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12/28/2006: "When Bad News Is Actually Good News"

In the runup to the holiday shopping season, all we heard was that there were all these iPod killers coming - Zune, Blackjack, etc - and that Apple Computer's highly-touted iTunes Music Store had suffered a massive decline in usage in 2006. So much for the predictions.

So many people got new iPods and iTunes gift cards for Christmas that the rush of traffic to the site to download new music - more than four times as much traffic as the same time last year - that brought the server to its knees.

Frazzled users began posting urgent help messages Monday and Tuesday on Apple's technical forum for iTunes, complaining they were either not allowed into the store or were told the system couldn't process their request to download songs and videos.

"It's actually created more positive buzz among analysts -- traffic was so great it blew up the site," said Gene Munster, senior research analyst at Piper Jaffray. "If anything it could be a positive -- demand was better than they were expecting."

Analysts said they didn't anticipate a rash of iPod returns because of the delays.

"What you're seeing is the tremendous success of the iPod," said Michael Gartenberg, vice president and research director with JupiterResearch. "No doubt it was a very, very popular gift, and no matter how well you plan on the server side of the equation, there are always times when you get caught short."

I get most of my music from ... other sources (hey, I was an Internet pioneer - we hate paying for anything!), but I've probably bought around 500 songs via the iTunes store. Apple deserves kudos for solving the digital music equation at a time when everyone else was throwing up their hands in defeat. Even now, with critics complaining that the Digital Rights Management philosophy adopted by Apple to appease the music companies is too strict, no one else has come close to repeating the success of iTunes - or the iPod, for that matter. The fact that so many people are lining up to download legal songs from iTunes for their iPod must really sit well with the folks at Microsoft ... especially as they look at the palletloads of unsold Zunes they're stuck with ...