Apple needs to reinvent its crown jewel.

Hello Subscriber,

Apple dominates the market. Its device is the epitome of cool, the must-have item for college students and businessmen. It`s easy to use, more powerful and just plain better than the competition. Bill Gates grits his teeth when he sees it.

What product am I talking about?

No, not the iPod. The Apple II.

Released in the late 1970s, the Apple II was the original sexy personal computer, the one that started the whole revolution. By the late 1980s, though, Apple had been relegated to a runner-up position by the onslaught of Microsoft`s DOS and the IBM PC clones.

One big reason why: Apple never relinquished its primary intellectual property. It maintained tight control over its operating system, hardware, and peripherals, while Gates and IBM licensed their technology to all comers. Apple`s market dominance was overwhelmed by cheaper, less inspired products.

Fast forward to 2005. The iPod dominates the digital music market. No other device is cool enough for teenagers, despite its higher price tag. Competitors are swarming. Napster, Yahoo, and Real have introduced portable music subscription standards, with phone maker Ericsson announcing a broad partnership last week. Sprint and other cellular carriers are streaming music and music videos. Nokia is loading Microsoft music software on some of its phones.

Meanwhile, Apple refuses to open up its product to competitive standards like Real and Windows Media.

Is Apple about to be overwhelmed again? Or has Steve Jobs learned from the past?