The Quest For iPhone 3G…

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There’s something special about having new technology the day it comes out…

I spent a big chunk of last Friday waiting on a couple of lines to get my hands on the newly launched iPhone 3G.

Based on my previous unsuccessful experience of trying to get the original iPhone from an AT&T store when it launched a year ago, I decided the Apple Store was the only way to go. Being in New York, I had the luxury of three choices, and decided to head to the newest (and least known) Apple Store over on 14th Street and Ninth Avenue – in the heart of the old meat packing district.

I wanted to document the experience for this blog, so I took a video camera along to record what it’s like being part of a line at an Apple launch event. This short video captures the highlights:

The new iPhone is great, but does have a few quirks and shortcomings that I’ll tell you about in a follow-up review. (Overall, it’s still the best “Smartphone” you can buy.)

Feel free to share.

Enjoy!…

Walt Mossberg's iPhone 3G Review…

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It’s no secret I’m a big fan of the current iPhone…

I made the switch to iPhone a year ago after being a longterm Blackberry user, and haven’t looked back at all. Well it’s almost time for the next iteration of the iPhone – the iPhone 3G – will go on sale this Friday at 8am.

If you’re a current iPhone owner, the big question is:

Do I need the new hardware, or is the free 2.0 software upgrade enough?…

Gadget geek that I am, I plan on upgrading my iPhone Friday morning when it comes out, and I’ll let you know what I think after I try it out.

Until then, take a look at what Walt Mossberg of the Wall Street Journal has to say:

This should be interesting…

The iPhone SDK: An Enterprise Strategy…

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Apple’s media event last week was a lot more than a simple PR opportunity…

It was really all business. Steve Jobs opened the event, but beyond making introductions, he spent very little time on stage. This was a sales event. Features and capabilities were front and center here, and the folks that did the talking and demoing were the ones directly responsible for what we saw.

And we saw a lot…

Apple’s Phil Schiller demonstrated support for Microsoft’s ActiveSync, giving iPhones a dynamic, remote synchronization with the enterprise standard Exchange server.
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The integration of ActiveSync allows calendar events and contacts to be sync’ed directly over the air without the need to dock. Apple is also delivering remote management of iPhones, allowing a corporate administrator to lock or erase the contents of an iPhone if it should be lost or stolen, or configure groups of iPhones centrally. And this went beyond just talk and slides.

Apple demoed each of these features and mentioned specific firms that were beta testing them.

They clearly wanted to impress on everyone that these capabilities are real, and that they would be shipping soon…

By delivering on these capabilities, Apple will have the chance prove it’s mettle in the enterprise world – a market that the current iPhone software fails to seriously address. And that means it will move into direct competition with the current corporate standard bearer – RIM.

RIM has had these types of synchronization capabilities for years, and – recent outages aside – has a proven track record of success. The iPhone, on the other hand, is still the new kid on the block. So what might motivate traditionally conservative enterprises to choose the iPhone over the safe and fully vetted RIM Blackberry?

In a word: Applications…

The announcement of support for ActiveSync was just the warmup act. The main act was the iPhone SDK.

And Apple didn’t disappoint…

The SDK available for the iPhone isn’t some deprecated mobile API with limited platform support. It is a full fledged API with access to every key hardware capability built into the iPhone, and an iSQL database for local data storage and retrieval.

It’s the real deal for real application development…

    A rich GUI interface? – Got it.
    Access to GPS data? – Got it.
    A powerful structured database – Got it.
    Details on device orientation and velocity? – Got it.
    Full MultiTouch control? – Got it.
    Access to contact information? – Got it.

The bottom line is that corporations will be able to build rich, full featured, intuitive applications that extend the user’s desktop into the mobile realm without requiring a laptop. And they’ll be able to do it without having to break the bank on user training and support, and without investing in a mobile strategy that forces users to ‘downgrade’ their expectations of simplicity, functionality, and usability. In fact, the mobile experience on an iPhone can actually equal – or even surpass – that of equivalent desktop applications.

And Apple wants to see more than just corporate IT building iPhone apps…

Apple also made it clear that they are looking to foster a robust 3rd party community around the development of iPhone applications. They showed off some impressive demo applications (from both the business and gaming genres) developed by major companies like Electronic Arts and Salesforce.com.

