One could have asked the same question of the iPod in 2001, when there was a similar variety of music players already available. Early reviews suggested Apple's product was simply nothing new, that it just had a bigger price tag. Why did the iPod clean up the market? For starters, it leveraged some key Apple assets:
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•Well designed hardware specifically tailored for its intended use.
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•An uncluttered, simple, and easy to use interface that works well.
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The iPod shares a similar price point and feature set with the iTV. That helps provide some clues of what the iTV will be able to do. Both need primarily to decompress audio and video from a hard drive, but instead of creating output for headphones and a small display, the iTV will use digital audio ports and component video, or its HDMI AV connector.
The other obvious difference between the two is that the iTV has a direct power cable instead of running off a battery. That allows it to to connect with an iTunes PC via wireless or Ethernet, instead of a dock.
That also means the wireless networking on the iTV will have a functional purpose beyond frustrating users with slowly shared, adware wrapped exploding media while the battery quickly dies.
Zing! Snaps on Zune!
That's why the iTV will be much more like an upscaled iPod than a downscaled PC. Microsoft has been trying to resell the PC in the form of MSN TV and the Windows Media Center and is simply not doing so well with that strategy.
The most obvious advantage this gives Apple is a much lower price point. It's rather hard to scale a standard PC down to $299 while providing HD video and optical digital audio outputs. By targeting the iTV directly at its intended purpose rather than lobbing a PC at every problem, Apple ends up with a product that sells itself.
Engineering vs Marketing
The public is so used to me-too style copying that Aperture was quickly dubbed a Photoshop rival until people realized that Aperture wasn't a new Photoshop at all, but rather represented a new workflow tool for photographers; the two products share little overlap.
Auf der Hand
In contrast Microsoft--as primarily a marketing company--takes existing products and tries to sell them as the solution to the problem at hand.
Both efforts failed, largely due to the availability of a cheaper, simpler option in the Palm Pilot. Neither Apple nor Microsoft managed to deliver enough value to a wide enough audience to create a sustainable PDA product. Apple shot too high, Microsoft just sprayed gunfire around randomly, but neither hit the target of price and features to create a product with significant sales.
PC Über Alles
Now, Microsoft is again simply rebranding the failed Toshiba Gigabeat as its Zune. While this is a fast and cost effective way to deliver a product, refiring the same old bullets hasn't proven very successful for the company in the past. The reason: it adds little value for consumers, so they don’t buy it.
Microsoft's most promising product category is the Xbox 360, a custom designed, closed platform that borrows strategies from Sony's Playstation and Apple's Macintosh. While it still makes no money in hardware sales, it at least involves a business model that makes up for those losses with lucrative software sales and licensing.
How iTV will Add Value
Apple doesn't need to “kill” any of those products in order to be wildly successful. In fact, iTV will offer the most value to consumers by integrating well with the products they already use.
Again, consider the iPod: it plays consumers' own CD tracks and MP3 downloads, podcasts, as well as commercial downloads from the iTunes Store. The iPod didn't kill the CD, it embraced it and added value to consumers' existing CD music collections by making them more portable and accessible.
I've identified five categories of content where Apple can do the same with the iTV. Coming up next: the first of five ways Apple will change TV--by adding value to existing content.
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