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Apple's 2010 'Music' Event - Evolution, Not Revolution

September 09, 2010

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Apple's annual iPod event saw a significant revision of its range of portable media players and a major revamp of Apple TV and various updates to other entertainment hardware and services.

Apple TV:

  • The new, smaller Apple TV set-top box (STB) will be priced at $99. Unlike the previous models, the revamped STB does not feature a multi-gigabyte hard-disk drive (HDDH); instead, the box which will feature minimal onboard storage and focus on streaming content from a mixture of local and remote (cloud-based) sources.
  • Apple TV will enable AirPlay (see below) and allow access to Netflix Watch Instantly service in addition to YouTube (which was available on previous models).
  • It is understood that the STB, which features the same A4 chip as the iPhone and iPad, will run a version of iOS.

 iTunes 10:

  • iTunes Store now offers television show rental. The new proposition is limited to the US and features content from only a handful of major content owners - ABC/Disney, Fox and BBC America. SD and HD television episodes are both priced at $0.99 each for a rental period of 48-hours.
  • iTunes 10 also features Ping, Apple's new "opt-in" music-focused social network.

 iPod line-up:

  • The iPod Shuffle, is only available with 2GB of storage priced at $49 and has returned to a form-factor similar to the 2nd generation clip on design
  • The iPod Nano will feature a multi-touch screen, and is significantly smaller and lighter than its predecessor. Available in seven colours, the iPod Nano will feature a 24-hour battery life and is priced at $149 for a 8GB version and $179 for a 16GB version.
  • The new iPod Touch, is thinner and brings the most popular iPod in line with this summer's iPhone 4, featuring: the Apple A4 chip, front and back-facing cameras and features a similar 'retina display'. The 8GB model is priced at $229, the 32GB at $299, and the 64GB model at $399.

 iOS: the company detailed the next point releases of iOS 4:

  • version 4.1 (September 2010) brings a number of enhancements to the iPhone and iPod Touch including TV show rentals and Games Center (Apple's social gaming platform)
  • version 4.2 (November 2010) brings iOS 4 to the iPad for the first time (as well as appearing on smaller iOS devices) and will bring with it printing and AirPlay which will allow users to stream music to other compatible devices on the same wireless network(e.g. stream movies or TV shows from an iPad to an Apple TV). AirPlay is not limited to Apple's own CE devices but will also be compatible with devices from other manufacturers. Announced partners are Denon, Marantz, Bowers & Wilkins, JBL, and iHome.

Apple's annual refresh to the iPod line-up brought with a range of expected upgrades (notably, bringing iPod Touch in line with this summer's iPhone refresh, and the long expected update to the Apple TV) as well as a range number of expected updates (the significant change in the iPod Nano form factor and AirPlay).

Of these, the Apple TV has perhaps attracted the most attention. However in many respects the iPod Touch revisions are far more significant. Apple claims that the best selling iPod is now the number one portable game player both in the US and internationally, outselling Nintendo and Sony portable game players combined. Screen Digest estimates that the company has sold almost 50m units of its iPod Touch device to date. The three year old product now accounts for roughly 40 per cent of the total 120m iOS installed base, or 20 per cent of the 275m iPods sold since 2001. This year's line up brings the 'retina display' and A4 chip to the whole range ending the two tier arrangement of last year's models which saw the bottom of the range have a slower processor than its more expensive siblings. The standardisation should help to facilitate the development of richer, more processor intensive applications and help to consolidate Apple's position in portable gaming.

When it comes to the new Apple TV, Screen Digest believes that, despite the emphasis on streaming, which removes the need for complicated file management, and attractive $99 US price point (the UK price is an appreciably higher £99), the device inherits many of the problems of its predecessor. Specifically that it is better suited for playing video from the iTunes Store than it is helping consumers to play movies and TV shows they already have, or even providing internet video service providers a cost-effective means of directly getting to the main living room TV. In this sense the Apple TV remains better thought of as the iTunes Store for the TV, rather than the iPod (or even iPad) for the TV. Tellingly, as of the end of Q2 2010 Apple had only sold around 34 tracks from iTunes per iPod and iPhone over the lifetime of the music store-plus-device product line up. The rest of the music on these highly successful devices coming from other sources. Consequently the new Apple TV may well struggle to attract an audience beyond the Apple faithful much as its predecessor, while some of its streaming features even fall short of the similarly priced Roku, a standalone internet-connect device which offers access to many more streaming services than the new Apple TV, and which failed to capture the imagination of the mass market consumer. The cardinal rule being that internet-connectivity and streaming video services is still viewed by consumers as an additional feature of set-top devices, rather than a reason to spend money on a specific piece of hardware.

Notably, Apple TV lacks a significant point of differentiation from functionality that is increasingly being built into TV sets and Blu-ray players and already being offered to users of the Xbox 360 and Playstation3. Netflix, for example, has become nearly universal on all connected living room devices. Moreover, with Apple making AirPlay available to other CE manufacturers, the device has little in the way of must-have features that are not available elsewhere.

The obvious move would be for Apple to enable apps on the device, but this is far from being a trivial undertaking on the new hardware. The streaming-focused nature of the new Apple TV brings with it a marked reduction in on-board storage which means that local apps may not be viable on the device. In addition the bundled remote with its minimal button lay out is not well suited for apps that require rich and/or rapid interactions (e.g. games). More generally, there are issues that are yet to be resolved revolving around the optimum user interface (UI) for applications (other than games) on the TV set which, with its '10 ft' viewing experience, is likely to require a new paradigm that evolves beyond the PC and the more direct UI of touch based tablets and portables. Apple has a great track record of UI development and Screen Digest would not be surprised if it turns out to be the company that solves these issues in future but this is not the generation to do it.

Find Out More > iSuppli | Screen Digest Broadband Media Intelligence Service

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