With iPod Success, Apple Takes "Network Effect" from Microsoft

With iPod Success, Apple Takes "Network Effect" from Microsoft: "During the epic Microsoft antitrust trial with the US Department of Justice (DOJ), witnesses and government experts spoke of the 'network effect' that Microsoft enjoyed because of the success of its relatively low-price Windows products. Today, however, the company that's most obviously enjoying the benefits of the network effect is Apple Computer, whose iPod portable audio player now dominates an important emerging market. And, ironically, Apple's success with the iPod is coming at the expense of Microsoft and its partners, which have watched as competitor after competitor fail to make a dent in the iPod's armor.
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In these ways, Apple's iPod strategy can't fairly be compared with the company's Mac strategy because the iPod isn't a product you'll be stuck with for several years, as you might be with an expensive computer. Apple has done something unique with the iPod. More important, perhaps, Apple has finally beaten Microsoft at its own game. The iPod, not Microsoft's extensive platform and ecosystem, is defining the market for portable digital media. And for a company that has long struggled in the shadow of its massive competitor to the north, that's good news indeed."

Thoughtful and timely insights from Paul Thurrott -- read the full article.