And in an even more significant move, Apple had venture capitalist John Doehr from Kleiner, Perkins, Caufield & Byers close the presentation by announcing the launch of a new $100M fund targeted solely at funding iPhone development.

Apple is banking that applications will be their edge in the enterprise market…

While widely referred to as the “iPhone SDK” event, my take away was that the SDK itself wasn’t really wasn’t the main point in what we saw last week. This event was really the launch of Apple’s enterprise strategy, and the SDK is simply one – albeit highly visible – aspect of that.

By combining Exchange support, rich mobile applications, and a breakthrough handheld device, Apple has all of the ingredients in place to be wildly successful in the corporate space.

So what could hold them back?…

Two things.

First, they are locked in with AT&T exclusively. RIM works with multiple carriers and can offer a solution to pretty much any corporation without requiring them to switch. There’s no easy solution to this except for Apple to sell in to those businesses that are already committed to AT&T, and wait out their agreement.

Second, the current iPhone has no 3G support, and AT&T’s Edge network can be painfully slow. While having strong WiFi support can help to mitigate this, it still limits the device in terms of offering a truly seamless mobile experience. Apple will be releasing the production version of this new software sometime in late June, and I believe they will introduce a 3G capable iPhone along with it.

So where does that leave things?…

The iPhone definitely has some strong momentum behind it, and Apple seems to be making all of the right moves to take it to the next level. That said, Apple is still somewhat new to the politics and internecine struggles that take place around corporate purchasing deals, and will need to come up to speed fast on that end of the business as well. They

It’s an exciting time to be an iPhone user…

Macworld 2008…

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Apple is taking a great direction at this Macworld…

Apple seems to be giving some fresh attention to many existing capabilities and products:

  • They have announced Time Capsule – a wireless backup station that works as a companion to the Time Machine backup that ships with Leopard.
  • They have done a software refresh of the iPhone, buffing up some of the applications and making it a bit more configurable. Jobs also reaffirmed that the iPhone SDK is still in the works for next month.
  • After declaring video sales on iTunes a disappointment, Steve introduced a new movie rentals capability. This wasn’t much of a secret. What is surprising is that the service includes just about every major studio, and also has about 100 titles available in HD! That rocks.
  • As a companion to the movie rental announcement, Apple has done a major rework of AppleTV. (Steve refered to it as Apple TV – Take 2.) This is a completely new software package that no longer requires access to iTunes on a computer. You can rent or buy from the iTunes Store directly, download podcasts, playback Flickr photos, etc! It will still allow syncing with local iTunes, but that is no longer required. This will be a free update. They also dropped the price to $229. Lets move this out of the hobby category – it has legs this time.
  • This is all great stuff…

    Apple is starting to mature – in a good way. They are taking what they have done, continuing to refine it, and working to better integrate it. Apple clearly understands that they are putting together a digital ecosystem, and these are the fundamentals of making that happen. They are delivering on the promise.

    Of course, no Macworld would be complete without something new…

    The MacBook Air

    In a word, the Air is “Breathtaking”. It is incredibly thin – so thin that Intel needed to develop a custom version of the Core 2 Duo to make it fit. It is full featured, including 2GB of memory, an 80GB disk or 64GB SSD, 802.11N, Bluetooth 2.1/EDR, a multitouch trackpad, and a backlit keyboard.

    Wow!

    This is a blogger’s dream system…

    This system is also ideal for much of what I end up doing at work. It will let me deal with any web or office type of application easily – especially while commuting.

    There is a lot to be excited about from this Macworld. I’ll expect to post a lot more on some of the upgrades and announcements.

    I’ve got to go now so I can order my Macbook Air…

    Ebook Redux – Part 2: Moving Forward…

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    There may be a question of when, but eBooks are absolutely coming…

    In part 1 of this post, I took a look at the challenges facing the eBook marketplace. They are certainly real, but are actually only transitional issues – adjustments that need to be made to accommodate the new economics of going digital. All of them can be managed and overcome. And the sooner this industry recognizes the inevitability of its digital future, the better it will be for everyone.
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    In this post, I wanted to make five suggestions to publishers on what they can do to get beyond these challenges and give the eBook market a real jumpstart:

    #1 – Go Deep:

    If you are a publisher, give people something they just can’t get from traditional print. Dig out and digitize your out-of-print back catalog – all of it. Give Amazon, Sony, or any other eBook provider access to this catalog and let them convert it into any and all eBook specific formats they want to sell. Competition at the channel level will be your friend, and can help create some visibility. Also, price these books really low. If they are out-of-print, anything you make on them is found money for everyone. Maximize it through volume – it will pay dividends over time.

