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The Trojan iPod
September 14, 2007

Steve Jobs once said that Apple was actually a software rather than a hardware company. What he meant was that Apple built hardware that accommodated Apple software, which in the early days was only Apple’s computer operating system. 

Arguably the iPod continues the tradition of selling hardware to accommodate software (iTunes music management and store) although now they do not limit their software to just their hardware. And the business of selling iPods is a good one way more so than was ever true of Apple’s computer business (75% MP3 player market share versus 5% personal computer market share.) But I think the introduction of the iPod Touch may be designed to take Apple in yet another completely different direction and if so they might just pull it off.

If you know iPods you know they are designed to “receive” but not “give” meaning you can send music to them from your computer but cannot send music from them back to the computer or to other iPods. But now we have the Touch, a de-phoned iPhone iPod and besides bearing little or no physical resemblance to other iPods it turns out these are “givers” as well as “receivers.” With Touch the user can access the iTunes store via Wi-Fi and buy anything they wish, storing their purchases in the Touch 8GB or 16GB internal memory later downloading what they bought to their computer. In other words exactly the opposite of the way things have worked in the past.

So why the change?? And while we’re at it, isn’t such an elegant product with only 16GB of storage, a step backwards particularly for a product whose software is designed to manage one’s large music, photo and video libraries?? I have a theory.

My 4^th generation 40GB iPod currently holds just under 9,000 songs all but maybe 15 or so of which were mine from my CD collection. Try as they might, Apple has just never been successful getting me to buy music from them. There are many reasons for this but maybe they think one of them is that I haven’t found the process convenient enough to do so. What if they were to give me a device that allowed me to connect to the iTunes store directly from my iPod via Wi-Fi with the extra incentive of being able to do so at no cost while at Starbucks? And like no other iPod this one would include all the elegance of the iPhone. The one catch would be the limited internal storage but hey, they might reason, maybe I would give up loading all my own music and would instead use the space to temporarily house my iTunes store purchases before transferring them to my computer. In other words instead of selling me a device whose main function was to serve as a portable repository for my CD music they would sell me a device whose main function was to make buying iTunes music much easier than is currently true. Were I and millions like me to do that Apple’s music sale revenues would increase significantly meaning they would have become a ___ company.

Use your imagination regarding the end of the previous sentence. We know Apple as a computer company and increasingly a consumer electronics company but what will we call them should they succeed in selling considerably more music and video content than has previously been true?? And if that happens what will happen to those who currently sell the bulk of music and videos we all listen to and watch??

The latest generation of iPods may just be the Trojan horse (iPod?) they ride to make that a reality.

Bill Matthies is the president of Coyote Insight (www.coyoteinsight.com) and can be reached at (714) 726-2901 or wmatthies@coyoteinsight.com

Posted by Bill Matthies on September 14, 2007 | Comments (0)