Can You Hype Me Now?

6:00 P.M. CDT and I am no where near an AT&T or Apple Store.  I am sure that there the Apple Fan Boys in Boulder are going crazy right now with their new iPhones.  Other bloggers are going nuts right now with live reports (link and link) from the lines at these stores.  What is sadder is the thousands of people watching the streaming video of people standing in the lines.

I will be so glad when the hype dies down next week and the tech news returns to normal.  Maybe CNET's Buzz Out Loud can go an episode without mentioning the iPhone.  I love gadgets and bleeding edge technology as much as any geek, but the hysteria and hype surrounding the iPhone is more than a Grateful Dead reunion.

I have to extend my admiration to Apple for their marketing and design efforts.  These guys understand the concept of the whole product.  The iPhone builds on the lessons learned from iPod to redefine what we consider a cell phone. I just received my first iPod a few months ago so I can wait until the second generation of iPhone.  The iPhone has some limitations that need to be addressed before I will buy one:

1. The price needs to come down considerably.
2. The battery should be user replaceable.
3. Open access for third party developers including Javascript.
4. Greater memory for programs and data.
5. MMS support.
6. Better voice quality.
7. Available on other networks like Sprint and Verizon with EV-DO support.

Until they fix these issues, I'll stick with my Samsung A900.  I may have a long wait.

Technorati tags: Apple, iPhone

Lawsuits Gone Wild

So you think that concept patents and intellectual property law suits have not gone far enough?  On Thursday, I read in Forbes and heard on a Wall Street Journal podcast that Adobe Systems, Microsoft, Apple, and Real Networks have received cease and desist letters by Media Right Technologies (MRT) for "actively avoiding their X1 SeCure Recording Control."  MRT believes that because these companies do not use their DRM product that they are in violation of the Digital Millennium Copyright Act (DMCA). 

Talk about stretching application of the law.  Although the DMCA is overreaching in its objective, I am sure that Congress or the music industry (i.e. RIAA) did not intend for it to be convoluted in this fashion.  Who who is next?  EMI for selling non-DRM music through the iTunes Music Store.

Apparently MRT has developed a new business development technique that I am unaware.  If you cannot get a company to purchase your technology, threaten to sue them.  I see this move as a last ditch effort by a struggling company to coerce the big guys into keeping them afloat.  Hopefully the federal judge that ends up with this case, if they even file one, will not waste taxpayer dollars and throw it out.  Maybe MRT should consider hiring a good marketing and business development professional.

CNET News.com article

Technorati tags: Adobe Systems, Apple, Microsoft, Real Networks, DMCA, DRM

Tired of Crummy YouTube Videos

Everyday someone forwards me a link to another pixilated and grainy video on YouTube.  Most of the content are clips from previously copyrighted material, but the most annoying feature is the quality of the Flash-based video displayed.  In this day in age of high-definition video, why must we accept postage stamped size, poor quality video?  Because Adobe's Flash video leads the market in Internet-based video over Microsoft, Apple, Real, and DivX. 

This market lead has led Adobe to believe that they can launch yet another media player to compete against all of the other leading players and new ones like Joost and Democracy.  The Adobe Media Player is yet another video RSS aggregator that will include DRM and advertising.  So how will Adobe differentiate it from all of those other players?

Their only differentiator is the huge amount of web sites already using Flash video.  With the Adobe Media Player, web sites using Flash video can advertise through the player providing other outlet to their sites.  Adobe will line up all of the usual content providers to seed the player/aggregator with content.  But the question remains; do we really need yet another media player?

I have all of the above mentioned players on my machine and I use all of them because not one of them can satisfy all of my needs.  iTunes manages my podcasts and some of my music.  RealPlayer is my primary music library manager.  Democracy Player is my video podcast aggregator.  The only time I use Windows Media Player is when I download WMP-formatted content; otherwise, most web content is played from the web site with the embedded QuickTime player.  I would really like a single player that can do all of those functions so I would not have to chew up all of my disk space and CPU cycles running all of those separate players.

So that brings me back to the Adobe Media player.  How can Adobe differentiate their player from the rest of the fray?  From the announcement last week, I see no features or capabilities that would cause me to download and install yet another media player, and I believe that most users out there will feel the same.  The Adobe loyalists that use CS3 including Flash to design web sites will be the ones to use it.

