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January 23, 2008

ipod

Midas touch hints at a golden future for the iPod

Posted Jan. 23, ’08, 2:17 PM PT by Dan Moren
Category | iPod

iPod If you didn’t listen to yesterday’s financial conference call or follow along with our full liveblog over at the Mothership (and hey, we can’t really blame you—financial conference calls are drier than an Oscar Wilde play performed in the Sahara), you may have missed out on a few salient details. Yes, we know that Apple had its best quarter evar and we’re thrilled, believe me. But that was hardly the most interesting part of the call. In particular, I wanted to hone in on something that Apple COO Tim Cook and CFO Peter Oppenheimer said a couple of times: that they see the iPod touch—and the future of the iPod line—as not just a music player, but as the first “mainstream mobile Wi-Fi platform.”

Pieces are starting to come together here, including some that date all the way back to the origin of the iPod. At the time, the product’s name puzzled some: “pod” is an awfully generic word that has little to do with music. Sure enough, in time, the iPod began to acquire other features: you could view your calendar and your contacts. Then you could watch videos and plays games. By that time the iPod moniker had become almost synonymous with portable music player, the logical successor to the Walkmans and Discmans of the ’80s and ’90s.

Still, almost every iPod from the original first-generation model to the current iPod classic (excepting the shuffle and touch) have kept the same basic form-factor, with slight revisions and refinements along the way. And in all of those cases I’d argue that the additional media features are more bolted-on afterthoughts than part of the device’s design. Video is certainly watchable on a 5G iPod or on a 3G nano, but it’s quite a different experience from watching on an iPhone or an iPod touch: these are devices that are still designed for music above all. The Click Wheel user interface is superb for dealing with music and while it works fine for navigating video and many other features, it was never going to be suitable for dealing with more complex functionality—like, say, anything that required text entry (look at the added-on “search” that came on the second generation nanos and 5.5G iPods; it was clunky at best, not to mention somewhat redundant given the iPod’s excellent navigation interface).

Hence the iPhone and iPod touch. On the hardware side, the multi-touch UI is an entirely new playing field, one where you’re not limited to the functions of traditional physical controls: the touch-interface gives you almost infinite flexibility in how you manipulate and control the device. On the software side, these two products run on OS X instead of the iPod’s old firmware, which again, was designed primarily for media-playing. Yesterday, Tim Cook said they envisioned the iPod touch as a platform “running all types of applications.” There is no clearer indication that Apple is positioning the iPod touch as their entry in the ultra-mobile computing field.

And it makes sense. While iPods are still selling in record numbers, growth is slowing, in large part because so many people have iPods now. How to draw those people in once again? Move the iPod into new markets, such as, say…a mainstream mobile Wi-Fi platform. The success of the iPhone has shown that there’s definitely a demand there and providing a device that’s not married to a provider like AT&T—and thus foregoes the monthly recurring fee that many find distasteful,—clearly has an attraction to many users who wouldn’t consider buying an iPhone, or are happy with their existing cell phone.

Since Apple doesn’t break their sales down by model line, it’ll be difficult if not impossible for us to see just how well the touch is selling, but we’ve already seen it have one impact—the fact that the touch costs more than other iPod models has raised the Average Sales Price (ASP) of the entire iPod line, increasing Apple’s iPod revenue despite the smaller growth in that segment than in previous years.

One big ingredient to building this as a platform remains, however, and that’s next month’s impending SDK. If Apple provides a full-featured SDK without burdening it with onerous restrictions on who can or can’t make apps, as well as keeping the amount of hoop-jumping low for developers, then expect to see the touch define this market space in much the same way that the original iPod did for portable music players. On the other hand, if they do cripple the SDK or application distribution in some way, I’m guessing that many savvy users will continue to follow the jailbreak path in order to get the functionality Apple doesn’t want them to have.

Either way, despite concerns that its days are numbered, the iPod’s future looks bright. I’ve said before that Apple’s biggest potential enemy is itself, and the fact that it realizes the iPod needs to evolve and innovate bodes well for the company.


2 Comments

Anonymous said:

The only problem is the lack of wide WiFi coverage. Until there is a corporation to help unify and provide more open WiFi access a WiFi only device will have limited appeal.

January 23, 2008 4:04 PM
The Tuesday Night Tech Show said:

I feel that the iPod will completely take over the world yet again when the millions of previous-generation iPods fail (hard drive, etc.) and everyone has to purchase a new unit--of course they will look at the Touch and the iPhone as a great replacement, with full internet access and 3rd party app support. Buy that stock while it's beaten down people!

January 24, 2008 5:59 AM

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