Forrester changes its view on Google and the Internet

George Colony, CEO of Forrester Research, has changed his view on Google's prospects. Forrester now has come around to our point of view that Google represents the future of the Internet and marketing. He also notes in his piece another of our points of view: that Microsoft has a lot to prove with its Vista software release to account for four years of stagnation.

Technorati Tags: Marketing, Google, Forrester, Microsoft, Internet

Apple: Downloading video is officially a business

Apple announced today that its iTunes Music Store has sold one million videos in less than 20 days. That's about one-third as fast a ramp to a million as the original iTunes Music Store, which sold a million songs in a week, but those sales were from a music catalog of 200,000 songs. The video store has a catalog of only 2,000 videos, so selling a million copies of those is actually quite significant. Given that video downloading should achieve revenue of about $3 million in its first month of operation, I think it is now safe to say that video downloading is a real business for Apple. Expect to see the company expand the video catalog as it strives to become the first download-to-view TV network.

Technorati Tags: Marketing, Apple, iPod, Video iPod, Apple Movies, Apple TV, Consumer Electronics, HDTV, Steve Jobs, Front Row

SBC's CEO picks a fight with Google

In an interview with Business Week, Edward Whitacre, CEO of telecom carrier SBC, said he wants to make Internet services firms like Google, Vonage, and MSN pay fees to allow SBC's broadband customers to reach them. When asked how concerned he was about Internet upstarts like Google (GOOG ), MSN, Vonage, and others, he said:

How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?

The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! (YHOO ) or Vonage or anybody to expect to use these pipes [for] free is nuts!

Said another way, Mr. Whitacre believes that while firms pay for bandwidth and peering arrangements with SBC, and consumers pay for bandwidth in their subscription fees, it isn't nearly enough. He wants to impose new additional fees to reach SBC customers.

Professor Larry Lessig warned that such a walled garden approach had the potential to destroy the utility of today's Internet in his seminal book, Code. And from a marketing point of view, there's an interesting question to ask here. Marketing is about connecting prospective customers to services you provide. Just how is this approach going to encourage the likes of Google and Skype to use SBC services rather than bypass them? While Mr. Whitacre may feel like he has a monopoly, SBC is far from the only game in town for Internet connectivity, and I would expect such policies to drive a mass exodus of SBC customers -- particularly business customers who pay for very large pipes into their data centers -- to other service providers. And should Mr. Whitacre enforce this walled garden on consumers, they will flee to other broadband carriers like Comcast in no time.

At the end of the day, the outcome of this fight is determined by this question: which company's services -- Google's or SBC's -- do you use more day to day? The answser for most consumers and businesses isn't SBC. If Mr. Whitacre actually imposes these fees, he will discover very quickly that picking fights with your customers is never good marketing.

Technorati Tags: Marketing, Google, SBC, Broadband, Telcos

Sony terrifically colorful Bravia TV ad

Blackfriars commented previously on Sony's decision to market its new Bravia TVs to women as well as men. Now, they've created a rather novel TV ad that should catch some people's eyes, just as Honda's "The Cog" chain reaction built out of Accord parts did. We won't try to describe it other than to say that it is shot in San Francisco with 250,000 colorful cast members that didn't belong to a union. We also suggest you keep an eye out for the frog.

Sadly, though, the British spelling of Colour indicates that this ad is not intended for US TV viewers.

Technorati Tags: HDTV, Plasma, LCD, Advertising, Sony, Bravia, Marketing

Xbox 360 shipments likely won't meet forecasts

Tags: Microsoft, Sony, Games, Gaming, XBox 360, Playstation 3, Marketing

With Microsoft's earnings announcement yesterday, Chris Liddel, Microsoft's CFO, commented about the effects of XBox 360 on future Microsoft earnings. This article in the Seattle Post Intelligencer notes three important points:

1. Traditional XBox sales are falling in anticipation of the XBox 360 launch, causing revenue to fall by $132 million in the last quarter.


2. XBox 360 sales will have a larger negative earning impact than XBox because it is newer and has higher costs to build.


3. Production volumes of XBox 360 will ramp up, not spike with the launch, resulting in shipments of 4.5 to 5.5 million units by the middle of next year

Another way to say this is that Microsoft is losing money in this business, but they intend to launch a new product that erodes its current business and will accelerate losses into next year.

