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 Post subject: IT News: New iPod causes rumblings in entertainment industry
PostPosted: Fri Oct 14, 2005 5:32 am 
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New iPod causes rumblings in entertainment industry
Video-playing feature is a reversal for Apple's Jobs


Before this week's unveiling of the new video-enabled iPod, Apple Computer's Steve Jobs was renowned in technology circles for his skepticism about video on portable devices.

Just how ridiculous did he consider the concept? Jobs joked in a conference call with reporters last year that if Apple were to add video to the iPod, it might as well turn the device into a toaster, too.

"I want it to brown my bagels when I'm listening to my music," he said at the time. "And we're toying with refrigeration, too."

His change of heart could have big implications for the media and entertainment world. In addition to announcing its new, video-enabled iPod this week, Apple introduced a departure from the TV industry's traditional business model -- generating revenue not by embedding advertising in the shows but by charging a small amount to download them.

Under Apple's deal with the Walt Disney Co., commercial-free versions of such programs as "Desperate Housewives" and "Lost" will be available for download from Apple's iTunes store for $1.99. The episodes can be played back on a computer or transferred for viewing on the new iPod.

The shows will be available for download the morning after they air on traditional television. Echoing comments by Jobs at the Apple announcement, Disney Chief Executive Robert Iger called it a "breakthrough" deal. It also works to Apple's advantage, providing content for the video-enabled iPod.

But if Apple's new device takes off, as Jobs predicts, it will do so despite a major head start for Microsoft in the area of portable video.

As it happens, Bill Gates had consistently disagreed with Jobs, strongly supporting the concept of portable video. In an interview with BusinessWeek last year, the Microsoft chairman made his point with a reference to a hit film from Pixar Animation Studios, which Jobs also leads.

"I guess Steve's kids just listen to Bach and Mozart," Gates told the magazine. "But mine, they want to watch 'Finding Nemo.' I don't know who made that, but it's really a neat movie."

The Redmond company was already pursuing a mobile video strategy at that point through its software for Portable Media Centers. The devices, introduced in 2004, are available from three hardware makers, but analysts say sales have been sluggish, and consumer awareness is low.

"Never heard of them," said George Kraw, a lawyer taking a jog with a portable satellite radio receiver in San Jose this week. He had, however, read about the new video iPod online, and he was already thinking about buying one.

Microsoft also offers television shows for Portable Media Center devices but in a different way from Apple's business model. A $19.95 annual subscription to the MSN Video Download service lets people download selected programs from such sources as Fox Sports, MSNBC, the Food Network and others.

In general, however, the content on the MSN service is "not as compelling" for the typical consumer as the shows in Apple's deal with Disney, said Michael Gartenberg, a Jupiter Research analyst. "Lost" and "Desperate Housewives" are the top-rated shows on television.

Unlike Apple's, however, the Microsoft software lets people transfer television shows recorded on a Media Center PC to its portable media devices. People can do the same thing with content recorded on their TiVo boxes.

But Jobs himself has been critical of the Windows-based Portable Media Centers. At an Apple event last year, he called them too big and heavy, with a lack of high quality content. At the time, he said he also believed that the screens on portable devices were too small in general to enjoy video content.

"So we think these products are wrong," Jobs concluded. "We think that video may be the wrong direction to go."

So what changed?

Jobs didn't refer to his earlier comments during Apple's announcement this week of the new video-capable iPod. In the year since he made them, however, the concept of portable video has begun to take hold on devices such as mobile phones and Sony's PlayStation Portable.

In addition, the details surrounding the new iPod show that Apple is trying to address the problems Jobs previously cited.

The company's agreement with Disney, for example, begins to solve the content problem. Analysts said it could foreshadow agreements with other major content owners. Music videos are also available for $1.99 per download.

While you can't find "Nemo" on the iPod yet, Pixar is offering some of its animated short films for playback on the device. Full-length films aren't yet available. If the iPod is successful, however, industry analysts say, it could show the viability of portable video and entice the movie studios to offer their films for download through the iTunes store.

Apple isn't limiting the market to its own computers. As with audio downloads, Apple said the videos can be retrieved through iTunes and transferred to the iPod using either a Mac or a Microsoft Windows-based PC.

As for another of Jobs' past concerns, Apple also noted that the new iPod is 30 percent thinner than the previous one, while remaining the same width and height. And on stage, Jobs stressed how good the video looks on the new, slightly larger iPod screen.

He did not say, however, how long it takes the new iPod to brown a bagel.


Initial video content to be available for Apple's new iPod:

ABC's "Lost," "Desperate Housewives" and "Night Stalker"; and the Disney Channel's "That's So Raven" and "The Suite Life of Zack & Cody." Downloads: $1.99 per episode.

Music videos, about 2,000 total. Also $1.99 each.

Six short films from Pixar Animation Studios.

Amateur and professional video recordings, known as video Podcasts, generally available for free through Apple's iTunes service.

Home movies transferred to the iPod from a computer.

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