It’s now been about 6 weeks since Apple bought Lala and I’ve spent some time reflecting on the acquisition. When I first heard the news, it sounded like a good fit. After-all, Lala is essentially a web-based version iTunes and has some great technology powering it. It makes sense that Apple would want to buy the next best thing and get some great engineers in the process. However, I didn’t think at the time that Apple’s strategy would become so clear, so soon. Apple’s acquisitions usually take years to come to fruition. Not this time though. TechCrunch recently reported that Apple is planning on transforming iTunes into a cloud-based service, and Lala’s technology is the quickest way to do that. (“Apple’s Secret Cloud Strategy And Why Lala Is Critical“).

Seeing the immediate impact Lala’s technology can have, I began to think about who else was in the bidding war for Lala? Most reports say there were multiple companies interested, so you have to assume the a few of the typical parties were involved; Google, Amazon, Microsoft, Yahoo, AOL, Facebook, & MySpace. Only a couple of those companies stand out as a great fit, Amazon & MySpace. Right now MySpace has too many problems to deal with, so that leaves just one likely suitor… Amazon.

Amazon’s entry into the digital music download space has been game-changing. Prior to, music lovers had no where to go to purchase non-DRM’d MP3s. We were stuck in the world of buying CDs to rip, buying DRM’d tracks from iTunes, or of course… pirating music. When Amazon came into the market in 2008, their impact was immediately felt as prices began to drop and DRM began to die. This opened the floodgates to other services who also began selling non-DRM’d MP3s, and music streaming became a sustainable business model. Without Amazon’s entry, I suspect little would have changed over the past 2 years. Having competition for Apple is vitally important to the evolution of the media industry. Apple is an amazingly innovative company, but like most companies, they grow content & less innovative without anyone breathing down their back.

As painless as Amazon has tried to make the downloading process when you purchase tracks from their MP3 store, it is still not as smooth and elegant as iTunes. To add insult to injury, once the download is complete, Amazon’s user experience is then transfered over to iTunes (for most users) where the user must import the purchased files to begin listening. Amazon clearly needs to do something about this. Transferring a customer into your rival’s product at the end of the transaction process is a giant flaw in product design. They need to provide their customers a way to stay in an Amazon environment throughout the Purchase->Download->Listen->Manage cycle. This is where their acquisition of Lala would have been perfect.

Had Amazon bought Lala, they would have obtained the engineering team that is hands-down the best at building a web-based media manager. After integrating Amazon MP3 with Lala, they could then integrate the Amazon Video & Kindle management interfaces into the Lala-based manager. Beyond music, video, and books, Amazon could then begin to expand into other areas, perhaps buy a company like Roku and make their streaming video experience end-to-end Amazon as well. We could have had a real competitor to iTunes. Sadly though, Amazon dropped the ball with Lala, especially since the acquisition only cost Apple $17 million. That’s nothing for a company that just spent over a billion dollars to purchase Zappos.

We’re clearly approaching a time where our music devices are going to have constant wireless broadband connections. You won’t have to worry about locally storing music, it can all be hosted in the cloud and streamed to you on demand. This isn’t a brand new concept, but the timing is right for it to finally become mainstream. If Apple is successful in transforming iTunes into, unchallenged, they will likely be able to declare “game over” with music delivery in the US.

Hopefully Amazon sees the writing on the wall and steps up their game to provide a challenge. Is Spotify our only hope?