iPod Mania

Friday, 29 October 2004

I’ve written a lot about the iPod, iTunes, and iTunes Music Store this year. At times I’ve wondered if I’ve devoted too much attention to it. Based on the last few weeks of news, however, perhaps the opposite is true — that the iPod is such a genuine phenomenon that I haven’t written about it enough.

First up regarding recent news is Apple’s report on its fiscal fourth quarter of 2004, which contained the staggering news that Apple shipped 2 million iPods. Recall that two quarters prior, it was big news that Apple shipped slightly more iPods than Macs. Now it’s not even close — 2 million iPods vs. 836,000 Macs.

Those Mac numbers are good — up 6 percent over the same quarter a year ago — but they simply can’t compare to the continuing phenomenal growth in iPod sales. More competitors continue to enter the market, but Apple’s market share is going up, not down.

And things are only looking up. The current quarter (which by Apple’s fiscal calendar is the first quarter of 2005) consists of the holiday shopping season, and will be the first full quarter in which HP is selling iPods. Oh, and iPod Minis are finally available in sufficient quantity to meet demand.

When in Doubt, Look to Paul

Tuesday’s debut of the iPod Photo and iPod U2 Special Edition are only going to add to the frenzy. If you have any doubt that these new iPods are going to be smash hits, look no further than the fact that Paul Thurrott has proclaimed them “uninspiring” and “underwhelming”.

This is the same Paul Thurrott who, back in March, declared the iPod Mini “way too expensive”:

It’s expensive. Way too expensive. I understand that flash-based players are … yada yada yada. Sorry, but $250 is just too much money for most people to spend on a device that, by definition, should be a spur-of-the-moment decision. If this was $200 (or, better yet, $150), people would fall over themselves to buy them as they happened by Apple Stores around the country. Now, what we get is the effect where an excited potential customer walks out of the store disappointed because they’d have to justify $250 to their spouse, and it just can’t be done.

Thurrott, of course, was totally wrong. If anything, Apple priced the iPod Mini too low. Constrained by the availability of the Mini’s minuscule 1-inch 4 GB hard drives, Apple has sold them as fast as they can make them. They’ve been and remain insanely popular, and likely would have sold out at $299.

This is also the same Paul Thurrott who reported this exclusive “scoop” regarding HP’s iPod licensing deal with Apple:

HP’s blockbuster deal with Apple will have one exciting side effect. The company will be working with Apple to add support for Microsoft’s superior Windows Media Audio (WMA) format to the iPod by mid-year. You heard it here first.

Of course, the reason you heard it there first was that it was completely wrong.

And let’s not forget Thurrott’s championing of the Dell DJ as an “iPod Killer”:

Apple Computer’s tenuous hold on the portable audio-player market might soon fall thanks to a predictable foe, Dell, whose Dell Digital Jukebox (Dell DJ) is off to a strong start. The Dell unit is a bit bigger than Apple’s elegant iPod, but it features a more intuitive scrolling navigation wheel and support for Microsoft’s ubiquitous Windows Media Audio (WMA) format, which all online music services except Apple use (even staunch Microsoft competitor RealNetworks, which has its own audio and video formats, uses WMA — a telling decision). The Dell DJ, which I previewed at COMDEX last week and will review soon for Connected Home EXPRESS, also features dramatically better battery life than the iPod, lower prices, a built-in audio recorder, and — gasp — a simpler interface than the iPod. As the owner of two iPods, I’ve long expected the PC world to catch up with — and surpass — Apple’s entry. My only surprise is that it’s taken this long. After all, Creative Labs, a PC company, not Apple, first innovated the hard-disk-based portable media player.

Considering the iPod now holds 92 percent of the market for hard-disk-based players — higher than when the Dell DJ debuted — one must assume the DJ is a very sneaky assassin indeed. Perhaps Dell’s plan is to kill the iPod via “catastrophic success”? (Would it constitute gloating to point out that yours truly declared the Dell DJ a dud at the outset? Yes, I suppose it would.)

Thus, judging by nothing other than Thurrott’s perfect 0.000 batting average with regard to all things iPod, Apple’s latest additions to the iPod line-up will sell through the roof.

With regard to the iPod Photo, Thurrott writes:

The reality of the long-expected iPod Photo was far less impressive than the mock-ups fan sites had created in the days leading up to the launch, featuring the standard but tiny 2-inch screen that adorns other iPods. By comparison, the Creative Zen Portable Media Center, which also displays photos and music, but adds support for videos and recorded TV shows, features a much larger 3.8-inch screen and better resolution (320 × 240 vs.  220 × 176 for the iPod Photo). It also gets dramatically better battery life. However, Apple says it kept the screen small in order to keep the iPod small, sacrificing both the display and battery life, presumably, for style.

Quite a presumption. The more obvious consideration would be that screen size and battery life were sacrificed for the sake of size because — duh — the iPod’s small size is a major factor in its popularity. Look no further than the Mini to see how important size is to the iPod’s appeal.

