Daniel Eran Dilger
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What’s Next from Apple: New iPods Sept 22, iPhone OS 2.1, iTunes 8.0

Daniel Eran Dilger
Kevin Rose has been trying his hand at making broad sweeping generalizations about the next generation of iPods, but sorry, no digg. Most of his predictions are not even original, and those that are are so vague that they’re really just worthless. Here’s what you can really expect.

Articles in this Series:
What’s Next from Apple: New iPods Sept 22, iPhone OS 2.1, iTunes 8.0
Two Decades of Portable Macs: 1989 – 2009
The iPod Power Behind Apple’s Big Mac Push
A Product Transition: Giving MacBooks the iPhone Touch
Rose likes to suggest what’s next from Apple, but his guesses only approach reality when they’re based on leaks that occur days prior to an announcement. His flat out guesswork tends to be yet far further removed from reality, indicating that he has no special inside track on things at Apple, nor much of an imagination tempered by realistic appraisal.

A month before the iPhone was unveiled, Rose predicted it would be available from CDMA providers, have a pull out keyboard, and sport two batteries, one for music and one for the phone. Of course, splitting a battery in half is not really a brilliant solution to prevent music playback from running down your phone, but the simple fact that Rose didn’t know about the exclusive deal with Cingular (come on, it was Apple’s only mobile partner to date) and the unlikelihood of Apple tacking on an HTC-esque keyboard makes his guesswork easy to dismiss.

I had imagineered the iPhone as a web browsing iPod (“based on Nokia’s mobile contributions to Safari”) with SMS messaging features, contacts, calendar, and a camera… six months earlier. And CDMA? I recommended Apple “leave Verizon alone and partner with Cingular, TMobile, and MetroPCS using GSM technology.” The difference between my ideas and those from Rose, apart from mine being six months earlier, is that I presented mine as only reasonable ideas with some rationale behind them; Rose insisted he had special knowledge from reliable sources.

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The Real iPod touch Deets.

Now he’s predicting new iPods. The iPod touch is supposed to get “fairly large price drops to distance itself from the $199 iPhone.” Sorry, wrong. The iPhone is only $199 in the minds of consumers. It gets a subsidy from AT&T, which is why you can’t just buy one for $199 and walk out the door without signing a phone contract. The iPhone’s $2,000 service contract offers plenty of distance between it and the iPod touch.

The iPod touch is not possibly going to get cheaper than the iPhone for a couple reasons. First, obviously, it costs nearly as much to make. The lack of a subsidy pretty much balances out its lack of mobile radio components. Second, Apple isn’t desperately trying to sell the iPod touch. It exists as a product to sell to users who can’t or won’t buy an iPhone because they’re tied to Verizon or don’t want a phone.

Rose worries that the iPhone is “cannibalizing sales of the iPod,” but there’s nothing more Apple would like to do than to feed every iPod user an iPhone. Sure the bonehead analysts will have another field day complaining about how there’s only minor growth among iPod sales while they ignore iPhone numbers, but these guys aren’t easy to reach with basic facts.

Apple has been giving away the $300 iPod touch to students buying a laptop; that looks like an effort to broaden the iPhone platform. Apple wants college kids playing iPhone games and interested in creating their own iPhone software. Left to their own devices, most kids would buy the old hard drive iPod Classic because they think they need to walk around with their entire torrent library of stolen music. (Get off my lawn!)

In any case, we all knew the iPod refresh was coming. I’m pretty sure they’re coming on September 22. I’m also pretty sure that the 8GB iPod touch is going away, making the 16GB model the new $199 version. That outrageous price drop, facilitated by today’s cheaper Flash RAM, would kill the remaining market for the hard drive-based iPod Classic, converting Apple’s entire lineup to Flash RAM. Additionally, it would migrate even more iPod buyers into the installed base of iPhone App Store users and hasten the cannibalization food chain that leads toward the iPhone.

The 16GB iPod touch will be sold next to the existing 32GB model, which was just released earlier this year. For that reason, I don’t see a larger capacity model being introduced now. I don’t see tremendous demand for carrying 64GB of music from people who are also ready to pay for 64GB of Flash.

Nano 4: Zune 2007?

Rose says the Nano will get a redesign that makes it look like last year’s Flash RAM Zune; iLounge already predicted this a month ago, although Rose embellished his version with the idea that “the actual plastic on the outside will be curved,” presumably like a TV from the 80s. How nostalgic! I miss having a wildly distorted tube picture, almost as much as a scratchable plastic iPod screen. Oh the good ol’ days.