But let's look at that last data point for a moment, because we've been big skeptics (documented in this, this, and this post) about whether Microsoft could actually manufacture these systems in the quantities they have promised. Assuming shipments of 5 million units by June 30, 2006, that's a production rate of about 23,000 units a day. And Liddel explicitly said he doesn't plan to have a "spike" of product at launch, which I interpret to mean, don't expect us to have a ton of product in warehouses in advance. The bottom line: Those numbers imply that there will be fewer than one million XBox 360s available for sale this Christmas worldwide, despite estimates of 1.6 to 3 million.

Now, that's actually good news for the business, since those early units will have the highest manufacturing costs. And high demand and little supply is good for building buzz about a new product (although companies like Apple often get trashed by the press for not anticipating demand when they launch hot products like new iPods or iMacs). But if we take success as winning share from Sony's Playstation franchise, this isn't going to be quite as merry a Christmas as Microsoft probably had hoped.

Whatever happened to that old marketing saw, "Undercommit and overdeliver?"

The Cinema Server for Sony's new film-definition projector

Gizmodo notes that QuVIS now has a Cinema Server that will drive Sony's new 2160p projector at it's full 4096x2160 resolution. That just shows that film-definition systems will be a real market, just as high-definition was, and cinema-definition is now becoming. And if you don't recognize those terms, see Blackfriars' blog entry on defining the high end of high-definition TV. After all, film-definition is a lot easier to say than 2160p.

Technorati Tags: HDTV, Plasma, LCD, Marketing, 1080p, 2160p

Microsoft loses two more key executives

ZDNet notes that Don Gagne, director of development for Microsoft Office, and Hadi Partovi, general manager of the MSN portal are both leaving the company. That's two more in addition to the gaggle noted by Business Week in September.

Technorati Tags: Microsoft, Marketing

Sharp reduces prices on LCD TVs

Sharp announced that it is reducing prices on its Aquos line of LCD TVs starting November 1. The highlights are as follows:
Pricing and availability for the selected models are as follows:

• The 13-inch LC-13B8U-S, previously $499.99, will be available for a Manufacturer's Suggested Retail Price (MSRP) of $449.99
• The 20-inch LC-20S4U-S, previously $799.99, will be available for an MSRP of $749.99
• The 26-inch LC-26DA5U, previously $1,399.99, will be available for an MSRP of $1,299.99
• The 26-inch LC-26D4U, previously $1,699.99, will be available for an MSRP of $1,599.99
• The 26-inch LC-26D6U, previously $1,799.99, will be available for an MSRP of $1,699.99
• The 32-inch LC-32DA5U, previously $1,899.99, will be available for an MSRP of $1,699.99
• The 32-inch LC-32D4U, previously $2,399.99, will be available for an MSRP of $1,999.99
• The 32-inch LC-32D6U, previously $2,499.99, will be available for an MSRP of $2,099.99
• The 37-inch LC-37DB5U, previously $3,299.99, will be available for an MSRP of $2,799.99
• The 37-inch LC-37D4U, previously $3,499.99, will be available for an MSRP of $2,999.99
• The 37-inch LC-37D6U, previously $3,599.99, will be available for an MSRP of $3,099.99
• The 45-inch LC-45GD5U, previously $6,499.99, is available now for an MSRP of $5,499.99
• The 45-inch LC-45GD7U, previously $6,499.99, is available now for an MSRP of $5,499.99

Of course, actual street prices will vary and are likely to be lower than seen here. For example, the LC-45GD5U currently is already available for as little as $3749.

Technorati Tags: HDTV, LCD, Marketing, Plasma

Panasonic 50-inch plasmas hard to come by

According to some information gleaned by people on AVS Forum from Panasonic, demand has been vastly exceeding supply for both the consumer and commercial 50-inch Panasonic plasma displays. That means that anyone planning on giving these bad boys for Christmas ought to get their orders in now. Most retailers are currently reporting stock in 2-3 weeks, but the information posted implies that all retailers will be on allocation.

This also means that anyone looking for predicted but small price declines on these units before the holidays is out of luck. With demand exceeding supply, prices are more likely to be going up for the next couple of months rather than down. It looks like Panasonic's August price cut set up some nice Q4 sales numbers.