    #2 – Improve Options for Sharing:

    Limiting sharing to a single account doesn’t make much sense. It takes any viral traction out of a digital purchase, and slows the spread of new eBook users (and hence potential eBook customers). I know you have concerns about piracy, but be creative. Perhaps you can try using a ‘Fav 5′ style model – let customers pick five friends or family they can share their books with. Or maybe only allow people to share any book except their most recent purchase. Whatever you do, make sharing work for your customers.

    #3 – Make Reselling eBooks Easy:

    Create an online site that will let people resell their eBooks, but you can set some limits on it. Don’t allow any book to be resold until 6 months after it was purchased (so that it doesn’t cannibalize initial demand or promote ‘high-velocity’ resales). You can limit reselling to the original full price purchaser, or a limited number of additional purchasers. You can even bake in a small resale fee that you can split with the publisher. Don’t take away something people can do with physical books – just find a way to make it work in a digital world.

    #4 – Take Advantage of the Digital Nature of eBooks:

    Help promote eBooks through the free, viral aspects common to all digital media. Let people pull clips from books and share them online, add comments, blog them, etc. Let them contain embedded links to purchase the book they came from, and give the posters a small percentage of any sales they drive. It will encourage the viral promotion you’ll need to go mainstream. Let eBooks become part of the complete digital ecosystem – not a disconnected digital orphan.

    #5 – Create Subscription Models:

    eBook readers are very expensive, so find ways to make them more affordable. In addition to the current direct purchase model, create subscription plans like the cell phone companies do to make high end phones attractive. Bake the cost of a reader into each plan so people can get a “free” or “discounted” reader with a 3 year commitment. Charge a monthly fee that will let people download a couple of eBooks a month and pay down the device. This will have two main advantages. First, more people can get started buying and reading eBooks without the big up-front cost. Second, after the initial multi-year contract term, people can choose to re-up and get the latest, greatest eBook readers. This will create a wave of used, inexpensive eBook readers that can hit EBay, or be refurbished and bundled into even cheaper plans for the next wave of eBook converts. Your goal needs to be making eBooks affordable to everyone. Think both short term and long term here. Understand that eBooks will be an important driver of your future business growth.

    Making the transition to eBooks will require some real effort and have its share of rough spots. Both publishers and resellers will need to make some significant adjustments to their existing business models, and make some commitments based on faith. But I know that faith will be rewarded.

    The future is digital, and eBooks will be a viable and valuable component of that future…

    Ebook Redux – Part 1: The Challenges…

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    With Amazon’s release of Kindle, I’ve been thinking more about the ebook market…

    I have been a long time fan of the eBook concept, starting with the original Rocket eBook Reader. I currently use the Sony Reader, which reset the bar on what we can expect in an ebook device – great battery life, an excellent screen, and a truly portable form factor.

    Amazon has taken the Sony design even further by integrating wireless book purchase and download right into the device through an innovative deal with Sprint.

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    The hardware side of this market has really come a long way…

    So does this mean that ebooks are finally ‘mainstream’? Will holiday gift giving include a fair share of these digital book readers? Will I no longer be the lone ebook reader on my daily commute?

    Not likely.

    After nearly a decade of trying, ebooks are still struggling to catch on beyond their ‘hard core’ niche. There are a number of reasons why this is still the case:

    REASON #1: Selection

    Amazon offers about 90,000 titles in ebook format (including magazines and web feeds as well as books). While this may sound like a lot, it’s still small compared to the 1.2 million unique book titles that were sold last year. And it is absolutely tiny compared to the more than 40 million book titles cataloged in OCLC’s WorldCat, the open directory of books housed by libraries globally. And even within the titles that are available, some popular authors like Tom Clancy and J. K. Rowling are absent.

    It would be extremely frustrating for someone to invest in an ebook reader, then find there are titles they want to read that aren’t available in digital format. You can’t grow a new product niche by asking people to simply ‘settle’ for what you can offer.

