Apple TV’s next moves?
Before the Christmas holiday, rumors of Apple’s overtures to the networks abounded like so many visions of sugar plums. Journalists and bloggers posited about the effect of Apple’s entrance into the subscription television market. Most of the analysis was solid. The Seeking Alpha blog featured this succinct write up. Most expect a successful Apple offering would threaten cable and satellite subscription models. Others note that an invigorated Apple TV could put the pinch on the Netflix Roku service. Light Reading’s Cable Digital News noted the following.
While cable operators likely won’t face an immediate threat from the subscription service Apple Inc. (Nasdaq: AAPL) is purportedly pitching to major content suppliers, the offering may instead put the hurt on over-the-top video service providers like Boxee and Roku Inc.
It should be noted that Apple TV employs a hard disk. Content is downloaded before it’s played. Roku receives streams, so it’s a lower cost, lower footprint device. Most importantly streaming allows more delivery flexibility. Netflix doesn’t care whether I watch my content on a PC or a TV. Apple TV is anchored to a television. While an iTunes account can be managed from multiple devices, content needs to be downloaded to each to play it. Even with improved progressive download performance, this model has its limitations. One blog noted that a full season of an HD network television series can take up to 50 GB of hard disk space. So there’s a limit to how much content can be delivered to an Apple TV.
For Apple to leverage the strong iTunes brand it has to unhitch content from the device – a fundamental change in business model for a device manufacturer. But if any company has shown the ability to adapt to the digital media marketplace of the early 21st century, it’s Apple. If Apple succeeds at getting content deals in place, I expect a next-generation Apple TV to emerge shortly thereafter.
Apple, iTunes, and the cloud
A small, but interesting tidbit. Word has leaked that Apple has agreed to acquire the hybrid streaming-download music service Lala. Unlike other streaming services, Lala is not subscription-based so it fits nicely into Steve Job’s view of the online music world. Lala is more of a cloud-based iTunes. If you keep your music on the cloud and stream it, you pay 10 cents to add it to your collection. Downloading a song costs 89 cents. Lala also has a nifty technology that allows the user to upload his MP3 library to Lala. Any song in Lala’s catalog is linked to the Lala version, others the user can upload for free.
Assuming a proliferation of music playing devices with inexpensive Internet connectivity, the deal’s a no-brainer. It accelerates iTunes’ much needed migration to the cloud. You gotta love this business model from the consumer’s point of view. “Let me get this straight, you’ll store, backup, and manage my music collection on your storage with your infrastructure for 10 cents per song, or I can take on the hassle for 89 cents per song.” Apparently the model works according to a Wired article.
This Lala acquisition could also help iTunes increase its revenue-per-user. Steve Jobs admitted in 2007 that the average iTunes user had only bought an average of 22 songs. By contrast, Lala CEO Bill Nguyen told us in October that its paying customers spend an average of $67 on Lala music…
And don’t forget all of those wi-fi capable iPods to be sold.
Where Cisco wants to take video
Cisco’s acquisition of Pure Digital, makers of the Flip video cameras came as little surprise to the digerati. What Linksys was to wireless home networking, the Flip is to consumer video. Good enough, simple, and inexpensive.
Cisco made its name as a big iron networking powerhouse. With its heavily publicized purchase of Linksys the company bought its way into home networking. And with its less heavily publicized acquisition of set top box maker Scientific Atlanta, Cisco gained control of another digital gateway into the home.
So why would a networking company want into the acquisition business? GigaOm has written extensively on the purchase – the reasoning behind it and whether Cisco overspent.
Cisco is just the company to make video accessible to all. Every household has at least one camcorder. Mostly it sits idle. Acquiring the video is easy enough – hit record just as granny is about to blow out the candles or the cat is about to flush the toilet. The moment can now live forever on tape, disk, or flash media. Therein lies the problem. It’s cumbersome to do anything with it after the material has been recorded. Cuing up the media to show to family and friends around the flat panel is a pain in the neck. Editing and distributing the video online is a similar pain, just head south 36 inches.