Adobe has promised high-definition Flash video in its media player, but why bother when there is DivX.  DivX is the clear winner in high quality video over even MPEG-4.  I try to view and download content in DivX format whenever possible.  DivX produced high-definition Internet video before all of the others started jumping on the bandwagon.  This little San Diego company has a great underground following with some mainstream content that they publish through their Stage6 web site.  Visit Stage6 and you will see large, high-definition videos that are worthy of display on your computer or your $7000 plasma TV.  I often use their CODEC's with the RealPlayer to play and manage video.  I create home videos for playing on my computer, web site, or DVD with the DivX codec in Roxio's Easy Media Creator.

The problem with DivX is that it is not as ubiquitous on the web or in DVD as other media formats although many DVD players, TV, recorders, and cameras now support the DivX format.  DivX is challenged not by technology, but by a sound marketing strategy.  They have made great inroads in the consumer electronics market, but they failed to make significant penetrations in consumer content, web video, mobility, and IP-TV/Internet TV.

What markets are left for DivX?  They missed the boat to be the format for high-definition DVD.  Microsoft is leading in IP-TV deployments, and Adobe's Flash dominates the Internet.  That leaves them relegated to yet another video format to fight out a niche content creation market for those people that want exceptional quality video in a small package.  There is a long-shot that they could be utilized as a next generation mobile content format should they seek partnership with their neighbor Qualcomm.  As displays on mobile devices grow and have greater resolution, customers are not going to be content with the graininess from the 3GPP format currently in use.  DivX certainly has a shot to position themselves as a next generation mobile content format. 

Although a mobile strategy has the potential to propel them beyond the $100 million revenue chasm, I do not see the talent within the company to achieve that goal.  DivX will continue on their respectable revenue growth trajectory from software sales and licensing revenue and remain under the $100 million mark for the next few years.  Consumers will have to settle with poor quality Flash video with islands of DivX clarity and portability.

Disclosure: This article is linked to the DivX site where they offered to send a serial number for a copy of DivX Pro although I already have these capabilities through Roxio Easy Media Creator.

Technorati tags: DivX, Adobe, Apple, Microsoft, YouTube

Should Motorola or Cisco/S.A. Be Worried About Apple?

Apple did something very uncharacteristic of them in their much ballyhooed "It's Showtime" event. They preannounced a product two quarters before it will ship. Forget the iPod announcements, the product code named, iTV, has the potential to do what Microsoft could not with Media Center: replace the set-top box. There are other appliance-type boxes out in the market that download and store content for playback, but what makes iTV a serious contender is that it comes from Apple.

Anyone in marketing or technology realizes that Apple has mastered the art of marketing. They are able to gain an almost religious following because they understand the concept of whole product. For those of you not familiar with marketing and product management concepts, the whole product is not just a specific box, piece of software, or service. It includes the whole ecosystem surrounding the product that delivers utility to the consumer. Couple this concept with a coolness factor, add some mystique, and you have a category hit on your hands.

Apple's 75% plus marketshare in portable music players is no mistake. Apple successfully accomplishes what Microsoft struggles to do...they made it easy for the average consumer to buy, store, and play music on the go even with mediocre hardware quality. You do not have to be a computer genius with knowledge of MP3 and AAC encoding, USB, virtual drives, and digital rights management (DRM) to take your music on the go. All you have to do is to plug your iPod into the supplied cables, fire up iTunes, and purchase your music at the iTunes Music Store. Apple takes care of the rest. While the geeks and techies were arguing about DRM, encoding restrictions, and batteries, consumers were downloading millions of songs from the iTunes Music Store. They make cool products. Even the packaging is cool. This attention to design is a must for any consumer product. Apple's marketing genius combined with a thorough understanding of the process consumers use to purchase content makes them envy of any product manager trying to introduce a successful new product in an overcrowded marketplace. You bet several product managers in Redmond are green with envy. It is these magic beans that makes the iTV a potential market disrupter to the set-top box market.

The iTV picks up where the set-top box leaves off. A consumer can purchase this box, available 1Q07, for $299, plug it in, turn it on, and start enjoying rich multimedia on their TV and audio system. No external clunky PC with Microsoft's Media Center is required. Just a nice, neat appliance with a sexy user interface delivering movies, TV shows, music, podcasts, and photos. Nothing from Motorola or Scientific Atlanta even comes close to date. TiVo and Moxy are contenders but they are missing the mobility/portability factor.

