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| How the Grinch With the Green iPod Stole Macworld |
© 1-09-04
András Puiz
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Through with Christmas
Kids love Christmas. Of course, it has nothing to do with the selfish pleasure of getting presents. No sir.
Rather, it's all about the sleazy, self-indulgent pleasure of getting a lot of expensive presents all at the same time. Just ask a child whether (s)he would have Santa cancel Christmas and deliver all gifts throughout the year instead, and you'll see emphatic dismissal, probably accentuated by bitter tears of desperation, bereavement and betrayal. Christmas is an event. And it has been there for centuries. You can't just substitute it with several press conferences in Cupertino, California.
For the Mac-loving child in us, the Macworld Expo conference and trade show is Christmas. But the glory of Macworld seems to be fading. Apple wants to announce its products when the time's right, not when a third party would prefer it to (Macworld Expos are run by IDG). So, slowly but steadily, the Christmas cornucopia is going away. At his week's Macworld San Francisco (MWSF), there were no new Macs announced (unless we count the Xserve). Final Cut Express and the iLife apps received some minor improvements. Oh, and there's a new one, iGarage... I mean, GarageBand. Plus, the iPod Mini. That's it.
Already referred to as "the dullest MacWorld keynote since Gil Amelio's notorious snoozathon," Tuesday's keynote didn't only lack ground-breaking product announcements, but also failed to talk about any Apple strategies. There was no roadmap lined up for anything. Last year was the "year of the laptop." In 2001, we were told that the Mac was actually a digital hub, and that Apple would be seriously catching up on music.
But the message this year was... That Apple will, um, release new products this year. But not today. Forget Macworlds. (Actually, don't you just hate these shows? No? Anyway, I do, and so will you.) Expect G5 speed bumps maybe next week, perhaps the minute the show's over. Oh, and in case you're heading on to www.apple.com to look for the latest downloadables that inevitably accompany a MWSF, well, head again: there are no freebies. Not even a lousy iPod firmware update. No new iPhoto, either. That thing will be available later... Though not for free. That ain't gonna happen. In fact, even the download page for the last version is gone.
Santa's through with Christmas. He has no new toys for you. He's taking away your old ones. There, now do you still like Christmas? Still want one next year? Damn.
This Record Ain't Broken
But then who knows, perhaps MWSF 2005 will be a spectacular event again, with holographic iMacs or at least free rotary-wheel mice for attendees. Macworldophobia may not be the real reason behind this year's low-key keynote: perhaps it's just that the fact that Apple's doing fine.
Apple doesn't have to convince the world it isn't going out of business tomorrow. (In fact, it has to convince some people that it won't buy Disney tomorrow.) Complacency has set in. Apple's just following, slowly and steadily, the paths it outlined for itself. Catch up on music it certainly did: in three years, Apple has become not only the most music-friendly computer maker, but also the number one seller of MP3 players, capturing half of that market (in revenues). It also created the concept of online music stores, and has kept its leading position despite the numerous pretenders to that throne.
Looks like Apple is going to take the world of computing by storm, after all, just not all at once. Niche by niche, it will become the platform of choice for more and more target groups. Twenty years ago, it captured graphic design. Then came movies: it started off with iMovie and desktop movies for consumers, continued with desktop DVD, and is culminating in an aggressive (and quite successful) push for professional and prosumer market share, complete with acquisitions. And now it's music.
While Apple has apparently felt it had little to do with watching movies and chose to help users make them instead, it has taken the opposite approach with music. The reasons are obvious. First, computers are perfectly suitable for playing and downloading music, but not movies. Second, a portable music player is (apparently) a product with a market, unlike a portable movie player. And so on.
But this Tuesday, Apple reached out to the makers of music by releasing GarageBand, a consumer-level digital music production studio application. Actually, it was a very logical next step. Apple has excellent reputation in the music business, so this is the perfect time to establish the Mac as the desktop music platform, bringing digital music production to the masses.
