At the iPad unveiling in San Francisco, Steve Jobs announced a milestone for the company he co-founded in 1976. Apple has turned 50… billion dollars in annual revenue. And to kick off its next growth opportunity, its super sized iPod seeks to fill the gap between the smartphone and laptop, a gap that has become an abyss for many.
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Given all the outlandish rumors circulating around Apple’s forthcoming announcement on Wednesday, you probably wouldn’t be surprised to hear that the purported Apple tablet can become transparent and levitate. Indeed, it is otherwise difficult to explain how the device was able to hover above the CES show floor, invisible to everyone’s eyes but prominent in everyone’s imagination.
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The uneasy relationship between digital delivery and physical stores has a steadily improving history. In 2004, as its Virgin Megastores were struggling, parent company Virgin funded Virgin Electronics, which quickly disappeared in 2005 in the shadow of the iPod. (My colleague Stephen Baker is quoted in this CNET-authored obituary.) Nintendo’s Wi-Fi connection took it to the next level, providing connectivity in retail stores for the Nintendo DS, but didn’t provide much differentiation for retailers. And while Apple provides free Wi-Fi in its stores, it instead partnered with Starbucks to offer a customized iTunes store home page that offered lists of recent songs for purchase playing in its coffee shops.
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As flat-panel technologies made TVs thin enough to tempt Jenny Craig into becoming a CE retailer, consumers found that they could not only put them in places that had been impractical before (such as on walls), but also fit more TV into less space. This was further facilitated by the relatively light weight of large flat-panel TVs, which made them easier to transport home from the store or ship from an online retailer. Indeed, according to NPD’s recent 2009 TV Inventory Study, nearly one-in-five televisions that consumers own is 40″ or larger.
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With such relatively minor updates as new color options for the button-less iPod shuffle, and stronger 3D performance for the iPod touch, Apple may have simply tuned the transmission of the iPod hardware lineup at its annual music update last week, but it was pedal to the metal when it came to greasing the wheels of digital commerce for media and applications. The changes included:
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Since 2005, Apple has held an event each September that has provided an update on the iPod ecosystem. Most of the rumors around the possibilities of such an event this year have been focused on an Apple tablet device. However, a secondary rumor has speculated that this year might mark the end of the line for the iPod classic, the most direct descendant of the original hard drive-based 5 GB iPod.
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To butcher the universal application of an old cliché regarding books and their covers, don’t judge an electronic book market’s profitability by its hardware. The industry has been obsessed with guessing the number of Kindles Amazon has sold, but that doesn’t tell the whole story of the device’s success. Since the Kindle is a $300 vending machine for Amazon, it can be a sustainable venture for the e-tailer even if it never cracks the mass market or achieves market share dominance.
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HDMI has attracted criticism for its rapid development causing confusion in the marketplace, but it is simply being pushed ahead of the pace of change in the industry, not to mention competitive standards. These include DisplayPort, which is gaining momentum on the PC side of the convergence equation, and emerging wireless challengers such as WHDI and WirelessHD.
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Apple’s forthcoming iPhone 3G S may have twice the speed and, at its 32 GB size, twice the capacity of today’s high-end iPhone 3G, but it is also at least twice the price now that the 8 GB iPhone 3G will drop to a mere $99. Of course, that’s with a new contract and a two-year commitment to stay with AT&T.
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Apple’s iPod led many to opine that the future of consumer electronics lie in the integration of hardware, software, and services, the so-called “CE 2.0.” I would certainly concur that “beyond the box” solutions — particularly software for unconnected devices that compose the vast volume of the industry — can lead to many benefits such as competitive differentiation and a better overall user experience.
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Consumer Technology | Ross Rubin, Executive Director, Industry Analysis | 
January 28, 2010 2:24 pm | 
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