    And this will absolutely be the case for anyone that jumps into the ebook space right now.

    REASON #2: Price

    For a new product segment to be successful, it needs to offer a fundamental and compelling value proposition that simply wasn’t available previously. Clearly there are elements of portability and convenience that are fundamentally unique to the ebook space. And while these unique capabilities are certainly nice to have, they probably aren’t sufficiently compelling on their own to attract most people to this new market.

    What would be compelling is a radical reduction in the price of books.

    Ebook readers carry an initial cost of between $300 and $400 dollars. After having to spend that much on the reading device itself, most people would want the cost of the content for it to be tiny.

    But it isn’t.

    It’s certainly cheaper to buy ebooks than the corresponding physical books, but only by about $6.00-$7.00. That means that you would need to buy at least 50-60 books just to break even on the cost of the device. That number of books probably represents better than three years worth of reading for even active readers.

    With their current pricing model, it will be tough for ebooks to go mainstream. For most people, it would simply cost less to keep buying paper books.

    Next to a limited selection, price is probably the biggest drag on the development of ebooks.

    REASON #3: Rights Management

    Once you purchase a physical book, you can pretty much do anything you want with it. You can lend it to family and friends. Trade it in for credit at a bookstore. Even sell it on EBay or at any of the numerous online book exchanges. You can even sell used text books on Amazon!

    You have none of these freedoms with ebooks. You can only share them with people directly on your account – probably limiting distribution to yourself and your spouse. You can’t give them away when you are done – they are tied to your unique account. You can’t resell them either, further eroding the cost benefit of digital over print. Ebooks today are a buy and hold asset.

    To bootstrap this marketplace, something viral needs to happen here. To start buying ebook readers, people will need to have a lot of content (and content they want to read!) available to them at a low price. And without selling a lot of readers, ebook sales will never take off. Publishers are only willing to go digital if they can lock down their content. And locked down content is the surest way to guarantee that going digital fails.

    They have their own little “Catch-22″!…

    Publishers are doing to the digital book industry what the record companies did to the online music industry – killing it with fear and control. They know they need to go digital because their old model is falling apart. But they are hell-bent on preserving their old economic model even though it doesn’t apply in a digital world. Just look at the state of the recording industry today if you need proof where this will lead.

    REASON #4: Proprietary Formats

    Unfortunate, the two main purveyors of ebooks – Amazon and Sony – have chosen to go the proprietary route when it comes to formats. You can only buy ebooks for the Kindle on Amazon, and for the Sony Reader on Connect. It is hard to fathom the thinking (or lack thereof) going on here. From a Game Theory perspective, even if mutual ‘defection’ will become the ultimate equalized state , the near term dominant strategy for each party here should be cooperation. At this point, being proprietary is simply a race to failure.

    We are seeing the BluRay/HD-DVD war play out in ebooks. We have two upstarts offering basically the same capability in incompatible formats, and a public that would rather stay with the status quo and ignore them both. For an emerging market segment struggling to get a foothold, this is insanity!

    ✦✦✦

    Given what I have laid out here, it’s clear that the ebook marketplace has some significant challenges to overcome before it gains a meaningful foothold – never mind becoming the ‘next iPod’ in the gadget space. But I do believe that ebooks have profound potential and can gain mainstream acceptance if the industry is willing to make some course corrections.

    In part 2 of this post, I’ll cover what I think both the publishers and ebook players will need to do to turn this market around.

    J Allard Must Have Cringed…

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    It can be tough doing media events with your boss…

    Just ask Microsoft’s J Allard.

    jallard.jpgFrom his days heading up development of the XBOX 360 platform to his role as head of Microsoft’s consumer products division, J Allard has always been able to articulate a compelling vision of where Microsoft is going. So with the launch of a new generation of Microsoft’s Zune, it’s no surprise that he and his boss – Bill Gates – have taken to the road in support of their new line of media players.

    One press opportunity they shared was an interview with Jeff Leeds of the New York Times. With an eloquence only the richest man in the world could get away with, Gates (unfortunately) offered some context for the new devices by discussing the initial Zune launch:

    “For something we pulled together in six months, we are very pleased with the satisfaction we got,” Bill Gates, Microsoft’s chairman, said in an interview Tuesday. “The satisfaction for the device was superhigh. The satisfaction on the software actually is where we’d expect to see a huge uptick this year. It was just so-so on the software side.”