It is worth noting, however, that the iPod Photo is a bit larger than its non-Photo brethren. All clickwheel iPods are 2.4 inches wide and 4.1 inches tall. Both the 40 and 60 GB iPod Photo models are .75 inches deep, a tad thicker than the regular 40 GB iPod (.69 inches deep) and quite a bit thicker than the 20 GB models, including the new U2 Special Edition (.57 inches deep). Obvious reasons for the extra thickness would be the color screen and/or the new headphone jack port that supports composite video and audio output. Both iPod Photo models are also ever-so-slightly heavier than the regular 40 GB iPod, 6.4 ounces vs. 6.2 (the 20 GB models are 5.6).

As for the U2 Special Edition, Thurrott describes it as “curiously crippled”, which he justifies on the basis of its $50 premium over the price of the regular white 20 GB iPod, and the fact that it comes with white earbuds instead of black.

Predicting Success

It will be interesting to see how well the U2 iPod sells; for U2 fans, the price difference is ostensibly covered by a $50 discount towards the purchase of The Complete U2, a “digital boxed set” of 400 U2 tracks from the iTunes Music Store (which will be available in November, upon the release of U2’s upcoming album How to Dismantle an Atomic Bomb (which title I simply love)).

But hardcore U2 fans likely already own most of the tracks in the band’s library; the $50 discount toward the boxed set is nice, but I don’t think it’s going to sell many iPods. No, I think the success of the iPod U2 will largely hinge on the popularity of its striking Darth Vader-ish appearance. Even if you were a huge U2 fan, and you were planning to buy both an iPod and The Complete U2 collection, if you don’t like the way the iPod U2 looks, you could get a regular 20 GB iPod and the boxed set sans discount for same price as you would with the U2 iPod and the $50 discount.

Is there pent-up demand for black iPods? If so, are those who want one willing to pay an extra $50 for it? We may never know — Apple doesn’t release model-by-model sales figures for the iPod. The surest sign will be whether we start seeing more “special edition” models, perhaps in an assortment of colors, tied to superstar performing acts.

I personally don’t like it, but mockery aside, I can see how it might appeal to others. Considering that Apple is likely to sell over a million iPods a month during this holiday season, I suspect there could easily be a few hundred thousand people who’ll pay an extra $50 for a U2 model. Some because they’re U2 fans, some because they think it looks cool, and some because they just want something different.

The iPod Photo, on the other hand, strikes me as a sure-fire hit. For one, some people are suckers for color screens. Even without considering the photo features, there’s simply no doubt there are people willing to spend an extra $100 for a color screen. It won’t make the music sound better, and it won’t make it any easier to use, but to some, it’ll make it cooler.

Second, while most people can fit their entire music libraries on a 40 GB iPod, serious music collectors cannot. By offering 60 GB drives only in the iPod Photo, Apple is tempting anyone who wants a more-than-40-GB iPod to splurge, regardless if they care about the color screen or photo features.

Third, the photo features are worth something. Nomenclature notwithstanding, the iPod Photo is clearly still a music player with photo features as a bit of icing on the cake. I can easily imagine many people buying iPod Photos for use only as music players; I can’t imagine anyone buying one for use only as a photo album. But, still, the photo integration is nice icing.

In a nut, I see three reasons behind the iPod’s tremendous success:

• Hardware design and engineering. The iPod is small, the controls are intuitive and useful, and you can store a ton of songs on every iPod.

• Software design and engineering. iTunes is as much better than competing software as the iPod is better than competing hardware.

• Publicity and Peer Pressure. The iPod has risen to pop-culture phenomenon status. People aren’t shopping for “digital music players”, they’re shopping for iPods.

Undergirding all three is the secret sauce: the “it just works” factor. Long-time Mac users aren’t surprised by the straightforward, nearly bullet- and fool-proof procedure for getting started with and using a new iPod. But for PC users, the difference between Apple quality and what they’re used to is significant.

The Wall Street Journal’s Walt Mossberg recently reviewed three competitors to the iPod Mini, and unsurprisingly, found them more difficult to use than an iPod:

The contenders have mimicked aspects of the iPod’s user interface — music is organized in clear lists that can be displayed according to various categories, and the “Now playing” screens even show which album a song comes from, something the Apple Mini doesn’t show. But other aspects of the user interfaces were more awkward than Apple’s.

Worse, synchronizing the players with the music on a PC was a real challenge. After three separate attempts to sync with different Dell computers, we finally achieved success with the Dell Pocket DJ and Creative Zen Micro, using Musicmatch software — but only with the very newest PC in our office. The Rio Carbon did better, synchronizing with the first computer we tried. But it wouldn’t accept some songs in Microsoft’s copy-protected format.