Technorati Tags: HDTV, Plasma, LCD, Marketing, Panasonic, Flat Panels

Commercials now being broadcast in high definition

Tags: HDTV, Advertising, Marketing

HD Beat notes that advertisers have started running high-definition commercials on Monday Night Football, and some of the commenters to that article note that they have been creeping into the broadcast stream for some time. This just shows that enough viewers are now watching in high definition to make the added shooting and editing expense worthwhile.

The iPod nano lawsuit: fighting is the right marketing strategy

Tags: iPod, iPod nano, Marketing, Apple

There are a surprising number of press releases and articles about the lawsuit gainst Apple Computer regarding the iPod nano screen scratches. Why is it surprising? Because it is a lawsuit brought by a single plaintiff. While the accuser has asked for class action status, it hasn't been granted yet. Yet, we've got news outlets from CNN Money to the BBC writing articles about this single filing.

The irony of this lawsuit is that it is all about esthetics, not functionality. After all, this is the same product that keeps working even if you run over it with a car multiple times. The lawsuit isn't about whether the product works or not -- it's about whether the screen can be scratched by rubbing it on a T-shirt or with paper towels and thereby is "defective" in design.

I'll note here that in the lawsuit, the plaintiff was offered the oppportunity to exchange his scratched iPod for $25. He viewed this charge as unreasonable and wants to be awarded a percentage of iPod profits in exchange for his claims of defects. Clearly, this is just absurd, regardless of what the law says.

Our opinion: this is a silly lawsuit that should just go away. Apple should simply refund the plaintiff's money in full plus interest (for goodwill), apologize that he is disappointed in its products, and call it a day. Should the plaintiff not accept a full money back guarantee, then clearly the plaintiff has another agenda, and Apple should fight him in court. Marketing is about delivering products to consumers that want them. But when consumers want your product only as an excuse to tap into your profits, that's a completely different story, and it's one that shouldn't earn that consumer anything more than what they spent.

Oh, and if you have any of those nasty defective scratches on your iPod nano, you can remove them yourself with a four dollar can of Brasso.

Google Print is really just good book marketing

Tags: Marketing, Google, Books, Google Print, Journalism

Eric Schmidt wrote an excellent article defending the purpose and business of Google Print and why the AAP shouldn't be suing them. His bottom line (although not in so many words): Indexing is just another form of marketing books to people who want to know their contents. Book publisher marketing departments are always looking for new ways to reach prospective buyers; Google just allows a world-wide audience to find out about authors' books instead of just the few who stumble across them. It's a great and well-written article too!

In many ways, this controversy about Google Print reminds me of the early days of the Web when copyright holders made arguments that no one ought to be able to link to their content without paying royalties. This debate is just one more silly extension of a copyright law that, in my opinion, has far outreached its original intent.

Others start speculating about all-in-one Apple media centers

Tags: Marketing, Apple, iPod, Video iPod, Apple Movies, Consumer Electronics, HDTV, Steve Jobs, Front Row

APC Magazine's Dan Warne in Australia thinks he sees Apple putting all the pieces together to outflank Microsoft in Media Center systems. His view is a little less ambitious than Blackfriars' vision of an all-in-one HDTV system, but it is interesting to see someone else trying to assemble the puzzle pieces and figure out what picture they create. Unfortunately, we'll probably have to wait well into next year to find out who's right. But regardless, you can rest assured that Apple's going to look more and more like Sony as time goes on.

Todd Holmdahl explains why XBox 360 will win

Tags: Microsoft, Games, Gaming, XBox 360, HDTV, Marketing

The folks over at Team XBox have an interview with Todd Holmdahl, Corporate Vice President of the XBox Group at Microsoft. In the interview, you'll hear from the horse's mouth why XBox 360 has no digital outputs (they expect third parties to fill that gap at Christmas) and why XBoxes don't target 1080p outputs (XBox 360 will output whatever component HDTV signal you like, but 1080p is just too small a market, given it isn't a standard).

In case not everyone has a calendar in front of them, XBox 360 launch is scheduled for about one month and two days from now. Given that the target is about 1.6 million XBoxes this holiday season (Goldman Sachs says 3 million -- I say get out of town), I wonder how many are built so far? My uninformed speculation: less than 10,000, and probably fewer than 1,000. Time will tell, though, and we only have about four weeks to wait to find out who is right. But by my calculations, if they intend to ship 1.6 million with only 72 days left in the year, those Chinese factories have to be cranking out about 22,222 a day starting now. Ditto for IBM in cranking out triple-core 3 GHz PowerPC chips -- and they would have had to start much earlier.

