The ocean is riddled with raiders
Who hassle legitimate traders
But lo and behold!
We can keep our gold
If we just out-design the invaders!

What if I could show you how Apple (Nasdaq: AAPL) is getting the best of hardware pirates, simply by being the best Apple it can be? And the same principles can work for many other businesses, too.

The piracy problem
Piracy is a major problem for several industries. In Hollywood, movie studios and TV networks are trying to find a mix of consumer-friendly, salable content packages and hard-nosed copy protection measures that can squeeze cash out of content libraries like Disney 's (NYSE: DIS) and Time Warner 's (NYSE: TWX). The Motion Picture Association of America released a study in 2005 that put major studios' yearly worldwide losses due to piracy at $6.1 billion. China’s piracy rate stood at nearly 93%. Unlike other industries which count on the emerging world for future expansion, piracy takes the “oomph” out of any potential Hollywood-worthy growth story.

The music business sits in a similarly uncomfortable position. Ubiquitous MP3 downloads from legal and illegal sources are threatening to make zero-cost commodities out of our favorite songs, albums -- even artists.

Software wranglers have been fighting the pirates since, well, the beginning of software development. Despite their best efforts, even veterans like Electronic Arts (Nasdaq: ERTS) and Microsoft (Nasdaq: MSFT) often find their latest and greatest programs available for free download -- before they even hit store shelves.

In a 2008 study, the Business Software Alliance calculated that the global piracy rate was 38% and resulted in more than $48 billion in packaged PC software losses. In the emerging BRIC countries, more than 75% of all software is pirated rather than bought, according to this data.

And the problem extends even to consumer electronics and other hardware. Design a better mousetrap and watch Taiwanese or Indonesian knockoffs flooding less-reputable markets everywhere within weeks. It happened to Apple's iPhones and iPod Nanos already. TiPhone, anyone?

The stylish solution
But now, Apple may have found a cure for the disease of hardware piracy in an unconventional way. High-end design has always been a hallmark of Apple -- lithe, svelte, handy-dandy gadgets in smoothly stacked shells. You know an Apple gizmo when you see it. And Apple has finally gone so far as to out-design the pirates.

The latest iteration of the iPod Shuffle is so ridiculously compact and efficient in design that would-be copy shops just can't pull off the usual cloning job. The Shuffle's basic components, like resistors and capacitors, are too tiny to even identify. The rechargeable battery may be the smallest model available anywhere. Each part may be rather inexpensive -- iSuppli sees a hardware bill of just $21.77 for the $79 Shuffle -- but they're also impossibly small and hard to handle.

It appears at this point that Apple has out-designed the pirates stalking its wares. By the time the hardware pirates catch up to this ultra-compact manufacturing move, Apple will have had plenty of opportunity to increase its lead with new designs. I wouldn't bet against it.

How other companies can beat their scourges, too
Each of the old-line media dinosaurs already has its own formidable array of unique weaponry available. The movie industry has larger-than-life screens and the old dinner-and-a-movie angle, neither of which is easily copied by your home theater system.

Longtime Rule Breakers recommendation IMAX ( Nasdaq: IMAX) tackles the dual threats of piracy and commoditization by producing a movie-watching experience that quite frankly can't be copied and taken home. I mean, who installs a home theater that covers your entire field of vision, with surround sound to match? Continued...