ENTERTAINMENT COMPUTING
Power from the Edge Michael Macedonia
I
n the book iCon (J.S. Young and W.L. Simon, Wiley, 2005, p. 60), Larry Tessler, a former researcher at the Xerox Palo Alto Research Center, recounted the now-famous story of 24-year-old Steve Jobs’ first encounter with the Xerox Star workstation in 1979. The computer, which had a graphical user interface, a mouse, and an Ethernet connection, became the inspiration for the Apple Lisa and later the Macintosh: Then when he began seeing things that I could do onscreen, he watched for about a minute and then he was just jumping around the room, shouting in the air, saying, “Why aren’t you doing anything with this?! This is the greatest thing! This is revolutionary.”
Jobs’s epiphany involved no less than an instant awareness of the personal computer’s future and destiny. That awareness provided him with a strategic vision for Apple. Yet, in his pursuit of that vision, Jobs learned powerful lessons that the iPod embodies today. Both Lisa and the early Macintosh were brilliant failures. Outrageously expensive, the Lisa sold for $10,000 when consumers could buy the IBM PC for only $3,000. The Macintosh benefited from daring and aggressive marketing, such as the famous Orwellian 1984 Super Bowl ad that directly attacked IBM’s perceived stodginess and conformist tendencies. Yet Apple lacked the expertise to back up its promotional flair—the early
nents. Edge devices connect users into service provider networks (www. networkdictionary.com/hardware/ edgedevice.php). The most ubiquitous example of an edge device is the cell phone. In 1997, only 200 million mobile phones had found their way to market. Today, more than 2 billion are in use worldwide. The mobile phone has driven huge advancements in storage, such as flash memory and micro hard drives,
Apple’s new iPod video technology may soon leap to cell phones. Macs performed poorly and lacked third-party applications. Like Napoleon at Elba, Jobs found himself forced into exile for these failures, only to return more than a decade later to rescue Apple in 1997. In 2005, he again graced the cover of Time, promoting the newest version of the iPod, which now includes video playback capability. After repeatedly denying it would do so, Apple announced a new iteration of the device in October 2005. Jobs had said as recently as September that “We also offer video podcasts, but will people buy a video device just to watch this video? So far they haven’t. No one has been successful with that yet” (www.computerworld.com/ softwaretopics/software/story/0,10801, 104803p2,00.html). This statement reveals Jobs to be a grandmaster of computing-world marketing strategy. It says less about video’s importance and more about the iPod’s role. The video iPod provides an evolutionary product for a disruptive marketing concept that delivers power from the Internet’s edge. Key to this strategy is an understanding of technological and cultural velocity. The iPod directly exploits the development of edge devices and compoPublished by the IEEE Computer Society
power management, processors, and organic light-emitting diode displays.
APPLE’S VIDEO MARVEL Leveraging these advances, the video iPod comes in two different configurations: 30 and 60 Gbytes, with a 2.5-inch screen that supports a 320 × 240 resolution and 260,000 colors. The 30Gbyte version is 30 percent thinner than the 20-Gbyte model it replaces, while even the 60-Gbyte model is 12 percent thinner. The two versions carry a price tag of $299 and $399, respectively. The iPod line, shown in Figure 1, does not offer the most innovative media players, nor are the devices unique. Other companies, such as Creative and Sony, have introduced MP3 and handheld video players such as the PSP in advance of the new iPod. But—as Jobs learned with the Macintosh—timing is everything. The technology had to be a commodity so that Apple could tap multiple suppliers and leverage technology that was no longer just proven, but actually cheap to make.
Convenience is key Another key to Apple’s strategy follows Robert Pittman’s advice. AOL Time Warner’s former cochief operatDecember 2005
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Entertainment Computing
Disney, a huge media distributor. To maintain this momentum, Steve Jobs announced earlier this year Apple’s move to Intel processors. The rationale again had many dimensions. Laptops are the largest component of home computer sales. Yet, Apple’s PowerPC Mac laptops were falling behind in performance and used too much power. Intel’s Centrino chips excel in these areas and in wireless communications. In Apple management’s vision, the laptop forms only one part of the content delivery chain to the iPod. Therefore, it must be a commodity item—cheap and with Apple software automatically bundled with it. The final element in Apple’s strategy is the Internet. The chain of distribution begins with large media servers that communicate with PCs and then the iPod.