LCD display prices to drop 50 percent?

Tags: HDTV, LCD, Plasma, Applied Materials

This isn't a slam dunk, but at least one analyst believes that prices for 50-inch or greater LCDs could drop 50% if manufacturers would standardize on certain sizes and specific Applied Materials equipment.

Tuesday, Applied unveiled the AKT-50K, its latest product for making flat-panel TV displays. Applied says the device will let product makers produce twice as many liquid crystal display screens for HDTV sets as can current gear....

VLSI Research analyst Risto Puhakka says the AKT-50K will give TV makers the ability to make HDTVs in bigger numbers, which will lower their costs. That, in turn, should reduce retail prices and spark more sales.

"We're talking about a 50% price reduction" on LCD flat-screen HDTVs, Puhakka said.

This is just one more shot fired in the flat panel price wars, but remember that the analyst doesn't provide a time frame for this price reduction. Still, as many people say nowadays, it's all good.

Jobs hints at coming Apple attractions

Tags: Marketing, Apple, iPod, Video iPod, Apple Movies, Consumer Electronics, HDTV, Steve Jobs, Front Row

Last week we commented that we thought that Apple has an all-in-one HDTV system in the pipeline, based upon its development of the Front Row interface for the new iMac and Apple's work on video distribution. Jobs gave another hint in that direction when talking to Fortune magazine at the event:

As his company moves deeper into music, video, consumer electronics, telephony, software, and services, Jobs is asked, How does he describe Apple Computer Inc. these days? He responds by picking up the new Apple remote control device and placing it against a giant, peanut-shaped remote that comes with a computer running Microsoft’s Windows XP Media Center Edition PC operating system. The Apple remote, sleek and white and smaller than an iPod, has six buttons. The Media Center PC remote is a handful, with more than 40 buttons. "Apple is a company that takes complex technology and makes it easier and simpler to use," he says, and seems satisfied with his answer.

While this is a bit of a Delphic comment, Jobs clearly aims to take something very complicated and make it simple and usable by a broader audience. To me, flat panel HDTV nicely fits that bill.

"Lost" in iTunes video

Tags: Marketing, Apple, iPod, Video iPod, Apple Movies, Apple TV, Consumer Electronics, HDTV, Steve Jobs, Front Row

I was intrigued by Les Posen's experiment showing iTunes Video on a Pioneer plasma display, so I decided I should emulate him and try out some of the new iTunes video product as well. So I downloaded the first two episodes of Lost from last year and watched bits of them. Despite the fact I write a lot about HDTV, I don't yet own one (running a start-up business tends to discourage toy-buying), so I watched the episodes on my 22" Apple Cinema display at a distance of about two feet. That's about four times closer than I should be for a typical HDTV viewing experience, (viewing distance should be about 3.3 times horizontal screen size), but it is where my chair is.

The bottom line: Les is right. The video is completely watchable. The place where the compression artifacts really show up is during the credits. They get noticeably fuzzy. But that's about it. Even the closeups of people's faces in the pilot episode were fine, if a bit softer than my screen is capable of. But I now have no concerns about whether the iTunes video store is delivering a product people will buy; if people will watch standard definition TV over the air, then they'll watch iTunes video. And without commercials, it's a very absorbing experience.

Apple's future TV network

Tags: Marketing, Apple, iPod, Video iPod, Apple Movies, Apple TV, Consumer Electronics, HDTV, Steve Jobs, Front Row

One of the questions I've heard about my prediction of the Apple all-in-one HDTV system yesterday is "How do you watch TV on it? It has no TV tuner!" I've also seen some commentary claiming that Apple's iMac is "Microsoft Media Center Lite" without live TV or personal video recorder capabilities, and therefore has no chance of succeeding in the market.

Well, Apple could add a TV tuner to an all-in-one system (although the majority of people watch live HDTV through a cable box or satellite controller, neither of which use a TV tuner). But let's assume they don't. How would anyone watch TV on such a system, especially one that might only offer a broadband Internet connection? Isn't that a complete loser?

