14 DAY TRIAL // The news that HP is giving up on iPod, only a year and a half later after Carly Fiorina triumphantly announced the closing of the Apple contract at CES 2004, is, whether you like it or not, a turning point in iPod's evolution.
HP refused to comment the reason why it's canceling the contract and it only stressed that this decision doesn't mean that the company is no longer interested in the digital entertainment market.
The partisans of the Apple player grin, saying that until August 2006, HP will be unable to manufacture an alternative equipment (which is pretty relative, considering that nothing is stopping them from doing with another player what they've done with iPod) and that RadioShack, one of the major distribution networks in the US, is about to sign a deal with Apple.
But HP's decision questions iPod's future, not the one of the printer and camera company. Apple is losing a partner that ensured 8% of the player's sales and more than that, it suffers an image blow, whereas HP seems to be closing a rather unsuccessful business.
Analysts say that Mark Hurd might have taken the decision to get rid of a disadvantageous contract closed by Fiorina; another hypothesis is that breaking-up with Apple is just a part of the restructuring strategy put together by its new CEO. The truth is that this decision might be more related to iPod, rather than to HP.
On a market where iPod has an increasing number of competitors, HP might have reached the conclusion that the success enjoyed by Apple's player is about to end and that it's time to change the partner of this complicated waltz imposed by the digital entertainment market. Indeed, iPod still owns 70% of the player market, but the question is how long it will be able to hold back the attack of cheaper and more advanced players.
Moreover, the appearance of mobile phones with MP3 player functions (such as, for example, Nokia N91, which will be launched towards the end of the year) will complicate even more the existence of the iPod, a product which hasn't been improved too much over the past two years.
Currently, all we know for sure is that HP has decided to leave the building. What does the future hold for the iPod?