Will Apple expend significant resources to make the Nano 4 into a widescreen tall/long player and define a new 4GB hardware model to fit into a niche that is only $50 less than the new 16GB $199 iPod touch? How much room for differentiation is there under $200?

Seems more likely that Apple will instead only release a cheaper version of the existing 4GB Nano that’s closer to $99, leaving room for a $149 8GB Nano in between. That will pull Shuffle buyers up into splurging on a full video Nano. If you want to watch video sideways, you can get an iPod touch for $199. What kind of widescreen cinematic experience can you get with a long/tall Nano/Zune? When I reviewed the Flash Zune, one of the complaints was that half (but only half) of the controls reconfigure when you hold it sideways.

Plus, existing iPod Games wouldn’t work in the widescreen orientation; both the display and the controls would be messed up. On top of that, regular video playback would be forced to play back wide, and/or look bad because its stretched. Microsoft has no qualms with playing video in an odd aspect radio, but the iPod is made by Apple, which has some aesthetic boundaries that constrain its behavior.

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Winter 2007 Buyer’s Guide: Microsoft Zune 8 vs iPod Nano

iPhone 2.1

Rose says Apple will also release “iPod touch 2.1 software, iPhone to get update very soon after.” We already all knew the iPhone 2.1 update was coming, and that it’s going to be significant, and that it is due for release around the same time as the new iPods. Whether the new iPod touch will ship with it in advance of the iPhone would depend on whether iPhone-only features in the release hold it up, but Rose doesn’t suggest any special knowledge or rationale behind this claim.

iPhone 2.1 is supposed to usher in new GPS features and the push Notification system, but the real demand for downloading it will be that it fixes a major problem that currently causes third party iPhone apps to crash on launch and randomly when running. Apple needs to get this out quick before it blows the reputation of iPhone software stability in the minds of users. That’s reason to believe that iPhone 2.1 might ship even before the new iPods, rather than the other way around.

Because software developed using the iPhone 2.1 SDK won’t run on iPhone 2.0.x, expect everyone to need to update their software to download a new generation of 2.1-only apps. This will be free for iPhone users, but might incur a nominal fee for iPod touch users due to accounting rules.

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iTunes 8.0

Rose says iTunes 8.0 “it’s a big update with new features,” but doesn’t say what they are. He also says it will be “a real point upgrade” deserving the 8.0 name. However, there is little rhyme or reason to Apple’s iTunes version numbering, and no real correlation between the amount features introduced and the version number increment.

iTunes 2.0 added iPod support after ten months of iTunes 1.0, but iTunes 3.0 only added minor features the next year. It was replaced by iTunes 4.0 a year later, which added the Music Store and AAC support. Two years later, iTunes 5 introduced some cosmetic changes and was immediately replaced with iTunes 6.0 only a month later, without any major new features. Another year later, iTunes 7.0 arrived with a new look, video game support, and Coverflow. It has since seen loads of new features, from support for Apple TV to the iPhone to new iPods and new movie rentals, all of which were only numbered as minor updates.

We’ve had iTunes 7.x for two years now, so iTunes 8.0 is not really ballsy prediction at this point. Of course, Apple is just as likely to skip ahead and release iTunes X. And if iTunes X isn’t ready, we can might even get iTunes 7.8 and 7.9 over the next couple years. Oh my sides.

With the likelihood of entirely new iPod touch or Nano models being quite low (after all, the Zune isn’t going to get a refresh until late next year, and Apple isn’t facing any tough competition at the moment), Apple’s iPod announcement might end up more about a new iTunes than the iPod.

Rose doesn’t make any iTunes 8.0 feature predictions, instead jumping ahead to suggest that Apple is working to make sure Mac OS X 10.5.6 will provide support for Sony’s BluRay, the competition to iTunes that nobody cares about. Hmm. Steve Jobs has so little regard for optical discs that he basically shunned iDVD last year when showing off iLife 08, but now he’s going to resurrect BluRay and excite customers by including it on the company’s laptops, where any resolution advantage it offers over DVD would be nearly invisible? Oh ho ho my sides.

iTunes Unlimited?

The rumor mill is talking about subscription music in the next iTunes. Steve Jobs has opposed subscription music since iTunes got started. He worked for years to convince the labels to let go of the dream of billing users to essentially listen to the radio. Subscription music has always revolved around outrageous DRM that requires the (historically Microsoft PlaysForSure) player to sync up and check in every month or lose its music.

I’ve written up lots of reasons why subscription music was an awful idea that wouldn’t fly. I doubt Apple will actually float it as rumored (“iTunes Unlimited” for $129 sounds awful). However, enough has changed in the last two years to reconsider how subscription music could be delivered. For starters, the iPhone and iPod touch are now wireless, so they can both stream and verify exploding media DRM.