The first answer is to remember that Apple could use Quicktime streaming to deliver traditional channels of TV over a broadband connection. That doesn't seem terribly interesting from a business model point of view, but would work nicely with a Verizon- or SBC-like carrier with an IPTV strategy.

More intriguing, though, is to return to a post I made a few days ago pointing to an article in ManagementChannel.de. That article had a wonderful 2x2 strategy matrix describing different business model strategies for Apple's video distribution business. Apple chose the "iTunes Music Store" model that allows customers to buy video and TV a la carte. What I think might be more instructive is to consider the box right above that: the book club model, where the customer pays a subscription fee and yet still owns the resulting content.

Imagine that the Apple TV network is simply digital NetFlix using the iTunes Music Store for distribution without any need for shipping DVDs back and forth. Customers would pay a fixed subscription fee to own a number of TV shows and movies -- say 20 -- a month. When they decide they are done with them, the consumer deletes one, and that allows them to download another show. Consumers can retain a show indefinitely, but it always occupies a slot in their subscription if they do that. Consumers who end up watching the first season of "Lost" over and over might decide to buy a copy independent of their subscription, but there is no requirement for them to do that.

So what does watching the Apple TV network feel like? It feels like having a TV channel that only has your favorite shows and movies on it, and plays those shows whenever you want. One subscriber might have their subscription tailored for "Desperate Housewives", "Dancing With The Stars", and "The Apprentice". Another might focus their subscription around classic movies like "Casablanca" and "North by Northwest". Think of the these channels like podcast subscriptions that update automatically and which can be changed at will, all for a fixed price per month. And delivering this experience only requires adding this NetFlix-like subscription system to the iTunes Music Store -- and you can bet that much of the mechanism is already there to deal with for-pay podcasts.

There is one exception in this model that requires something different: sports. Much of the value of sports is seeing events at the same time everyone else is seeing it, not a day later. This is where Quicktime streaming rides to the rescue and allows viewers to see the big game in real time as part of the subscription service or as pay per view.

Do I think this will happen? Not right away. Just getting most of the major TV networks and shows to distribute their content through the iTunes Video Store will be a major negotiating job for the next year or so. The Motley Fool has a pretty convincing business case for why the show creators would want to do this. But once we have a critical mass of TV shows on the iTunes Video Store, the Apple TV network will be possible. The big question is whether consumers want to rent or buy their TV content. We believe that most consumers prefer to own their music, but for the majority of watch-once TV content, renting is better than buying -- and it only makes Apple's position in the market stronger.

My favorite contemporary speech

Tags: Speeches, Apple, Communication, Steve Jobs

A client recently asked me what my favorite speech was, and I replied that my favorite recent one was Steve Jobs' commencement speech at Stanford University from this spring. There's even a podcast of it up on podcasts.yahoo.com. If you haven't heard it, it is both powerful and moving. Further, it only lasts about 15 minutes. It is a great example of how less can be more.

Apple's all-in-one HDTV future: a commentary on the "Just One More Thing...." special event

Regular readers know that I consider Steve Jobs to be probably one of the best presenters in business. I've finally viewed the 90-minute Steve Jobs presentation. Here are some quick comments about the the strategic content. I'll follow that by some comments about Job's mastery of the presentation form as well.

• The new iMac with Front Row foreshadows Apple's entry into all-in-one HDTV. Need a prototype for a where Apple is headed in the future? Look at the 20-inch iMac with the Front Row couch user interface and its Apple Remote, and then think of it built into a 42-inch or 50-inch plasma or LCD display. All they need is a cool packaging, some design work around how to integrate some other sources for the plasma, and you've got true flat-panel home theatre in a box. No one else has that. Don't expect it before 2006 (unless Jobs intends to tee it up in November for Black Friday), but this will be an entirely new category will have Sony, Panasonic, Samsung, and everyone else scrambling to imitate. And better yet, it will get consumers into flat panel HDTV that never would have accepted the complexity of component home theater solutions (see Don Norman's essay on this problem if you don't think there's a market here)..


• Photobooth was way cooler than I thought. Apple took a really simple app to take your picture and made it amazing with built-in flash using the iMac display and special effects. This was clearly just a "delighter" product -- not necessary to the success of the new iMac -- but Jobs sold it as a key Apple difference, and I'm sure it will get more use than people think.


