iPhone Won’t Rule the World. Yet.

Unless you’ve been living in a cave, you already know about the Apple iPhone, which happens to be the most anticipated launch of the year. A lot of ink (and bytes) has been devoted to the subject, so I’ll be brief:

• It’s way too expensive. $500! No way! The iPhone is not going truly mainstream until it drops to the 350 mark.
• Competitive market: Nokia, Moto, Sony, etc. aren’t going to roll over and play dead. This is not the mp3 player market of 2001, with little competition, catering to uber-geeks or those with patience for a big learning curve. Already, Sony has the excellent Walkman series of phones out there and Nokia has the N Series that is doing well. Video is supported on mobiles
• Innovation: With the iPod, Apple bought iTunes to the table.
• Teething problems: Did you buy a 1st Gen iPod? Neither did I!

Since it’s easy to bitch and harder to deliver, here’s something for Mr. Job’s to chew over:

• Aim this at the Video market. Let this be the only Widescreen iPod on the market, which makes Video an altogether more pleasurable experience. Release an unlocked version, without the WiFi and other fancy features (just Phone + Widescreen iPod) for those who don’t want to be tied into Cingular and want a simpler video capable iPod phone. Add more video content to iTunes and market this as the best (and sexiest) option to play video on the go. One more thing, the cheaper version should go for abt $550 unlocked and $300 with a contract.

Of course this is Apple and the iPhone will DEFINITELY sell out. But Apple seriously needs to do the above if it wants to get a large chunk of the market and not remain a niche player. Steve Jobs has said that they want 1% of the market by the end of the year, and they just might get it (thats 10 million phones), but the going will get harder after that unless they have a cheaper model which has a definitive advantage over other phones (video + iTunes).

5 Reasons Why the Microsoft Zune Will Fail

Microsoft is looking to kick off its challenge to the iPod juggernaut today with its Zune music player. Gizmodo recently ran 5 Reasons Why the Microsoft Zune May Succeed. I counter this with 5 reasons the Microsoft Zune will almost certainly not be an iPod Killer.

1. Too late in the game. Microsoft has given Apple a 5 year head start in the music market. While 5 years is not really much of a lead generally in the tech industry, where standards and benchmark products change swiftly, Apple has managed to sell over 60 million iPods since launch. More importantly, it has sold over a BILLION legal songs on iTunes at 99 cents a piece (mostly). That’s a sizable investment from iPod users, in music while will be totally incompatible with the Zune. Microsoft would be smart of use some of its muscle to get music companies to allow consumers to trade legal songs bought off iTunes to Microsoft’s Zune Music Store format (whatever it may be) for free. But this is unlikely to happen and an iPod user with, say, a modest 200 legal songs will have to buy the same music all over again in the Zune music store. That adds an extra $198.00 price tag to the price of Zune, which at $300, is already reported to be $50 more than Apple’s iPod.

2. One size doesn’t fit all. Microsoft will be launching one basic version of Zune, a 30 GB model. No “lite” model is available, ala the iPod nano (and, to a lesser extent, the Shuffle). This is a mistake. The only player which has moved more units than a full-sized iPod is the iPod nano. While it’s important to have a full-sized flagship Zune player to announce their presence in the market, a sleeker (and cheaper) Zune is needed to appeal to the masses.

3. Apple is sexy. Apple has spent a lot of time and money cultivating a sexy image. Steve Jobs is a rock star and Apple announcements are his concerts. It has a rabid following of early adopters, “apple fanboys”, who will endlessly protect the company, and laud its every move to anyone who listens, whether online or off. But all this marketing and PR wouldn’t be worth a cent if Apple didn’t have it’s greatest weapon, a passionate, rabid obsession with simplicity. Steve Jobs brought over this culture of finely tuning every product to the widest possible market, without losing the X factor or sex appeal, over from Pixar. The result: the iPod is stunning and simple to use. But you already knew that. While cynics might say that Apple tries to appeal to the lowest common denominator with its offerings, that is a good thing, because it works well for everybody. Buying and listening to music on an mp3 does not need to be an intellectual endeavour.

4. Zune WiFi sounds complicated. Although its too early to say, I will venture out on a limb and say that Zune’s WiFi feature will be relegated to geek status and be useless (and too complicated to use, to boot) for the average Joe listening to music on the way to work. What Microsoft is trying to do here? Disrupt? Well, sadly, this won’t do the trick. Not only is the feature useless to most, it also suffers from the chicken-and-egg paradox. You can only broadcast to, and ’socialize’ with other Zune users. But, without a really compelling reason to buy ensuring an instant and overnight success, will there really be other users to share with? Think about it.

