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In the original match-up of the PC Titans, it was all Microsoft, but now that the return bout has shifted to personal entertainment gadgetry, Apple is showing some fancy footwork. Microsoft dominates the entertainment PC space with Windows XP Media Center Edition (particularly since they let OEMs ship it in PCs without TV tuners), but the problem is that entertainment PCs are still hanging out in the home office of most consumers and not with the stereo and TV. Meanwhile, Apple hit Microsoft with a roundhouse they didn’t see coming in the form of the iPod personal media player and iTunes music store which knocked down Microsoft and its PlaysForSure hardware partners.
For the next round, Microsoft has been talking tough with its Zune personal media player, but Apple came storming out of its corner yesterday and went right for the living room with a new appliance to bridge the PC to entertainment center gap:
But then Apple made what can only be called a highly unusual move for a company that forbids employees from even speculating publicly about forthcoming products. Jobs unveiled the iTV, a product he’s hoping will bridge the chasm between those movie downloads and the TV set in the living room. Thing is, it won’t be available until early 2007. When released, it will sell for $299.
“Apple is in your den, Apple is in your living room, Apple is in your car and, of course, Apple is in your pocket with iPods,” Jobs told the audience at the San Francisco event. “I hope this gives you a little bit of an idea where we’re going.”
Where Apple is going—or hopes to go—is territory that rivals have so far failed to conquer. Apple says iTV is capable of moving music, movies, and other content from a computer to a television, or another entertainment device. This would be done using wireless technology—probably some variant of wireless fidelity, although Apple didn’t explain further.
And iTV is supposed to work with both Macs and Windows PCs. By itself, this isn’t new other than the promise to support HTDV which will require the bandwidth of some variant of the 802.11n Wi-Fi standard which hasn’t been ratified yet. Indeed, Microsoft currently has two offerings in this area:
Now there’s no claim of HDTV support for the above, but it isn’t like Microsoft left the space empty. The Apple value proposition seems to be like that for the iPod: a simple and foolproof device coupled with simplified video pricing and ordering at the iTunes store.
Speaking of video at the iTunes store, Apple also announced yesterday the availability of a selection of Disney movies (640×480 resolution) via iTunes with further studios expected in short order. (There have already been some complaints of long download times and you can’t start viewing until the download is complete.)
Finally, Apple also raised the bar for Zune with a revamp of the iPod line including brighter screens, more storage, and new iPod video games.
So how does the bout stand? Apple got in a few good punches yesterday, but this round’s not over, much more the fight.
Apple Computer and Creative Technology have agreed to settle their legal dispute over music player patents for $100 million, the companies announced Wednesday.
The $100 million, to be paid by Apple, grants Apple a license to a Creative patent for the hierarchical user interface used in that company’s Zen music players.
Sounds fairly straightforward, right? Wrong – there are some twists:
The patent covers an interface that lets users navigate through a tree of expanding options, such as selecting an artist, then a particular album by that artist, then a specific song from that album, said Phil O’Shaughnessy, a Creative spokesman. The patent applies to portable media players, which includes devices like the iPod or cell phones that have the ability to play music, he said.
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Apple can get back some of the $100 million payment if Creative is able to secure licensing deals with other MP3 player manufacturers, said Steve Dowling, an Apple spokesman.
That’s a nice touch, since Apple in some sense has just validated the patent. I bet the Apple legal staff is just itching to help Creative work on the letters to all the player manufacturers right now. But wait, there’s more:
As part of the agreement, Creative will also enter Apple’s Made for iPod program as an authorized seller of iPod accessories. Creative will be able to affix the “Made for iPod” logo to its speakers, headphones and other related products, O’Shaughnessy said.
You think maybe Creative decided that there wasn’t much future in being a Microsoft PlaysforSure partner in view of the Zune and decided to diversify a little?
Update: For reference, see also the Apple press release.
It wasn’t an announcement. It wasn’t a demo. It wasn’t even a preview. But via an interview in Billboard magazine and a plethora of press statements, Microsoft confirmed the gist of the rumors and ‘fessed up to be working on a family of personal media players and an associated online media purchasing service under the brand name Zune. The best roundup of all of the press sources (official and unofficial) I have seen is from Ryan Block at Engadget. The net: Zune is coming this year and not only targeting Apple’s iPod and iTunes, but also emulating Apple’s business plan:
-The Zune brand is intended to be an entirely vertically integrated end-to-end solution, not unlike the iPod / iTunes / iTunes Music Store triumvirate.- The service and device will not be PlaysForSure compliant, meaning you will not be able to use your Zune player with Napster or Vongo, for example. This will be an entirely new system. Microsoft will continue to support and develop for their PlaysForSure initiative, but all things PlaysForSure are handled by two (sic) entirely separate division that will not have any crossover.
