid to appear in the iPod ads, and that the band and Apple would share profits from the U2 iPod.
"It's a horizontal relationship rather than a vertical one," Bono said. "We will make (money) on the products that we put out together. If they don't sell, we won't."
The Edge said he sees the partnership with Apple as the beginning of a wholesale transformation in the distribution of music, to an online world from a physical one of CDs.
"We wanted to find an innovative way to redefine the distribution of music," The Edge told reporters. "We see it as the next step for the music business."
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