Apple licenses iPod to Hewlett-Packard

Apple Computer said it would license its leading iPod digital music technology to Hewlett-Packard, the world's second largest computer company, as it seeks to break out from its niche markets. HP will also bundle Apple's iTunes music software and online music store with its personal computers, potentially further boosting Apple's lead in online music sales. The deal represents a change of strategy at Apple, which has traditionally refused to license its core technologies, only to lose market leadership positions to rivals. This occurred with the company's groundbreaking Macintosh computer, introduced 20 years ago, the first mainstream computer to feature a mouse and graphic user interface.

The two companies declined to comment on the financial details of the alliance, but people close to the companies said there was a revenue-sharing arrangement. Carly Fiorina, HP chief executive, said: "We explored a range of alternatives to deliver a great digital music experience and concluded Apple's iPod music player and iTunes music service were the best by far." The alliance with HP is also a boost to Apple's digital rights management (DRM) technology, which helps protect music from piracy by restricting the number of copies that digital music buyers can make. This has been key to the willingness of music publishers to allow Apple's iTunes online music store to sell their songs.

News source: Financial Times

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