I saw an article on Ars Technica yesterday about Apple's 'power-trio' of iTunes, iTunes Music Store and the iPod. The author brings up an important point… Right now, it's basically iTMS/iPod/AAC Vs. The Rest, and even though Apple does have a big chuck of the portable music player market with the iPod and a big, big, BIG chuck of the music download service market, does it have the ability to face up against Microsoft and its technologies?
I don't have any hard figures, but think about how many portable WMA players there are out there… I bet plenty! From what I've read, a song downloaded from one online music store can be played on any of the compatible WMA players, which gives the user a wide choice of services to choose from. If Service A doesn't have the song, go onto Service B and buy it! They'll all work on your WMA player, so there's no need to worry. Microsoft is aggressively pushing WMA as the next big music format, and the best way for it to do that is to get companies to pump out these WMA players and have download services that use this format.
Compare this to Apple. There's only the 3 generations of iPods and the iPod Mini from Apple. They've sold like crazy (especially in the last year), and they do make up a large portion of the portable music player market, but they only play MP3/AAC/WAV/etc, but not WMA. From what I've read, iTMS is the only major download service that uses AAC, and it is also the only service using Apple's FairPlay DRM system. The only problem with this is that songs downloaded from iTMS will only work on the iPod. That would be great, if the iPod was the only portable music player out there. Fact is, it isn't. I haven't seen anything from Apple or the iTMS saying that tracks downloaded from the service will only work on the iPod (correct me if I'm wrong), and many people would assume that, but what about the casual user who downloads a song from the iTMS, and tries to load it onto their WMA player? They'll find it won't work, and either go "Screw the iTMS, there are heaps more download services that will work with my WMA player" or "Screw this WMA player, I'll get an iPod and use the iTMS". The problem I see is that many people like choice, and the iPod/iTMS combination doesn't offer that.
Some people have said that Apple should open up iTunes and the iPod to playing WMA files. I don't agree with that, as it basically concedes to Microsoft and allows WMA to gain a stronger foothold. Instead, as the author of the article says, why doesn't Apple license its FairPlay DRM system to other download services? RealNetworks has come to Apple, asking for an alliance that would open up the iPod to other music services. Apple basically shoved it back in RealNetwork's face. I think this could be a bad move. iTMS apparently makes a loss (or a very small profit), but Apple hopes that people will buy iPods as well as iTMS songs, so Apple wins in the end. By licensing FairPlay to other stores, there would be a wider variety of download services that would work with the iPod. If there's a wider variety of stores, more people will have these AAC/FairPlay format songs, which will only work on the iPod. As a result, Apple will probably sell more iPods, so it wins in the end.
Of course, there could be downsides to opening up FairPlay to other stores. The user experience of other stores may not be as good as the iTMS, but the user is always free to buy songs from the iTMS if they feel it is better, and Apple still makes money.
If anyone is actually reading this, I'd like to know other people's opinions… 