While GarageBand will not turn anybody into a musician, it certainly has the power to do to music what iMovie has done to video: bringing niche products to the masses, making productivity tools more accessible than ever, so that talent can prevail. Unfortunately, lack of talent will also be tolerated, and the worst iMovies may now start getting aggravated by the worst soundtracks. But at least, GarageBand makes sure that Apple Loops, the collection of looping tunes (like bass lines, guitar riffs and trumpet solos) included with the app, stay in the same key when combined with each other.
The reviews aren't in yet. But if previous iLife apps are any indication, GarageBand should excel in taking an existing product category and turning it into an extremely user-friendly, yet surprisingly powerful tool that is perfectly capable of producing quality output. Hopefully, Apple's selection of instruments and loops will reflect a taste as impeccable as seen in iDVD's themes.
One More Thing
The iPod has captured (or pretty much created) the market for high-end MP3 players. Every third MP3 player sold today is an iPod. Half the revenue coming from MP3 player sales worldwide are generated by iPods. What should Apple be worried about?
Well, analysts predict that the iPod's leading position can go away just any minute now. It's too expensive. Also too big. Smaller, cheaper, more full-featured competitors are breathing down its neck, ready to take over its leading position immediately. Apple really needs to sell $100 MP3 players, analysts say, or it's doomed... At least, it will lose its market-leading position.
And indeed, Apple did go ahead with the very $100 MP3 player everyone was expecting to see. Feature by feature, Steve Jobs compared it to the average $200 MP3 player, and the new iPod bested that worthy opponent in every field. There was only one category to go, price — and as we listened with bated breath, Jobs said, "$250!" Moments passed in silence.
So Apple's going after the $200 target group... And asks them to become a different target group instead, pretty please: he expressly asks them to spend $50 more. Meanwhile, another $50 would get them a full-blown iPod whose capacity is almost four times as big — partly because it just got a 50% boost! What's going on here? Is Apple deliberately trying to keep people from buying the mini iPods?
Well, yes! If there's any chance that you can beg, steal or borrow yourself another $50 for a 15 gig model, please do yourself and Apple a favor and choose that one by all means, because you'll get a much better deal. And, of course, Apple just sold over 700,000 of these "old" iPods this quarter alone, so they've probably figured out by now how to make them for a fraction of their $300 price point. On the other hand, the new, small guys are just beginning their life cycles; they are relatively more expensive to produce, so Apple probably makes less money on them.
By further distancing the HD capacity of the low-end "big" iPod from the mini model, Apple also wants to make sure that as little backward migration is taking place as possible: if you wanted a $300 iPod, don't even think of going for a $250 one! Isn't that 4-gigabyte disk space just ridiculous?!
Apple chiefly targets people whose only iPod choice is the mini. I think the company hopes that the new iPod's nifty features will make it attractive enough for people with $200 budgets to stretch that budget by 25%. At the same time, the large gap in storage capacity between the two categories should prompt people with $250 budgets to reach 20% deeper into their pockets and get almost four times as much disk space.
So that's how worried Apple is. It isn't giving customers huge price drops to buy itself more market share. Instead, it's provoking and confusing its market. It's basically playing cat-and-mouse games with potential customers and their wallets. It's thinking of clever ways to maximize profits by indebting and enslaving people on limited budgets, forcing them (by subjecting them to mind-boggling dilemmas) to pay more than they were originally willing to.
By the way, I think the mini iPod is an excellent product. I'll be watching very closely where Apple will take it: as 1" hard disks develop, so will these little gems. I think the two categories are becoming the iMacs and Power Macs of MP3 players: as the high-end iMac is more expensive than the low-end Power Mac, something similar may happen here too.
A few hundred thousand minis from now, when the novelty factor has worn out somewhat and early adopters have paid their dues, that $250 price will be ready to go down. Way down. I wouldn't be too surprised to see a $150 model by year's end. But of course, Apple will only drop prices if it needs to. You may have noticed how the demand for iPods actually exceeded their supply in some geographies over the Christmas buying season — all at those nasty, worrisome, market-share-threatening high price points.