    Wow. Really makes you glad they updated it!…

    Without a doubt, that’s not the kind of pitch Steve Jobs would make to introduce a new iPod. Allard gets the chance to jump in at some point and does a really good job getting his message out. I not sure if I agree with his bigger vision for social network integration, but it’s definitely an interesting approach. (If you get a chance, the article is worth a read.)

    When Microsoft finally releases the upcoming Vista Service Pack, they’ll probably be sending Bill back on the road to fire up sales again and re-energize the channels. I’m sure the marketing folks are already hard at work writing the script for him to follow:

    “For something we slapped together in five years, we were very pleased with the satisfaction level folks are having with Vista. Sure, we had to hack out most of the really cool features we originally promised, but that’s going to give us something to promise now for the next few releases. Overall, the packaging and the marketing for the original Vista were great. It was just so-so on the software side.”

    Then again, maybe they’ll have Bill sit that one out…

    Apple Gets It (And Why Forbes Got It Wrong)…

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    Recently, Forbes Magazine posted an article entitled “The iFlop”…

    The article by Scott Woolley looks at Apple’s AppleTV device – and it doesn’t have much good to say about it or Apple:

    Six months later iTV is a flat-out iFlop. Renamed Apple TV upon launch, the ballyhooed box has sold perhaps 250,000 units–far behind the 1 million sold for the iPhone, which was priced twice as high and has been on the market less than half as long. Apple … provides detailed sales data for the iPod and other digital wonders but won’t reveal any numbers for Apple TV; apparently the truth is too humiliating. A company spokesman declined to respond to written questions.

    By even the most generous of metrics, this is a scathing article. Woolley pulls no punches – and he throws a lot of them throughout the article. That said, I am not convinced that the article presents anything more than negative conjecture. It isn’t clear where the 250,000 unit sales figure Woolley quoted – a centerpiece of his argument that the device is a flop – came from. It clearly states it wasn’t from Apple, and no alternate source is cited.

    But even if what Woolley claims in the article turns out to be factual, I think he simply misses the point. Unlike the iPod, Apple TV isn’t about near term revenue. Its one step in a longer term media based ecosystem that Apple is working to develop. It is a necessary component that I believe will evolve into a something more complex and important than an iPod for your media center.

    Lets take stock – good and bad – of where Apple stands with it…

    The Content Picture:

    Music: Without question, Apple has more music available than any other digital venue. DRM free music is starting to appear, but it is really slow in coming. (That’s an issue with the studios – not Apple) The only other issue on the music front is that oft repeated call for a subscription service. I’m not sure if there is a big enough demographic for a music subscription model to really take off and become mainstream, but I believe there would be enough people willing to opt-in to one that it would be economically viable for Apple to implement it.

    Television Shows: Apple has struck deals for a broad range of video programming assets. They have 550 different television programs from 58 networks. It’s a good number, but the universe here is pretty large, so Apple has some room to grow. There are a couple of downsides here, however. The versions of the programs being offered by Apple are poorly encoded, and only have stereo sound. The metadata system surrounding them is weak as well (better suited to music than video). Both of these need to be addressed.

    Movies: This is where Apple is clearly weakest. iTunes offers just over 550 movies, and they are available for purchase only. That number is not impressive, and only having a purchase option limits their appeal. Like the television programs offered on Itunes, the movies are also poorly encoded, lack surround sound, and have weak metadata. Encoding flaws are an even bigger negative for movies, as they are more often viewed in a large screen environment than on the iPod itself. On a positive note, Apple does seem poised to release a movie rental service soon, and that chould change the number of available movies significantly. In short, Apple will need to deliver on a rental option, improve encoding quality, and look at offering HD quality to make their movie service stand out.

    Long Tail: Quality media today isn’t only found on broadcast televisions and at the movies. It’s also available on the web. The current version of AppleTV has direct support for YouTube videos, though its lack of support for Flash has limited availability to just those video Google chooses to convert to h.264 – the encoding standard AppleTV understands. And while the video quality of most of these is pretty low, some are quite entertaining and worth watching.

