Some Leftover Thoughts From A Busy Week

Posted by: Arik Hesseldahl on September 07

A few more thoughts on the iPod – iTunes news this week.

1. Someone at NBC-Universal had a very bad week. I’m almost certain that no one at NBC had any inkling that the hugely popular iPod nano was going to become a video-ready player. I’m also pretty certain that they had no clue that the number of video-ready iPods would double from two (iPod and iPhone) to four (nano, classic, touch, iPhone.) Seeing how nearly 100 million TV shows have been downloaded already at $1.99 a pop and that NBC accounted for about a third of the 10 most popular shows it doesn’t take a math whiz to figure out how much walking away from iTunes might cost. With four players on the market including the nano – which historically has accounted for more than half of all iPod sales – now supporting video, we could reasonably be talking about Apple having sold 300 to 400 million TV shows by this time next year. Assuming NBC shows remain as popular as they have, you’re talking gross revenues of more than $200 million, most of which would go to NBC. Or less, assuming the reports saying that Apple wanted to drop the prices for TV shows to 99 cents per episode. Still nothing to sneeze at. I bet NBC comes back to the table and cuts a deal before the year is out. I don’t know anyone buying TV shows on Amazon’s Unbox. (Doesn’t even work with on a Mac!)

2. Apple slapped iPhone partner AT&T in the face. How? With the Starbucks deal. All those Wi-Fi hotspots in Starbucks stores are operated by AT&T rival T-Mobile, part of Deutsche Telekom. Now I can take my iPhone that connects to the AT&T network walk into Starbucks and give business to T-Mobile. The only way it might have been a bigger insult to AT&T was if Apple had put a Skype client on the iPhone and let people use it to make VOIP calls over the T-Mobile Wi-Fi network.

3. I understand all the grumbling about the iPhone price drop, I really do. But… When was the last time the price on a cell phone didn’t drop after a few months on the market? My phone is a Motorola KRAZR from Verizon wireless. I don’t recall what I paid for it when I got it about a year ago, but it was a heck of a lot more than the $49 it’s going for now.

4. Moreover, that apology? It’s all about generating foot traffic in the retail stores. I don’t know about you, but I never spend less than $100 in an Apple Store unless I need something really cheap. During last year’s holiday quarter, the retail segment turned in $1.1 billion in sales and recorded 28 million visitors, or a little less than $40 per visitor. Expect it to go higher this year as iPhone owners wielding $100 store credits go shopping, even after eating the cost of the credits. Between the total refresh of the iPod line, the in-store credit for some 800,000 iPhone owners, and the growth in the retail footprint to 195 stores (by my count) I’d expect retail to have a blow-out holiday season, one that blows out the last blow-out.

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