SEPT. 15 | APPLE COMPUTER AND ITS LEADER, Steve Jobs, have both a relish and flair for drama.
From the company’s habit of confirming nothing until it’s ready to make the “Big Announcement” to Jobs’ “Oh, one more thing” on-stage shtick, they’re masters of the PR moment.
Which makes last week’s Big Announcement a bit of a head-scratcher.
For one thing, they had no real news to announce.
Yes, Apple’s iTunes store will begin offering movie downloads from studios owned by the Walt Disney Co., for viewing on video iPods. But Jobs is the Disney Company’s largest individual shareholder and sits on its board of directors. It would have been news had Apple not been able to work out a deal with Disney.
Or if it had been able to work out a deal with anyone else. But even the widely rumored participation of Lionsgate passed without mention last week, and no one else appears to be rushing to follow Disney’s lead.
For another thing, Apple isn’t really a software company or even an online retailer; it’s a device maker. Its goal in selling downloads is simply to guarantee content to play on its devices.
And the device at the heart of last week’s announcement—Apple’s upcoming attachment for getting content from the Internet to the TV, currently codenamed iTV—won’t actually be introduced until sometime next year.
That’s the sort of place-holder announcement other, mere mortal companies typically make to try to scare off consumers from going with the competition (cf. vaporware), not the sort of thing Apple has typically stooped to.
In this case, however, Apple may have good reason to depart from form.
The race to fill the gap between the PC and the TV—the so-called last 10 feet—is an increasingly crowded competition.
Everyone from Moviebeam, to Cisco Systems, to CinemaNow and Movielink, to Akimbo and, of course, Microsoft (cue shark music) is offering or working on a solution to the last-10-feet problem.
Assuming Internet delivery of video programming becomes a real business—perhaps even some day replacing optical media—whoever controls the connection from Internet to TV will be in a position to act as gatekeeper to just about any content owner seeking access to consumer eyeballs.
With the iPod and iTunes, Apple was the first to offer a secure, end-to-end system for delivering music over the Internet and now effectively acts as gatekeeper to the online music consumer—to the increasing dismay of the record companies.
In the case of video, however, Apple does not have first-mover advantage and may even be trailing the pack.
Movie download services are rapidly adding DVD burning to their offerings, allowing consumers to carry the content from their PC to the DVD player attached to their TV set via “sneaker net.”
Hardware makers are adding Ethernet ports and hard drives to DVD players, making them capable of downloading and storing movies from the Internet while remaining attached to the TV.
Set-top-box makers of all kinds are racing to incorporate hard drives and support for copy-protection in an effort to entice content owners to let them handle downloads.
With the competition already at full sprint, Apple has ample reason to try to slow them down.
ONE REASON APPLE MAY be running off the pace in video is its own decision to change strategies a year ago.
Before Microsoft and Sonic Solutions began pushing their proposal to allow downloaded movies to be burned to a DVD using the CSS copy-protection system, Apple made its own, similar pitch to the inter-industry committee overseeing those efforts.
The Apple proposal was poorly drafted, however, according to sources familiar with its contents, and did not follow the rather Byzantine procedures set up by the committee for submitting things.
It was rejected and, contrary to expectations, never resurfaced.
One theory among committee members was that Apple simply decided to let Microsoft do the heavy lifting, once that proposal was on the table, secure in the knowledge that whatever deal Redmond got, Apple would ultimately get too, by default.
But it now appears the company decided to change directions entirely.
Rather than a download-and-burn model, it has gone with a download-and-beam system, aiming to leap the last 10 feet via wireless networking and iTV.
Perhaps Jobs felt the whole download-and-burn effort was getting just a little too Microsofty—if a deal could not be reached on CSS, Windows Media DRM was the likely fallback position for at least some content owners.
Or perhaps he hopes that the tight link between iTunes and iTV devices (along with video iPods) will allow Apple to establish the same sort of DRM-protected near-monopoly in the movie download business that it achieved in music.
Whatever the game plan, Apple will have to come from behind to win.