    Beyond YouTube, iTunes has great support for podcasts and videocasts. These programs are often exceptionally well produced, and some are provided in full HD resolution. (For a list of some interesting ones, see this post from Jeff Pulver’s blog as well as this Apple TV showcase on iTunes. You can also check out my favorite web show Wallstrip which is available on iTunes.) Apple is doing everything well here – perhaps too well. Unfortunately, itunes isn’t optimized for navigating the incredible amount of web content they have available here, and a new approach to browsing it would really be helpful. Simplicity is key.

    The Software Picture:

    Software, as usual, is where Apple is setting themselves apart. iTunes has become a ubiquitous media tool, living on both Mac’s and Windows PC’s (Unfortunately, no Linux version is available yet). It has given Apple a desktop reach that is rivaled probably only by Microsoft’s own Windows OS. Though far from the best media player/manager available, its integration of asset management, device syncing, and the iTunes store have created a compelling combination that would be hard for anyone else to match. The biggest problem I have with iTunes is with the store – I should be able to see everything I have purchased online, and re-download any items as required. This “buy-it and back-it-up” approach they suggest is a poor alternative. Amazon does it right with this aspect of Unbox, and Apple should copy them. The other aspect of iTunes which will need to adapt to a subscription-like model is the creation of a more personal and useful home page/media guide. People need an easier way to manage their subscriptions and see what’s on (downloaded), what’s new (unwatched), and what’s interesting (unsubscribed but relevant). Developing this functionality/navigation will be increasingly important for Apple as they take on a bigger role as a personal media hub.

    But the software framework doesn’t end with iTunes. Apple also has an application suite called iLife that appears to be taking on a growing role in this ecosystem as well. iLife gives people the tools to create and publish media. The latest version of the suite contains a video application – iMovie ’08 – that lets people easily import video from a digital camera, apply simple edits, and publish it directly to either their own ‘Web Gallery’ on ‘.MAC’, or directly to YouTube. Using the latest iLife, I can record an event – even in HD -and make it available – also in HD – to the whole world, or to just my family and friends. (a .MAC subscription is required for permissioned access) And most importantly, it can happen with very little effort, and no real technical knowledge. I expect a PC version of iLife to be released at some point as well, though for now it’s a good sales differentiator between Mac’s and PC’s.

    I believe both of these tools – iTunes (for purchase, subscription,management and playback) and iLife (for capture, creation, and publication) will continue to evolve, and see them as key components of Apple’s longer term strategy. We live in a Web 2.0 world where producing content is as important as consuming it. To support this model, I see iTunes becoming a gateway to uploading content as well as downloading it. It could let you keep track of what you have published as well as what you’ve subscribed to. It would be able to route a video you make to either .MAC or YouTube for publication. It could potentially let you upload songs or videos to the iTunes store if you had an agreement in place to sell them there. From the iLife side, I believe editing and publishing will continue to become simpler. This workflow could even extend to the professional space by adding a sophisticated publication module as a component of Apple’s professional video suite, Final Cut Studio.

    Software is the place where I expect to see the most significant changes from Apple- and where the most excitement (and market disruption) will come from.

    The Economics Picture:

    At the end of the day, the only economics that matter here are those surrounding access to content. And that is the one area Apple has the least direct control over. But they do have considerable influence. I see a lot of press about how Steve Jobs is a monopolist tyrant telling media companies how to price their products and run their businesses. And while Jobs is no choirboy, this characterization is really unfair. Unlike the major media companies, Jobs does have a clear vision of how to move forward in this space and has a track record to back it up. The track record of the media companies – without exception – is one of total failure. For video and movies, the only pricing consideration the media companies have is making sure they protect the DVD packages they sell at Walmart and Best Buy. And that is a sure way to kill the digital business. The video available on iTunes, and everywhere else online for that matter is technically inferior to that found on the DVD’s. It is also encumbered by DRM, that limits how people can use it. It comes without any of the extras found with the DVD’s you buy – not commentaries, cut scenes, or even the case and booklets. And in some cases, it can cost more:

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    This is what the media companies are able to do today on iTunes with even the limited flexibility they have over pricing. Imagine what it would be like if they could do whatever they wanted.

    Despite the criticism being dished out for the “hardass/stare them down” approach Jobs has been taking around pricing, I believe that this strategy is necessary for the long term health of the online media business – both music and video. It’s already clear to everyone but the record executives that produce them that CD’s are way overpriced. And while closer to reality in terms of packaging (I can just buy the songs I want), even $.99 downloads don’t really make sense. People would buy music in bulk if it were priced correctly, and the same is probably true of video content. The producers of programming need to ‘think different’ about their pricing.

