Nearly everyone who has had a chance to use Apple's newest, video-enabled iPod has fallen in love at first sight, myself included. Like the original music player of 2001, the new iPod does things that others have done before, but it does them vastly better. How is it that Apple manages to stay so far out front in the hotly competitive field of digital entertainment?
I think there is actually a surprisingly simple answer: Apple Computer's (AAPL) products and services are designed with the single overarching concern of delivering a great consumer experience. I'm a big believer in digital video in all its forms, but my experience with download services and portable players has been mostly awful.
BIGGER SELECTION SOON. Until the iPod, the most sophisticated products were players from Creative Labs (CREAF), Samsung, and others built to Microsoft's Portable Media Center (PMC) design. There are two ways to get video into a PMC: You can record TV shows yourself with a TiVo (TIVO) or Media Center PC, or you can subscribe to one of several services that offer second-tier content. For example, Comedy Central offers several programs for the PMC, but not the popular South Park and The Daily Show. There is no single place to buy content. And the process of getting the video from your PC to the portable player isn't terribly intuitive. No wonder sales of these products are minuscule.
After the music iPod came out, buyers had to wait a year and a half before the iTunes Music Store began selling downloads. Now the video content is available from the get-go. The iTunes Store offers hundreds of music videos, movie trailers, a bit of original Pixar Animation Studios (PIXR) content, and -- most important -- five top-rated TV shows from ABC and the Disney Channel available for download the day after they air.
Getting these shows requires two simple steps: You download the video to the iTunes software in your PC or Mac, then you transfer it from the computer to the iPod. And while the initial content is limited, it won't stay that way for long. Greg Joswiak, Apple's vice-president for iPod marketing, says Disney (DIS) is the only player right now simply because it is the only studio Apple told in advance about the video iPod.
Lovely as the new iPod is, keep in mind that it is still a device small enough to slip easily into a pocket. That means you're watching TV on a 2.5-inch display while holding the player in one hand -- not the world's greatest viewing experience. But watching video is not limited to that tiny screen. You can watch iTunes video on your PC or Mac. And with an optional $19 cable, you can connect the iPod to a TV and watch on a big screen.
SOWING THE SEEDS. The iTunes video is 320x240 pixels, about a quarter of the information in a DVD-quality image. When I connected the iPod to 19- and 27-in. standard TVs, the picture looked about as good as a broadcast. It was grainy and fuzzy on a 32-in. high-definition liquid-crystal display -- but that's just for now. Over time, as network connections get faster and studios grow comfortable with the idea of high-quality downloads, high-resolution versions will become available.
Perhaps most important, Apple has again done consumers a service by playing the trailblazer, persuading a top-tier studio to provide good content despite its fears of piracy and disruption to its distribution model. Competitors, especially Microsoft (MSFT), won't just back off while Apple locks up the video market, but they face a big challenge.
In digital entertainment, with so many irons in the fire, Microsoft has been unable to duplicate Apple's single-minded focus on consumers. The software giant's partners, mainly engineering-driven Asian manufacturers, design great hardware. But so far they haven't been able to match Apple's user-friendliness. Looks like Apple could be in for a good video ride.
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