Which player will win the format war?

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The Independent Online

What determines how standards become fixed in the internet world? If you've got a new way to do something, such as wireless networking, there are often many competing would-be standards at the outset, but the more people adopt a particular version, the more likely new buyers will adopt the same one, even if it's not as good as less popular rivals. Similarly, new standards should work with, not against, the old ones to achieve maximum take-up. Thus in wireless networking, the "802.11a" standard - which transmits data about five times as fast as the better-known "Wi-Fi" (or "802.11b") standard - never stood a chance against an equally high-speed rival, called 802.11g. Both "a" and "g" were introduced about the same time, but 802.11a networks can't connect with Wi-Fi networks, while 802.11g ones can. And Wi-Fi was an effective standard by the time the rival pairs came along.

For consumers, of course, the question is based on more direct self-interest, which is: how can I be sure that this gizmo I've just bought at huge expense won't be made obsolescent by the next software upgrade or hardware introduction? And how do I make sure that the new thing that I buy will work with my old stuff? The trick is to have the overview long before you reach into your pocket.

An emerging version of this conflict is being fought out now over standards for music purchased online. It boils down to this: will Apple support Microsoft's "Windows Media Audio" (WMA) format for purchased music on the iPod music player? Or has the Apple-preferred (but not Apple-owned) "Advanced Audio Codec" (AAC) format that it uses through its own iTunes Music Store become a de facto standard that others - including Microsoft - will have to adjust to?

Now, plenty of people out there think Apple will have to, and is going to, support WMA. Among them is the journalist Paul Thurrott, who says that when HP announced last month it would resell iPods, "a contact close to HP told me point blank that HP was requiring Apple to add WMA support to the iPod". HP said shortly afterwards that on its own-label iPods "we're not going to be supporting WMA for now", which is nicely ambiguous.

However, there are plenty of people who think Apple won't offer WMA support. The question is, does it matter? And who will be hurt more if it doesn't - Apple, Microsoft, or the average buyer?

At the moment Apple has about 25 per cent of the digital player market by numbers, and a huge wodge of the value: the iPod is slightly more expensive than comparable players that use a hard disk, which make up the high-price end of the market. Its market share is also sure to jump once HP starts reselling it. Then there are lots and lots and lots of small digital players that use flash memory - rewritable memory chips - to store an hour or so of music; byte for byte, they're more expensive than hard disks, but you can get them for less than £100.

The iPod is, I think, the only one of all those players that doesn't support WMA. On the face of it, you would think that means it's in a hopeless position, in the face of the biggest software company around pushing its own format, which runs on 75 per cent of other music players. Especially as the AAC format doesn't work on those 75 per cent.

However, the issue is more subtle. I'd wager most people listening to music on digital players have most of it in MP3 format. I'd also bet that every music player out there now has at least one MP3 file on it. People who've got into digital music assume that MP3 is the default format. The challenge for Apple, and Microsoft, is to join MP3.

Microsoft has been oft-quoted saying that WMA offers "choice" because you can play WMAs on all those other players, and not on the iPod. The problem it faces is - as even Microsoft's executives have admitted - is that the iPod looks better and has greater "mindshare". When people think of a generic digital music player, they think of the iPod, not a $100 flash player made in the Far East.

Then there's the download market. In the United States, Apple has about 70 per cent of it; outside the US the whole market is tiny, probably less than one-tenth the US. (And Apple has a zero market share, because it's still wrangling with record labels about song licensing in the European Union.) Overall, the US points the way. Presently, that way is AAC.

On that basis, there's no reason for Apple to support a "minority" format: even though WMA works on the numerical majority of players, because those players aren't being used to play downloaded music. And arguably, if Apple did enable the iPod to support WMA, it would open itself to being compared directly with the other players - and although it scores on looks, byte for byte it's still a touch pricier than, say, the Creative Jukebox range. OK, the Creative Jukebox couldn't play your downloaded AAC songs. But it's still not all positive.

Are there any arguments in favour of Apple supporting WMA? Only that it would enable people who are downloading from other music stores to play their music on an iPod. For Apple, a sale is a sale, after all; if people buy an iPod, why should Apple care which format they take their music in?

I think there are three reasons. First, Apple's chief executive Steve Jobs doesn't want to give an inch to Microsoft over WMA. He is greatly enjoying being in pole position while his great rival squirms. Second, the HP deal - putting iTunes, and thus a conduit to the iPod (and encoding in AAC format) on to 20 per cent of new PCs - will give AAC an even bigger boost, reinforcing the first point. Third, anyone with a non-iPod digital player who has iTunes, and buys music from it, won't be able to play it on that player. Will they blame Apple? The player maker? Microsoft? The future success of these formats will depend on the reaction of people who don't care about music formats - but just want their music to play.