    If a season of shows were $9.99 instead of $35.99, how many more people would buy it? If every show NBC produced during a season was available for $69.99, would that generate a lot more revenue? (I personally would be willing to pay some premium to free – the cost to me of viewing the broadcast show – for both the convenience factor I’d get from the download, and to have an archive I can go back to from time to time. But for me, it isn’t worth what’s being charged now.) If Apple were to allow ‘flexible pricing’, I would expect to see prices go up significantly, and would expect sales to drop sharply. Of course, the studios would throw up their hands and say “There’s just no market for buying videos online.” And that would be exactly what they said about selling music online before iTunes came along. And if that happens, the only winners will be the P2P networks.

    Tying it all together:

    So how does this all come together? Apple needs to ‘close the loop’ for this strategy to work. I see the final model looking something like the following diagram:

    applemediaecosystem-blog.jpg

    (click to enlarge)

    This model offers a simple way for people to produce, publish, subscribe, distribute, and access content. Some of the content in this ecosystem may be narrowcast for a limited audience, but one fully invested in watching it (e.g. – video clips of the grandkids playing). Some will be re-purposed content from broadcast media (TV and Movies). The rest will be created directly for the web and packaged in an accessible way.

    I expect AppleTV to play a bigger role in this media ecosystem. It already has access to YouTube, and will no doubt get the ability to access the iTunes store directly. I also believe it will get tied in tightly to .MAC as well. In this model of the ecosystem, YouTube, .MAC, and the iTunes store become the ‘media cloud’ that links everyone together – content consumer, and both professional and personal content publishers. It’s possible that Apple TV will evolve into the role of gateway for this cloud.

    I recognize that I have made some significant conjectures in putting this together, but I believe it is consistent with the moves Apple has made to date, and what is clearly in their interests moving forward.

    Time will tell on the details, but it’s clear to me Apple gets it…

    Apple TV Version 2.0?…

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    The Apple focused gossip site “LOOPRumors” is reporting that a significant update is in the works for Apple TV. According to the rumor, this update is expected to include direct access to the iTunes music store (similar to what was announced for the iPhone and iPod Touch), and the ability to rent movies right from the unit.

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    If this turns out to be the case, it will address the two most siginificant issues associated with the adoption of Apple TV – the need for an external computer and having movies only available for sale. These both seem to be logical nexts steps, and could quickly move the Apple TV from an Apple ‘hobby’ into a mainstream product offering.

    If this actually happens, Apple will be well positioned to evolve their content offerings…

    A step like this might set the stage for the development of a subscription model, possibly beginning around movies. This could pose a serious threat to the economics of the popular Netflix model. It costs Netflix approximately .75 per movie they ship, and availability is limited by the number of physical copies they have of any given title. Those costs and limitations could be completely removed by a virtual model, allowing Apple to offer a lower cost, ‘every title available’ service that could also maximize the revenue realized by the studios. It would certainly be a tempting opportunity.
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    The subscription model aside, I have a strong suspicion this rumor is true…

    Palm Foleo: D.B.A…

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    The Palm Foleo is now officially D.B.A – Dead Before Arrival…

    Earlier this summer, Palm’s Jeff Hawkins was bubbling with excitement over a new ‘mobile companion’ Palm was introducing at the All Things Digital conference called the Foleo. Foleo was a Linux based platform in a thin/light laptop like form factor that would pair with a Treo smartphone to provide basic computing services like browsing, email, word processing, and – interestingly – a solitaire game.
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    I expressed some reservations in a post I made back when the device was introduced, but was willing to give Jeff Hawkins (an incredibly bright individual) a chance to make it work. Unfortunately for Palm, the concept behind Foleo just never clicked with the marketplace, and they made the decision today to kill the project before it even hit the street.

    I give Palm credit for not letting egos or posturing get in the way of making what had to be a tough business decision. Not every technology company can claim to have the same discipline in this regard.

    I’ve always liked Palm, but like other tech companies that had early success, they stopped innovating aggressively and ended up losing their way a bit. (Tivo comes to mind here as well)

    I hope they have enough runway left for one more swing at the market…