By contrast, a new iPod Mini we tested for comparison synchronized easily with the first Windows PC we tried, accepting both unprotected and protected music. While we spent hours trying to get the Dell and Creative players to mate with a PC, we had all our songs on the Apple about 15 minutes after opening its box.

Apple’s marketing and publicity can only go so far. It’s word-of-mouth that has turned the iPod into a sensation. And a big part of that is that the iPod, iTunes, and the iTMS work exactly the way they’re supposed to, on both Macs and PCs.

The iPod Photo isn’t revolutionary (and certainly neither is the U2 Special Edition), but it doesn’t need to be. The iPod already has tremendous momentum; the iPod Photo is just an extra push.

Why Not Video

There’s a nugget of wingnuttery floating about that the reason Apple went with photos but not video is that Steve Jobs, in his other role as CEO of Pixar, has a conflict of interest and doesn’t want to see Pixar movies “ripped” for use on hard-disk-based players. Such thinking is to presume that the content for a hypothetical video-playing iPod would be bootlegged; considering the success of the iTunes Music Store, I don’t see the logic here. In fact, quite the opposite, Jobs strikes me as the film executive most likely to the see the potential for profit in downloadable video content.

You can’t always take at face value what executives — from Apple or any other company — state publicly. For competitive reasons alone, it makes no sense to share the actual reasons behind your strategy. But in this case, Jobs’ and Apple’s party line about their not being content for video rings true to my ears.

Jupiter Research analyst Michael Gartenberg agrees:

It’s because unlike music, it’s illegal to rip a DVD to your hard drive, Pixar or otherwise. Simple. No [sane] company wants to get into that legal issue with the studios and provide those tools. Not Apple. Not Microsoft. In fact, the reason MediaCenter Extenders won’t stream DVDs from your MCE to the device is that in order to do so they need to be decrypted to send the stream. That’s illegal too. Should it be? Of course not, but at the moment, it is. The only other source of legal video content is recorded TV and Apple at the moment has no interest in playing in that market. Should they? Perhaps, but that’s another story. Now there’s always personal created video but the market for that is tiny… really, really tiny. Call me and I’ll show you how small those numbers are. There’s a reason we call them consumers, as they consume content and not create it. There’s no market for the video iPod for Apple’s customers at the moment. No evil schemes. No Machiavellian thoughts behind it. It’s just not a good move for Apple without the sources of content they need. They will be there and we will get a video iPod one day. Just not this one.

When You Say ‘Photo-Synching’, I think ‘iTunes’

Another bit of scuttlebutt surrounds Apple’s decision to use iTunes for synching photos, which would seem a more natural task for iPhoto. Pre-release conjecture regarding iPod Photo focused on just this, and whether Apple would release a version of iPhoto for Windows.

It is a bit counter-intuitive for iTunes to handle photo synching, but I think the explanation is simply that it’s much simpler for one application to handle automatic iPod synching than to have two (or more) apps laying claim to the iPod. Arguably however, the Mac app that would be most naturally suited to this task is neither iTunes nor iPhoto, but, well, iSync. iSync is in fact responsible for synching ancillary iPod data — contacts and calendar items from iCal. Given the nature and dedicated purpose of iSync, it would seem natural for all iPod synching to go through it.

But today’s Apple is a pragmatic company. They are in the business of selling iPods and selling Macintosh computers; they are not in the business of developing and giving away Windows application software. Porting iPhoto to Windows might be nice for Windows users, but it’d be money down the drain for Apple, because it would be unlikely to help sell additional iPods. Porting iSync would make even less sense.

It’s also possible I’m wrong, and that Apple is working on a Windows port of iPhoto, but isn’t ready, and that the sync-the-photos-via-iTunes approach is a stop-gap. But I doubt it.

It’s also quite possible that if the iPod were still a Mac-only peripheral that the photo synching would be performed by either iPhoto or iSync, but that since all Apple has on Windows is the iTunes hammer, every iPod synching problem is treated like a nail. In the end, I don’t think this is going to make much of a difference. As posited earlier, I find it extremely unlikely that anyone will buy an iPod Photo just for use as a photo player, so everyone’s going to want to sync through iTunes for their music anyway. Shoehorning photo-synching through iTunes too isn’t going to hurt anyone.

It’s also the case that iTunes’ photo-synching allows you to choose any folder as the source for photos to store on your iPod; you can thus choose to manage your photo library manually, or using any other photo management software that keeps your photos organized within a single parent folder. This leaves iTunes as the only mandatory software for iPod synching.

iTMS Expansion

The remaining news of the week is the expansion of the iTunes Music Store to nine more countries from the European Union, and with support for Canada pre-announced for some time in November. Notably absent are Japan, Sweden, Australia, and most ironically, Ireland, the home of U2.

However, Mark Twomey reports that, according to the Irish Recorded Music Association, the iTMS will be coming to Ireland soon, but that licensing issues weren’t resolved in time for Monday’s launch.