• Jobs shamelessly emphasized marketing. Most company execs don't like talking about how they will market their products. Jobs makes it a centerpiece of his presentations. He knows he has great creative, but he takes that creative one step farther by marketing it as an Apple product. In essence, he is advertising his advertising -- and getting additional awareness and buzz to boot!


• iTunes Just For You will drive new sales. Amazon has had collaborative filtering for years as a way to cut through the tyranny of too much on its store. Now Apple has the same feature for the two million songs and two thousand videos on iTunes. That's smart and good business.


• iTunes TV shows are going to be a huge driver of new Apple business. Disney CEO Bob Iger said that they were looking for opportunities to deliver "more content to more people in more places more often." You can bet every network wants that, and that every TV executive is now booking a flight to Cupertino. Why? Because the new day-after TV show revenue stream is just found money for existing investments. And I doubt a single one will wonder if they should be talking to Microsoft about this. Why? Because if they talk to Apple, they can get a revenue stream in a month or two. If they talk to Microsoft, it will take years for them to catch up with a similar offering. And with Apple's all-in-one-HDTV solution in the pipe for next year, there's huge opportunity for many more revenue streams in the future, including HDTV distribution without the costs of pressing DVDs.

But this content would have fallen flat if Jobs hadn't presented it persuasively and clearly. What I noticed when I watched the video is how much Jobs' presentation craft made the story work.

• Every important message was repeated word for word many times. Very few people notice how much repetition that Steve Jobs does in his presentations, but he makes almost every major point at least three times, using exactly the same words. Most presenters fear repeating themselves, but Jobs knows that this is how you emphasize and drive home ideas for listeners and does it consistently.


• Steve made the theme and three-act agenda create drama around his story. I really liked the way that Jobs immediately told everyone in the audience that he was going to cover three distinct topics. Just standard and great Steve Jobs presentation art. And it perfectly set up the real kicker "One more thing...." theme of the event, which was TV shows.


• The conclusion sold the major message of the event. Kudos for Jobs for not only recapping the major points, but taking time to tell the audience what all the announcements meant in an "Encore" segment. His "Buy it, watch it, bring it" story really tied all the announcements together and allowed the audience to reflect on the entire solution that Apple offered, and compare it to "Buy it, listen to it, bring it" story that Apple was previously telling. It was a terrific way to communicate the importance of what he was announcing, and to get everyone to think about the whole story and not just the parts.

Technorati Tags: Apple, Apple Movies, Consumer Electronics, Front Row, HDTV, iPod, Marketing, Steve Jobs, Video iPod

Apple to become a consumer electronics company?

Tags: Marketing, Apple, iPod, Video iPod, Apple Movies, Consumer Electronics, HDTV

OK, I missed this yesterday, but apparently Steve Jobs made a very pointed reference to the fact that the new remote control that Apple introduced could be the start of a variety of new consumer electronics products. Blackfriars has been speculating nearly all year that Apple may be bringing hits hip style and radical simplicity to HDTV content distribution, but this was the first indication that they might take on the mess that is home theatre today. Could we see an Apple home theatre system in our near future? Our prediction: if it is in the works, we won't see it before next spring; Apple wouldn't want to rush to market with a new product category, and it is already too late for Christmas 2005.

I'm going to watch the 90-minute introduction all the way through later to see if there's anything else I missed. It is available in Quicktime off Apple's site.

Apple's video iPod marketing coup

Tags: Marketing, Apple, iPod, Video iPod, Apple Movies

Apple now sells a video iPod as well as downloadable episodes of ABC's "Desperate Housewives" and "Lost". But a quick look through the Apple Store shows that what Apple actually has done is rationalize their iPod product line. As recently as a few months ago, Apple had five iPod products: iPod Shuffle, iPod Minis, iPods, iPod U2 Special Editions, and iPod Photos. Now, it has three: iPod Shuffles, iPod nanos, and iPods (with video). Further, the price of the new video iPods didn't change, except that what used to be a 20 GByte iPod for $299 became a 30 GByte video iPod for $299.

Our conclusion: Steve Jobs just got international media attention for adding a feature -- video playback -- to the its traditional iPod line. This ability to generate visceral excitement and buzz is what makes Steve Jobs the best marketer in high-tech.