The latter point – that Microsoft’s erstwhile PlaysForSure partners are left out in the cold by the Zune – is one nail that I can never resist hammering (e.g. [1], [2]) and it seems to be quite a popular target:
More on that some other day, but the real and perhaps the only story in the news is that Microsoft’s partners – from device makers to music services – just got double crossed by the company they choose to believe in.
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Let me break this down: Zune – the devices, the platform, and the store/service – will compete with everyone from Apple (of course) to Creative Technologies, iRiver, Samsung, Archos, Rhapsody, Napster, Yahoo Music and anyone dumb enough to buy into Microsoft’s visions of Urge, Media Player, PlaysForSure etc.Microsoft could argue that Zune would be unique and those others can still do business. But it is also a classic example of why Microsoft is lumbering bureaucratic morass wrapped in a can of conflicts. A modern day version of medieval fiefdoms, perhaps? Take for instance, Urge which is built into Windows Vista, and is what I guess you could call an almost integrated experience. What happens to consumers when faced with the choice of Zune or Urge!!! Answer – iPod.
Jupiter Research’s Michael Gartenberg:
Early market share, however, isn’t likely to come from disgruntled iPod users looking to switch. The real losers in the short term are likely to be the likes of Creative, iRiver and other former partners that have failed to deliver to market share from Apple and will now find themselves not only competing with Apple but with their former partners from Redmond.
As uncomfortable as the position in which Microsoft finds itself is (and perhaps also dangerous to other future partnership ambitions as well), going it alone on personal media players is also likely the only way to succeed in that market as Nicholas Carr succinctly explains:
The Windows way worked for PCs because PCs are general purpose devices that become more attractive as more software and peripheral devices become available. An open architecture encouraged the development of lots of software and devices that expanded what a PC could do in ways that customers valued. They were even willing to put up with crashes and reboots and driver conflicts and all the other annoyances inherent in managing complex, heterogeneous systems. A special-purpose device, like a music or media player, is a different beast altogether. Customers want it to do what it’s supposed to do, and do it really well – and look good while it’s doing it. It’s fine – and in fact valuable – to have a lot of compatible accessories, as long as those accessories don’t mess up the internal workings of the core system itself. That’s been the Apple way with iPod, and now it’s the Microsoft way with Zune.
Some folks would argue that the Apple way is pretty good for consumer PCs too, but I digress.
After the startup turmoil gets cleared away and assuming Microsoft can deliver product on time, the question remains whether even Microsoft all by itself can make a credible play in consumer electronics where cool is just as important as functionality. Looking at the bizarre “viral marketing” video at Microsoft’s promotional site, comingzune.com, suggests that they have a long way to go. Who do music fans want to identify with: some weird guy with a rabbit or the folks rocking out in the iconic white earphones ads?
Finally, speaking of Web sites, Microsoft has two employees “Zune blogging” at Madison and Pine and Zune Insider; and spending a few minutes nosing around the web shows that a Zune ecosystem has already started with sites of varying quality like Zune Nation, Zune Owners, Zune News Site, Zune Zone, Zune Info, and Zune MP3 Player Deals jumping aboard for the ride.
Ina Fried at CNET has been doing some digging and that’s what her sources say:
As rumors unfurl about a new gadget upcoming from Microsoft, the company’s Origami Project is starting to take shape as a very small tablet computer, one perhaps affordable enough to appeal to mainstream consumers.
The concept, which Microsoft plans to detail next month, is built on top of the Windows XP operating system but aims to be a new kind of device, rather than a replacement for existing PCs, according to sources familiar with the effort. With a screen bigger than that of a handheld but smaller than a notebook PC screen, Origami devices won’t fit in the pocket, but they’ll make it into purses and even the smallest of backpacks, sources said.
Microsoft’s goal is to create a blueprint for devices that could sell for $600 or less, although the actual prices will depend greatly on what manufacturers decide to include. Origami is capable of supporting features like GPS, Bluetooth, 3G cellular technology and Wi-Fi, though each of these adds to the cost of the device.
That answers my main question as to whether Microsoft was going to build Origami itself or provide a specification for OEMs to build as it did for the Tablet PC and the Portable Media Center. Of course, some will argue that Microsoft would be better off building it themselves as Steve Jobs has observed about the Portable Media Center which has done poorly against the iPod.
As for the Origami box itself, there really aren’t enough details for me to offer much of a critique, but one odd note is the Windows XP operating system. Why would Microsoft launch a new form factor using an operating system that is just about to be obsolete? My guess is that it is actually Windows XP Embedded which would be a natural given the form factor and the inevitable delay before an embedded version of Vista becomes available.