Content comes through the iTV's built-in wireless network interface, probably based on 802.11a/b/g until 802.11n is fully standardized, so it can be placed in the entertainment center without trying to figure out how to run Cat5 cable to it. Apple did not disclose whether a hard drive was built in to the unit so I assume that a modest one is included so it could store and display content without the help of another PC. If not, then one can easily be connected through the USB 2.0 port on the back of the unit. Otherwise, media can be streamed from any PC or Mac running iTunes sharing their content. It has component video or HDMI connectors for connecting to a conventional or High Definition TV set.

The user interface is characteristically Apple. It looks like FrontRow supercharged and crossed with Media Center. Movies, TV shows, music, podcasts, and photos on the iTV or any other computer running iTunes are available without DRM worries. You can purchase a TV show from the iTunes Music Store that downloads to iTV but you don't have time to watch it all. Just fire up iTunes on your PC and move it to your iPod. Maybe you can connect the iPod to the iTV. Take that Comcast! I do this all of the time with podcasts. I start listening to them on the PC, then move to the living room where they are streamed to my AirPort Express before finishing them up on my phone while doing yard work.

So what makes the iTV a threat to the traditional set-top box? There are technical, marketing, and business reasons. Let me explain:

1. Apple's ability to sell a whole product or whole solution is a proven formula for success. They provide the complete ecosystem from providing access to the content all the way to enjoying the content in a simple almost non-technical way that brings the product into the mainstream beyond the early adopters.
2. Apple is a name brand with a reputation for cool and quality products. Their reputation for quality and innovation is beginning to surpass Sony's! Can you say, marketing muscle?
3. Movies, TV programs, music, podcasts, and pictures can be enjoyed on a PC, iPod, or iTV. It is truly portable and mobile. The cablecos and telcos are still wrestling with the mobility/portability problem. Verizon is just beginning to lighten up and allow recorded programs to be viewed on multiple TV with their new Motorola set-top boxes, but not on computers.
4. They provide integrated content delivery beyond video. Apple is not dependent on cablecos or telcos to provide access to content. They have their own deals with content providers like Disney. Although this may threaten cablecos and telcos, they are missing real-time content.
5. The iTV is similar to a set-top box so users will immediately understand how to connect it to their entertainment system. No external PC with Microsoft Windows OS that requires constant care.
6. Internet content will now be available on the TV. Listen to downloaded music, podcasts, and video content from the Internet. Only TiVo has this capability now.

If Apple's marketing machine can leverage these benefits without directly taking on the video content distributors, then they will have their next hit on their hands and drive content revenue through iTunes. I know that I will buy one if they do it right. Also, I'll cancel my NetFlix subscription and stop purchasing OnDemand movies.

Adding a tuner and supporting OpenCable Application Platform (OCAP), or minimally CableCARDS, would provide real-time video content that the iTV is missing. With the DVR and on-screen program guide, Apple now has a superior solution to Motorola and Cisco even with their TiVo and Digeo partnerships. The cable companies will quickly jump on the bandwagon because they would no longer have to supply costly set-top boxes; thereby, reducing their capital and operating expenses. This is the objective that they have been driving towards for years. Consumers would love it because they could save on their cable bill and most importantly have a choice where to acquire content. If the cable companies are worried about Apple cutting into their content revenue, I am sure that Apple would create cableco specific branches of the iTunes Music store that integrated with the cableco on-demand content.

I am confident that Jobs and company have already thought of adding these features, and they will include a version with integrated cable with the release of iTV. Apple's understanding of marketing combined with content mobility gives them the opportunity to be the first successful consumer purchased set-top box. Motorola and Cisco have a long way to go to catch up in features and cost. Look for some serious competition in this market in 2007-8.

If Apple can strike a deal with Comcast, I will gladly relinquish my Motorola DCT6412 (soon to be a DCT3412) and move my AirPort Express to the bedroom. Can I have it by February Steve?

All pictures in this article courtesy of Engadget.

Tag: Apple (APL), Motorola (MOT), Cisco (CSCO), Comcast (CMCSA), Verizon (VZ)