Will Steve Jobs' Announcement Steal the Thunder from CES?
January 7, 2007, 1:45 AM
Scott Fulton, BetaNews: It's difficult to speculate about the potential impact of a device whose function we don't know yet; but it's just too tempting to speculate about any device from Apple. So we called upon our frequent analysts Carmi Levy of Info-Tech Research, and Ross Rubin of NPD.
Scott Fulton: The other development is coming out of Macworld, but it’s affecting CES because it might suck the air out of the room, having to do with what Steve Jobs will announce on Tuesday. Everybody expects it will be some type of wireless communications device of some sort, and at the same time, it doesn’t appear that Apple is making any deals with carriers. So that said, it looks to me that this is going to be some type of alternative communications...thingie. I don’t know what to call it yet.
Carmi Levy, Sr. Research Analyst, Info-Tech Research: Apple has shown in the past that it’s been able to develop its own ecosystem quite effectively from scratch. It developed the basic iTunes technology, built an ecosystem around it, they were the first to truly recognize that it’s about three things: the device, the software, and the online store. I don’t really think Apple needs to partner with anyone at least to get it launched, eventually. Apple has enough of a cult-ish fan base that they will gravitate toward this technology, and eventually give it the push that it needs and the initial momentum that will ultimately drive content owners to want to partner with Apple, similar to how they realized that once the iPod was going to succeed, they wanted to be able to sell their content through iTunes.
So when Apple builds it, the rest of the world will eventually come, and I think that will happen with whatever this new device is. I think that model that worked so well for iTunes is probably going to be repeated here as well, and if it ties very closely into iTunes, if Apple leverages its strength with iTunes for this new device, I wouldn’t be at all surprised.
Scott Fulton: Well, in order for that model to work the way it has with iPod and iTunes, Apple would need to be ready to unveil The Complete Service Offering. They would have to do not just the device, but the carrier for the service, the decency of the price—it would need to be a pricing model as revolutionary as 99 cents per song was.
Carmi Levy: Apple isn’t going to launch something that’s half-baked. So either Apple has a carrier in its pocket, or Apple has access to a network that will allow it to deliver the kind of connectivity that other, more conventional wireless carriers are able to deliver at this point in time. So Apple never releases anything that’s half-baked. Version 1.0 is always ready to go, because Apple—unlike Microsoft, which tends to gather steam with versions 2 and 3—likes to hit the ground running with Version 1. So I’m sure Apple’s got answers to all of those questions; the problem is, at this point in time, because we’re simply dealing with rumor and conjecture, we don’t know what those questions really are.
Scott Fulton: Ross, if Apple really does introduce some kind of communications device, be it phone-capable or portable networking or whatever, does that take out some of the air in the room at Las Vegas? Does that actually negate, if you will, what other competitors who are there might have to show, make them "also-ran's?"
Ross Rubin, Director of Industry Analysis, NPD: Well, you know, even though Macworld is in a venue by its relatively isolated from the rest of the goings on in Las Vegas, it’s not an island, and sure, there’s a lot of discussion on the panels at CES, on the show floor, about what Apple has released, and the impact of its products are broadly felt throughout the rest of the industry.
A television kind of product, or a communications device, [from Apple] would be expected to provide a reference standard against which a lot of other products position themselves. So Apple focuses a lot on, what is the right feature set? And that’s going to be especially challenging for a communications device, because these things are notoriously feature-rich, and often that has come at the expense of usability.
Scott Fulton: So you think, if Apple does come up with a feature-rich product, by default, that becomes a standard set?
Ross Rubin: No, not necessarily. Apple focuses on a set of functionality that they believe will best appeal to the segment of the market that best identifies with their brand, with their distribution capabilities, and with the level of ease of use or elegance or design capabilities that they’re known for. So that doesn’t mean it’s the right solution for everyone, clearly.
The cell phone market is a big, competitive, global market, a very big pond. So Apple needs to focus. The product can’t be all things to all people in that market. It’s just too diverse a market, just like the Mac isn’t all things to all people in the PC market, and no PC vendor really has more than generally 15% market share. It’s not quite the same with cell phones, because you do have Nokia with a high global market share, although their US market share is a bit lower. But [with regard to] the approach, we may see [Apple] focus on doing a few things really well, and in a way offering some capability that hasn’t been there before, hasn’t been there at a given price point before, that would be the more consistent approach for them than trying to make it the ultimate do-all convergence gadget.
Then there’s another element here: If you’re going through carrier distribution, which is an issue for all handset manufacturers - certainly all the major ones - you really have two sets of customers: the consumer and the carrier. And the carrier will often have requirements or constraints on features. Now, to what extent Apple incorporates that feedback or whether they can convince...we’ll see, they may be able to convince the carriers that they understand the usage model better, that they’re offering an alternative that will be clearly differentiated, and so therefore shouldn’t be subject to the kinds of constraints they have on other handsets.
Scott Fulton: So carriers are looking for devices which fit a certain niche, and those niches aren’t necessarily at the top. They might be at the middle, where there are certain features we don’t want because we’re looking to fill a particular price point.
Ross Rubin: Or, [carriers could say], “We want support for streaming video...” Verizon could say, “Look, we’re investing in MediaFLO, we want to make a big push on that, so we want MediaFLO chips in the handsets.”
Scott Fulton: So if it needs certain types of DVB-H standards, then Apple would have to play like Motorola and Nokia and Samsung; it would have to adapt instead of...Does Steve Jobs know how to adapt? Has he done that before? That would be a new game for him.
Ross Rubin: Apple’s done a good job of getting the rest of the industry to adapt.
Scott Fulton: It’d be intriguing to watch just to see if it really happens. Thanks, Ross.
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