5. Talk of a connected, social music experience is BS. Microsoft is aiming to make Zune the first in a line of integrated, connected entertainment products which will make listening to music a seamless and social experience. Will streaming your Zune’s music to your Xbox 360 from across the room, to your 7.1 speakers might sound cool, it isn’t something most people really want to be able to do. The iPod works because it’s simple. It plays music. Some can play video too. That’s all. Plus, Apple invented the only seamless experience that matters when it comes to music, the ability to buy and transfer music quickly and simply. As mentioned in an earlier post in this blog, the iTunes Music store is Apple’s greatest weapon in the entire iPod line.

Bonus Reason. The iPod is a monopoly, or the closest one can get in an consumer electronics product. And as Microsoft knows, monopolies rarely loose, even if they have inferior products at higher prices (which Apple certainly does not).

So now, I would hate to bash the Zune without at least offering what the real iPod killer should (could?) be like. To really innovate, lets think of a problem with the iPod. I have owned one for over 2 years now, a full size 3G 15GB model and it serves me adequately. While its nice to have all music with me at times, especially on long trips, sometimes (while jogging, perhaps), I would definitely prefer a smaller player. Does this mean I have to buy 2 iPods (A nano/shuffle and a full sized one)? Also, even if I have 2 iPods, do I need to sync them separately? My iPod Killer would be 2 devices in one. A full fledged hard disk mp3 player backed by a simple and easy to use music shop. Flip a switch (or press a button) and it will “eject” a smaller, flash based mp3 player with limited built in storage. The smaller player would automatically sync all my favourite songs and playlists while syncing with my PC and thr larger one will hold all my music and video. The smaller player will have~ 4 GB of flash memory and will share few components with the larger player, like the controls, some internal electronics and the headphone jack. With flash based mp3 players getting smaller, with sizes as small as a fraction of the width of a pencil, it wouldn’t be hard to create a player like this electronically. The real challenge would be to make it aesthetically pleasing as the iPod. Anyone out there willing to make a mock-up? Email it to me at alizaki at gmail dot com.

 

Digital Movie Downloads

Digital video downloads have been the flavor of the week for a while now, but things are really heating up now. Youtube is the company to beat these days on the Internet. Grouper, a competitor, sold for $65 million recently to Sony. Even Microsoft is jumping into the act. Google Video has been selling TV Shows for as little as $1.99 each for a while now, but no one to date had really sold feature length Hollywood movies on the Internet in an organized fashion. Until a couple of days ago. Amazon.com, of all the people, launched a new website which enables digital movie downloads. Called Unbox.com, Amazon has pretty much scooped Apple on this one. And I’m sure it hurts.
Its pretty obvious that Apple has been working on a movie download store for a while now. Makes sense if they’re going to introduce large screen, video capable iPods soon (as the rumour goes). They’ve been working with major studios and I’m sure Job’s & Co. have been milking his Disney connections for all they’re worth.

But here’s something curious. Disney is the only major studio that hasn’t signed up with Amazon yet. And apparently, Disney is the only major studio Apple has signed up to date for their own store. Something is rotten in California. Should Apple be panicking now that Unbox.com has launched? How much value does Amazon scooping Apple really have?

Apple’s greatest advantage is iTunes. That is the reason why the iPod took off like nobody’s business. Allowing common folk download legal digital music quickly and simply sparked the iPod generation (Napster was great for techies and college kids, but most folks didn’t have the time or the willingness to use it).

But now the iPod is pretty ubiquitous, including the Video capable model. Any iPod Apple launches with large screen movie support is sure to be a success. So Apple has time on it’s hands to negotiate with the major studios to secure better pricing for us, which is the most probable reason for this delay. Luckily, Amazon doesn’t have the hardware to support their store just yet. End game: Consumer wins(cheaper pricing hopefully)!

This is a good time to talk about the flat pricing iTunes has for its music store, which is what Apple wants for its movie store as well. Frankly, it just doesn’t make sense to me on the face of it. Why should more popular music (or movies) cost the same as less popular stuff? Instead, let a free market be created for digital media. Who knows, new bands (or indie movies) might even profit by undercutting better known ones on price and get heard. Better yet, let users participate in a real time auction for digital media online, with Apple (or anyone else) only releasing certain number of licenses per track/movie per day. Result: You might have to pay $10 for the best song off the new Black Eyed Pea’s album but might just pick up a B-side no one really wants for very, very little. This model could definitely work very well with respect to optimizing revenue for the music industry, especially if only applied to new music, say all tracks released in the last 6 months (After which they are all sold at a flat rate).

Disclaimer: Yes, this model would definitely be againt artistic principal (Yadayadayada), but really, if your band is worried solely about their art, they should be on eMusic, instead of hiding behind Apple’s DRM.