The iPod touch: great ID meets the robber baron tradition

No doubt about it, Apple's iPhone and iPod touch continue that company's record of high class industrial design.  But if Steve Jobs's taste and focus make for great-looking consumer products, his tightly-integrated hardware/DRM/software business model is more a throwback to the great (and sometimes unfairly labeled) "robber baron" industrialists of the late 19th and early 20th centuries.  Ironically, this business style is about as far from the culture of the Web as any company active in this space today.  I hope Apple's design sense goes on forever, but the days for its business model are numbered.

The touch takes the iPhone, removes the mediocre camera and mediocre 2G GSM radio, and substitutes a Wi-Fi radio, and the maximum memory is a small 16 GB (though that is double the iPhone's).  My son, writing from Rotterdam, had the following reaction to the touch:

... This ipod, the full touchscreen ipod, I've been waiting for so long, it's incredible, exactly what we all wanted - except - 8gb/16gb?  This is next to nothing!  My ipod, the grandpa of ipods from a whole 4 years ago, is a 15gb.  ...

Most importantly to folks in my business, it continues the crippled version of the Safari browser.  Like a TV cable box with parental controls, it lets you access only media on the web that "Dad" Jobs wants you to access -- in this case, the iTunes Store of course, YouTube and one of the newest media companies, Starbucks (see Gerd Leonhard's reaction to the Starbucks announcement).  Only this isn't to keep you from naughty lyrics, it's to ensure you don't use any media that doesn't give Apple a cut.

The paucity of memory on the touch is puzzling, especially when Apple simultaneously released the iPod Classic with 160 GB of storage.  Why limit what you can store on the only device they have that permits paid downloads from iTunes?

On the subject of the Classic's large storage, read Bob Lefsetz's progressive vision of what Apple should do with this storage:

... It’s like we’re living in the twilight zone. The labels are stuck in the nineties and the public is in the twenty first century. Who even HAS 4,000 albums?  ¶  A lot of people. Oh, not as CDs. But as MP3s, stolen from the Net, their friends, their family.  ¶  People WANT music. The labels just can’t figure out how to sell it to them.  ¶  Took them over three years to even deliver it easily online at a reasonable price (2003’s iTunes Store). But, they still haven’t given people what they want. How about a 160 gig iPod PRELOADED with the greatest hits of the sixties? Or the history of dance music? Don’t bother to steal the music, you can get it, for an extra fifty bucks. ...

Link:  Lefsetz Letter.  Right on.  In the end, preloading will win out over even the iTunes Store -- because folks will realize that its superior pricing rationality and security will kill off virtually all piracy.  If the 2007 iPod Classic holds 40,000 songs.  With Moore's Law progression, we'll have a 1 TB iPod in five years.  Will be a nice retirement gift.  Hint, hint.

--Dennis

P.S.:  The picture above (taken at about the same age as Steve Jobs is now) is of "robber baron" James J. Hill, "The Empire Builder," whose railroad's advertising in Scandinavia and then its tracks were largely responsible for getting my grandparents and thousands of others to Minnesota in the 1880s.

Comments

[JJMusic]

It's the perfect combination if you were to ask me. I think ipod really stands out above the rest. With further enhancements, I think other competitors are just way far behind.

[Todd Mundt]

Great piece! The partially-disabled Safari browser and the odd "prison yard" freedom of the Starbucks playground are classic Jobs. The company has made a meager attempt to move beyond DRM, but while it's more than most have done, it's opening the door only a crack.

The locked-down Safari browser is maddening. I can listen to Internet radio with my Treo (which has great CDMA, a bad camera and a special feature that conveniently crashes the software each day), but not with my iPhone. On the other hand, might this be the most "open" phone I've ever owned? Maybe I'm only trading one closed regime for the shared reign of two (Apple and AT&T).

I'm puzzled by the issue about memory size. The smallest and thinnest products in the iPod line require flash memory, as far as I can tell, which greatly limits storage, but seems not to bother many people, considering the sales of Shuffles and Nanos since they were introduced. The non-Apple music player space seems to be dominated by flash memory players, most with much smaller capacity. Those of us who want to carry all of our media all the time (I'm in this category) won't be satisfied until hard drives get even smaller or flash capacity gets even bigger.

[John Proffitt]

Oh, Dennis. Tempting the Apple fanatics with a post that compares Apple/Steve Jobs to robber barons? Let's see if this generates a firestorm of comments! ;-)

I agree that Apple's made a minor misstep here with the iPod touch and iPod Classic. The classic should have been jettisoned and the touch should have been given the hard drive.

HOWEVER... I see Apple's logic here. By making the touch thinner than the iPhone with about 65% of the features, they make it an object of absolute lust for most consumers -- it's thin, light, and frankly, an amazing achievement. And by limiting you to 16GB of flash storage, they encourage two things -- longer battery life due to the lack of a spinning disk AND they more closely tether you to the iTunes system so you have to sync regularly to shift content in and out of the device.

Plus, and this is probably the kicker, they give themselves a growth curve for 2008 and beyond. Next up: the classic goes away and there are two touch-style iPods, one flash (replacing the nano) and one hard drive (replacing the classic). Watch for the line to shift again mid-2008.

Finally, consider parts manufacturing constraints. By splitting their line they give themselves breathing room for manufacturing and can play off multiple manufacturing players against one another for better pricing.

Does it suck, for those of us that know what's missing from these products? Yeah. But most consumers are not as knowledgeable as we are -- they don't really know what they're missing.

My mother ordered an iPod touch the day of the announcement. She will be perfectly delighted with this device and will not see the shortcomings. Apple is selling to a lot more people like her than to people like me, you or your son.

So I agree -- there's one or two products missing here, and I'm not perfectly pleased. What I really want is juuuuuust out of reach. Nevertheless, Apple's pleasing most of the consumers, keeping their own prices low / profits high, and giving themselves a product roadmap well into the future.

As for the robber baron / integrated experience knock, I agree that's an issue. However, only Apple has cracked this nut so far. Only they have made an ecosystem that makes sense to a broad swath of the media consuming public.

And, Apple will open up their services and systems as soon as they need to, as soon as consumers demand it. But for now, what other system out there offers the ease of use that the iTunes/iPod ecosystem offers? Nobody so far. Further, which DRM package beats Apple's FairPlay system in terms of flexibility for the consumer combined with effective (enough) protection for content owners?

I would L-O-V-E to see some competition here. I applaud Apple's efforts and leadership in the media sector. But I'd like some options, too. Too bad the content owners are falling all over each other to see who can attack consumers most viciously and ignorantly. You can have my money -- you really can! -- but you have to play nice with me and make it easy for me to spend my money on your products.