One interesting question will be whether all the color screen iPods are actually capable of displaying video. My bet is that they are actually the same hardware as Apple was selling previously, but that the new ones simply had a software update. It wouldn't surprise me if Apple put up a software updater for the previous 20 GByte and 60 GByte iPods to give them video capability (although no one should come gunning for me if they don't).

Regarding the ABC episodes deal, Steve may have been able to cut that deal simply because of the relationships he has built at Disney through Pixar. It's a terrific way to provide some high-value content to video iPod owners and seed demand for them without any content owner giving away the store. While I doubt video content demand will go through the roof in the short term, I think the price points -- $1.99 per episode -- are low enough and the shows in demand enough that they'll sell a few million downloads before Christmas. And that will be enough for other networks to want to join the fray.

Bottom line: those people who sold Apple stock off today will be really sorry in six months that they did.

More speculation on Apple's video strategy

Tags: Marketing, Apple, iPod, Video iPod, Apple Movies

This German blog does an excellent analysis of how and why Apple might enter the movie distribution business, based upon its 10 million existing customer accounts gathered through the iTunes Music Store. I like his concluding sound bite: "The end of TV as we know it" But what I really think makes his analysis compelling is the 2x2 video distribution strategy table in the middle of the article. Perhaps we shouldn't constrain our thinking that Apple will only distribute movies through an iTunes-like store; that "book subscription" model sounds suspiciously like NetFlix and might be similarly attractive.

High fuel prices already sending shoppers online

Tags: Katrina, Rita, Marketing, Hurricanes, Economy, Taxes, Retail, Shipping, eCommerce

Today's New York Times notes that the high price of gasoline is already driving up Web shopping activity. Blackfriars had predicted this phenomenon last month when we talked about marketing through the coming energy crunch.. But what we hadn't know was just how high the fuel surcharges had gotten on FedEx and UPS shipments: according to this article, ground shipment surcharges are already 3.5 percent, headed to 4.5 percent in November and may go higher in December. Worse, expedited overnight shipment surcharges are already 12.5 to 15.5 percent, depending on the shipper.

In similar news, today's Wall Street Journal notes that even the Fed is preparing for higher inflation driven by the late summer hurricanes. Marketers should be similarly preparing for this new, more expensive economy as well.

The new media mix -- less TV, more online

Tags: Advertising, Marketing, Media Mix

Stuart Elliott of the New York Times today has several insights about advertisers at the Association of National Advertisers reshaping their media mixes away from TV and toward more measurable and targeted media such as the Web. Jerri De Vard, SVP for marketing and brand management at Verizon had some particularly interesting comments:

After her speech, Ms. DeVard shared data on the shifts in the Verizon media mix from 2001 to 2005. Some newer media have increased their share of the company's ad spending. The Internet, for example, now accounts for 11 percent compared with 3 percent, and national cable television commercials are now 10 percent compared with nothing. And some traditional media have suffered as Verizon adjusts its media mix; newspaper ads, for instance, fell to 7 percent from 18 percent and broadcast TV spots to 20 percent from 33 percent.

These changes closely align with the marketing budget shifts we noted in our third quarter report, Marketing 2005: Q3 Marketing Budgets Spike.. But Eric Schmidt, CEO of Google, was unwilling to cast stones at competing media types:

"It's a little bit disingenuous to create an 'us versus them' situation," Mr. Schmidt said, because it assumes "a zero-sum game" when marketers are planning their media mixes. Rather, he said, there is the potential for increased ad spending in all media, new or traditional, because more targeted ads can generate improved results.

"We want advertising to be a growth industry," Mr. Schmidt said, even to the point of wanting more students to study advertising in college, because "it's to our benefit if it grows."

Cringely notes Apple's movie page is marked forbidden

Tags: Marketing, Apple, iPod, Video iPod, Apple Movies


Regular readers of this blog know that we always enjoy Robert X. Cringely over at PBS for his insights on the technology industry. In this week's column, Cringely notes at the very end of his discussion of Google's announcement this week, that going to http://www.apple.com/movies gives a "Forbidden" message instead of "Page not found". While this may not have anything to do with Tuesday's announcement which is rumored to be mainly about new non-video iPods, Powerbooks, and Power Macs, it does bode well for Apple someday announcing its move into video that Cringely also predicted.

Just adding fuel to the fire, Gizmodo reports that the BBC apparently also leaked a video iPod TV ad as well.