Apple Tempts Virgin

With the entry of Virgin Group's new MP3 player into the market, Apple (Nasdaq: AAPL  ) finally has some competition in the hype department. If there's any coddled billionaire who can out rock-star Steve Jobs, it's balloonist, spaceman, and rule-breaker Sir Richard Branson.

My opinion of Apple's stock notwithstanding, the portable player market has been Cupertino's to keep or lose since the launch of the iPod and mini. Competitors were slow to enter the business, and their products were universally clunky to operate as well as throw-me-out-of-the-nest ugly. Just take a look at offerings from Dell (Nasdaq: DELL  ) , NEC's (Nasdaq: NIPNY  ) Packard Bell, and others. Creative Labs (Nasdaq: CREAF  ) and Rio have done better with their Muvo and Carbon players, but neither of these will benefit from the consumer cache of Virgin.

Perhaps there's something to be said for the importance of personality in designing these gadgets, because there's plenty to suggest that the rest of the competition doesn't quite get it yet. Sony's (NYSE: SNE  ) scattershot iPod attack includes players of multiple brands including the tired old Walkman moniker and the squishy computer tag, Vaio. Moreover, the firm is making the same prideful mistakes as Apple, supporting only its pet encoding scheme onboard, relying on software to translate MP3s or WMAs.

Branson's player -- named, of all things, "player" -- looks like one of the first designs that will be able to compete with the iPod on style. The tiny, 3.1-ounce player is slightly larger than the mini but lighter, and, at 5 gigs, it has 25% more disk space. It features a screen that is derivative of the iPod, to say the least. Virgin's ships with an FM tuner and will support Microsoft's (Nasdaq: MSFT  ) audio format with the "plays for sure" guarantee. You can bet Branson and crew will try to neutralize iTunes by capitalizing on the synergies available to them as a diversified music and communications business.

The moral of the story is that competition is coming for the iPod. And it's improving. The oft-mentioned iPod mini wait lists are not necessarily good. If Cupertino cannot deliver enough product (even the less sought-after iPod demands a one-month wait in some markets, according to an Apple store employee who emailed me from Germany), Apple will be leaving money on the table for Virgin and others to collect.

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Seth Jayson prefers to listen to Cheap Trick. At the time of publication, he had positions in no firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.


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