Apple’s iTunes, modern iPods, Apple TV, and the iPhone also now already handle exploding DRM for movie rentals, which blew over last year without any complaint, although it doesn’t look like iTunes’ movie rentals have had a massive impact on the world due to their relatively high price point. Offering movie rentals appeared to be a requisite concession leading up to convincing the movie studios to agree to movie sales in iTunes.

Apple could sell access to subscription music directly from the iPhone and iPod touch that worked similar to movie rentals, and the labels might even allow users to freely copy rental tracks between computers linked to the same iTunes account. Such an arrangement hasn’t found mainstream popularity elsewhere, but nobody else had been able to sell music prior to iTunes either.

While the rumors suggest there could be a discount for MobileMe users, it would be a lot smarter to make it part of MobileMe instead. That would limit subscribers to Apple’s loyal base, easing in the system rather than exposing a brand new subscription service to ten million handheld users and 150 million iTunes users and all but promising another meltdown. At least by making it part of MobileMe, Apple could add lots of subscribers and upgrade existing subscribers to a $99 “unlimited music” additional fee. Keep in mind that all this is highly speculative. I doubt “unlimited iTunes” will fly, as the idea was not leaked but rather simply invented.

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How Apple Could Deliver Workable iTunes Rentals
The Online Music and Movie Rental Myth
Rise of the iTunes Killers Myth

As Long As We’re Speculating…

If Apple does convert its entire iPod line to Flash players, it would make sense to incorporate a new audio codec setting that maximized the amount of songs you could copy into an 8GB player. For years, Apple’s major selling point on the iPod what that it offered massive hard drive storage capacity. Now it’s migrating to Flash, which is more expensive but considerably more shock resistant and suitable for a handheld computer device like the iPod touch. Working to cram more music into tighter spaces would allow Apple to make the iPod touch and iPhone more competitive against a hard drive player. AAC is already optimized for low-bitrate playback.

Apple also needs to add remote functionality for controlling Apple TV to iTunes, just as you can already do via the free iPhone app. And how about direct streaming of content between iTunes, Apple TV, and the iPhone, such as for movie rentals. Currently, to get a rented movie from an iPhone to Apple TV you have to do two syncs involving a middleman iTunes PC.

iTunes also needs to expand on the options for syncing media to the iPod and iPhone. In addition to syncing specific playlists, it should be able to automatically sync over a smart “Party Shuffle” mix of music that fills a specific proportion of the device, such as 50% music, 10% podcasts, and then the specific movies, TV, and audio books the user selects. Then shuffle out the listened to tracks and add new music every time it’s synced.

Allow users to hide songs from iTunes just as you can hide photos from your iPhoto album to simplify the view without deleting anything. Add Time Machine support so you can go back to see earlier play counts and browse your media library as it appeared in the past. Add integrated support for viewing PDFs and other QuickView document types, so you could use iTunes as a metadata-rich document browser with search and playlist features. Or give Preview an iTunes metadata document database interface.

More Music Deals.

Add other corporate sponsors to the Starbucks deal, so you can discover their playing music and buy tunes over their WiFi link. And isn’t it about time Apple and AT&T got together and hammered out that plan to open iPhones to AT&T’s hotspots? I’d debit a 99 cent WiFi access fee from my iTunes account if it were necessary. What’s the point of setting up $8 per hour WiFi services for the zero people who use them? And on that tangent, how about rolling out my Ubiquitous WiFi idea for allowing other mobile users to borrow your AirPort’s WiFi signal?

I’d also like to see Apple get AT&T to allow users to place calls over their WiFi link as a concession for not having a functional 3G network in place yet. I also think AT&T should sell or rent AirPort base stations to its millions of broadband users, with all of them open to WiFi sharing so that iPhone users could place a freaking call and access the web at faster than EDGE speeds between now and whenever AT&T actually gets 3G rolled out.

Apple also really needs to deliver some sort of central media server, possibly tacked onto Apple TV. Just add a USB hard drive and have it serve up the contents as a Bonjour-discoverable iTunes library to your local network. This would allows users to dump all the media off their laptop. And then allow WiFi sync to optionally copy fresh media to the iPhone from the central media server library.

There’s plenty that could be tacked onto iTunes, but the biggest new thing in the iPod announcement actually might be something entirely different than last year’s iPods for cheaper and a new rev to iTunes. I’ll spill that in the next articles, starting with Two Decades of Portable Macs: 1989 – 2009.

Ten Big Predictions for Apple in 2008

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