Took some flak over email for suggesting that Apple-HP is a bad deal, and penetration of iTunes is irrelevant. The critics suggested that Apple is trying to defend against being Netscaped by MS, who will push for ownership of the media desktop soon.

Ok, I agree with that - Apple is in danger of being Netscaped. But let's think about it in more detail. Netscape (and countless other firms) possessed a penetration rate > 80%. But it did nothing to stop MS from taking control of the market. In this case, a high penetration rate was not a strategic asset. If anything, it blinded Netscape to the idea that it could be challenged - because they equated penetration rate with user ownership. But, in the end, it was who MS owned the user base, not Netscape.

I think it's the same thing with Apple and ITMS: a high penetration rate is not a strategic asset - it's just the illusion of one. Control still rests with MS, who can exert if they choose to in a very short time.

The lesson is that ownership does not equal penetration - they're very different. Ownership of a user base in tech markets is more often than about platform strategies - providing users combinatorial benefits to raise their switching costs and lock them in.

Can Apple do this? It's certainly trying - but I think to truly do so will mean it has to sacrifice the iPod itself, by opening the platform completely. That's the only way to really offer combinatorial benefits to users in the same league as MS can.