The Flip camera solves half the problem. With its USB port, the camera can attach itself to any Mac or PC. Now comes the scary part for a guy who makes his living designing editing software… The Flip camera comes preloaded with all the editing software the consumer needs. Plug the camera into the computer, and it prompts the user to install all the necessary software to edit and publish his video online. The FlipShare software doesn’t compare to Pinnacle Studio or iMovie, but it doesn’t have to. It’s so easy that people will actually use it.
Cisco has the capability to solve the rest of the problem. As GigaOm noted, it can eliminate the computer. Shoot, push to the cloud, and edit on the cloud. No Macs. No PCs. What Polaroid did for photography 50-some years ago, Cisco can do for videography. It can make it instant, inexpensive, and fun.
Cameras preloaded with editing software will be a minor disruption to business as usual. Editing on the cloud is where this is all going, and the industry will be turned on its head.
New MacBooks and MacBook Pros
Nice updates all. Speed bump, RAM bump, nice Nvidea card, and the very elegant new track pad. For about a year and a half, my main box has been a MacBook Pro with a 2.16 GHz Intel Core Duo and 2 GB or RAM. When the Intel-based MacBook Pros were first announced, I wrote an article for DV Magazine exploring whether that generation of laptop could do serious studio work in the high definition era.
With outboard I/O solutions like Io HD and the Matrox MXO (output only), and an Express34 eSATA card, the machine has chugged along quite nicely. I’ve only missed my towers when compressing large amounts of video to H.264 or MPEG-2.
A couple more gigabytes of RAM and a 25% quicker processor makes for an even nicer notebook. I had been in the market for a Mac Pro — mostly to assist in compression, but it would also take over as the primary Final Cut Pro or Avid box. The older tower would be put out to pasture on eBay.
Now I’m leaning towards adding a new MacBook Pro. Compression can be sped up with some network rendering. And another laptop adds to our flexibility — one more mobile editing system for location work or on-site consulting. The kicker is that notebooks hold their value much better than towers after 2 years.
Cringley’s wedding bells: Apple and Adobe
Cringley’s always a good read, often a good chuckle. Today he posits Apple will buy Adobe. Great headline, but not likely. Cringley likes to write about Steve and Bill, and his other schoolyard chums, but those guys still have to answer to their boards. And why would Apple’s board want Adobe?
Adobe’s stock has been flat for two years. It’s quite possible its core content creation market is near saturation. The margins on software upgrades are nothing like the margins on new licenses.
Adobe’s a smart company. It will do fine as it reinvents itself. That’s why Adobe’s going into the IP video space (Adobe Media Player) and software over the web space (Buzzword) with such energy.
So let’s go to the charts. It’s apparent that Apple is on a roll, and that if it had $20+ billion in spare change, that it would likely want to buy the next big thing, rather than the last big thing. I’m not saying that Adobe’s best days are necessarily behind it, but Apple could surely find something cheaper with as much upside potential.
Cringley doesn’t make his case well with the old “the Mac is the dongle” argument.
Some readers may know what a dongle is. For those who don’t, a dongle is a sort of electronic key that plugs into a PC to enable the use of some expensive software application like AutoCAD. Each copy of the app comes with a single dongle so you can put the software on as many computers as you like but only one — the one with the dongle installed — can function at a time. Dongles, which are rarely used today, were an early and quite effective form of copy protection. Apple uses a variation of the dongle technique for its professional applications, but in Apple’s case the dongle IS the computer. Yes, the software is a good value but you have to buy a computer from Apple — a dongle — to run it on. So Apple runs its professional application business effectively at breakeven, making its profit on the associated hardware.
If that’s all Apple is doing with ProApps, running it at break even, then why the rumors that Apple was entertaining bids for the unit? Apple doesn’t think of itself as a computer company any more. It’s a consumer electronics and media distribution company these days (that happens to make a hell of a personal computer). iPods and iTunes sell way more Macs than Final Cut Pro. So that argument is a little thin.
In a perfect world, Apple would love to control Photoshop, Illustrator, InDesign, After Effects, and Flash. But it’s highly unlikely it will pay all that money to do so. Does it really want to support all those enterprise clients with Acrobat?Interesting read, but I’m confident Adobe will remain independent for some time to come. I think it’s more likely Adobe would buy ProApps.
