Is Apple’s success with the iPod due to control? Many software and computer makers have tried to roll out their own products and have largely failed because of incompatibility issues between hardware and software.

The lesson big players are taking from Apple is to own both sides of the equation. RealNetworks has teamed up with SanDisk to develop an mp3 player that would compete with Apple’s iPod. SanDisk already has 10% of the mp3 player market – and in an environment that is 75% controlled by Apple, that’s pretty remarkable – so it might just work. I do worry about their overall strategy: subscription based access to music. So, users never actually own anything. Which would be fine for a much lower price point, but for about ten bucks a month? Not worth it!

Another big player following Apple’s lead is Microsoft. First with Xbox and soon with Zune, their long awaited music player. Unlike the RealNetworks/ScanDisk cluster-duck that is about to release, Microsoft plans on making its software and device iTunes compatible. Smart move, considering that securing market share will require cannibalizing iPod users.

This is going to be a very interesting holiday season.

Inspired by an article in today's WSJ.