CELL PHONES KEY Figure 1. Apple’s video iPod. In addition to providing mass storage for songs and audio programs, the video version allows download and playback of movies and television programs. Photo courtesy of Apple.
ing officer observed, “People will only change their behavior if it’s more convenient to do so. Which is why, for example, people will only download paid music and videos if it’s easier than trying to do it for free.” Figure 2 shows that Apple has focused on a simple user interface for both its iPod and iTunes music software, making the price of a single download only $0.99 for each song and $1.99 for each TV program. Apple also made using its digital-rights management software relatively painless by allowing multiple copies of music on CDs and PCs. Apple also understands the direction of its market’s culture. The U2 version of the iPod has been a marketing hit. Artists like Madonna now release iPods with their entire music collection preloaded onto the device. Apple’s deal to get ABC TV shows 124
Computer
has proven a major coup at many levels. First, it signals the moderation of a long-running dispute between Steve Jobs and Disney’s owner, ABC. More importantly, TV shows without commercials are only 20 to 40 minutes long. This makes their iPod download time less than six minutes on a broadband connection and lets them fit easily on the iPod’s hard drive. The TV shows can be downloaded the day after the evening broadcast. Perhaps more importantly, episodic TV can be watched over and over again—hence the success of the Friends comedy series on DVD. As for the viability of video on a small screen, if you travel by plane at all these days you’re likely to see a plethora of video devices.
Maintaining momentum Apple has become, like Sony and
Computing’s future lies in the ubiquitous cell phone. According to Reuters, Microsoft Chairman Bill Gates said in May 2005 that he would “bet on the mobile phone for sure” as the mobile device that will eventually emerge as the best for listening to music (http://news.zdnet.com/21001040_22-5704861.html). Apple covered this bet when it allied with Motorola to introduce the RockR cell phone. This product does not replace the iPod. It only holds 100 tunes, which must be downloaded from a PC instead of the Web. Yet it provides an opportunity for Apple to gain a foothold in the mobile phone world. The potential is huge for its new media distribution business. Only 30 million iPods have been sold to date, compared to billions of cell phones. The advancement of microdrives, flash memory, and broadband wireless is rapidly resolving the current cell phone limitations of storage and bandwidth. For example, annual shipments of 1-inch diameter hard-disk drives nearly tripled from 8.7 million units in
Figure 2. iPod applications. Leveraging one simple user interface, the iPod offers users music and TV program downloads as well as home video and photo storage and playback. Photo courtesy of Apple.
2004 to 23.2 million in 2005. This number will increase to 140 million units in 2009, according to The Information Network, a market research company. This represents a compound annual growth rate for the total period of about 75 percent (www.storagepipeline.com/news/1686 01126). Former Sun president Ed Zander, now CEO of Motorola, has laid out the road map for his company’s broadband services: “Our 3G phone hits the market in the fourth quarter. It’s small. Last year, the 3G phones were clunky. It will enable applications like video. People are exploring things such as WiMax, which transmits high-speed data as far as 10 miles using radio waves. Alternate networks will drive new applications, especially for WiMax, in rural areas. It’s not one winner” (www. mercurynews.com/mld/mercurynews/ 12798230.htm). Competition for this evolving market includes Google, led by another former Sun alumnus, Eric Schmidt. The company is pursuing a radically different content distribution strategy: In this case, it offers the content for free—accompanied by paid advertising—and delivers it by lightweight Web clients from any device via its massive server farms.
iven Google’s Web-centric world view and Microsoft’s everythingfor-everybody approach, we can anticipate a clash of titans that will attempt to execute distinctly different strategies in the computing world. The real winner could be an Apple product that can deliver TV shows and music to your cell phone—controlling the
G
distribution channel—and wrapping its customers in its proprietary digitalrights management system. Call it the strategy of power from the edge. ■
Michael Macedonia is a member Computer’s editorial board. Contact him at
[email protected].
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