Apple re-defines the market with video iPods new Macs

Michael Gartenberg | October 12, 2005, 02:16 PM

Like those who reported on the death of Mark Twain and were eventually proven correct when Samuel Clemens indeed passed away, Apple finally introduced their first foray into the portable video player market today. Interestingly the device will be called... "iPod".

We've known for some time that there is strong consumer interest in portable video with sixty four percent of consumers interested in the function (not as large as the interest in music but certainly a market) and I've addressed the issues of video as a mobile task in the past.

Despite that interest and the suitability of video as a mobile task, however, there have been a few hurdles that have plagued adoption. Most notably, they come down to three issues; form factor and battery life, which are both consumer priorities in mobile devices and most importantly, the lack of legal video content.

So why is Apple getting into the game and changing their perspective at this time? Well, they've gotten over those issues. The new devices are both pocketable and have good battery life. If you look at our mobile taxonomy, you'll see the pocketability is an important dividing line for carrying stuff and battery life is a critical feature. Unlike prior devices from other vendors, Apple is focusing on the core music experience first. These are first and foremost iPods, they're not compromising on the music experience in order to deliver on the video and therefore the additive function doesn't detract from the core function. Most importantly, Apple gets over the biggest issue with lack of legal video content. We've argued in the past that Apple would introduce a video iPod but would not introduce one unless there was a way of making mass market content available. By providing premium downloadable content that consumers are interested in through a proven delivery vehicle, Apple now has finally overcome the major barrier that has plagued these devices in the past. In addition, by creating a Macintosh that has synergy with the new iPods, Apple is re-affirming their mission to become the core hub for the digital home, with the best iPod experience to be had only on the Macintosh.

What are the implications for others? Well, Microsoft's assertion that there's a market for portable video has been validated but it comes at a time when there seems to be no energy around the portable media center platform. In addition, Apple validating a market hasn't really helped other players. For example, the iPod Shuffle didn't jumpstart any other product lines when Apple entered the flash market. It does seem now's the time for MSFT to try and re-launch their platform and get some good content into the MSN video service. Microsoft could also make a play for ORB or Slingbox and try and re-define the experience with a focus on contextual access. This still means coming up with a cohesive music and now video strategy to align the various parts of the Windows Media eco-system and present it as a viable alternative to Apple in the hearts and minds of consumers. There's an opportunity here for other vendors as Apple will need to work hard to position the new products with consumers as having even more allure and cachet than older iPods have had in the past and going from a simple message of music to more complex message around music and video. That's a small windows for competitors that have lost one of the last differntiating features they have had against the iPod.