Notes and Observations Regarding Yesterday’s ‘Let’s Rock’ Apple Special Event

Overall Scope

The overall takeaway from yesterday’s news is that Apple’s music and iPod business is right on track. There was nothing exceptional or particularly surprising, but the incremental improvements and changes were significant. A solid year’s worth of progress.

One thing that wasn’t mentioned, though, and which has figured prominently in past music-related special events, was growth. In past events, the overview of iPod sales has included charts showing tremendous year-over-year sales growth. Not yesterday. Instead, the charts emphasized only market share and total unit sales since 2001. The news there is good — Apple has sold a grand total of 160 million iPods since 2001 and today commands 73.4 percent of the U.S. retail market (followed by Sandisk at 8.6 percent and Microsoft at 2.6) — but the lack of any braggadocio regarding growth indicates that the market is saturated. That’s not to say unit sales are decreasing, only that they’re no longer accelerating. Of course, one reason iPod sales growth has slowed is that iPhones aren’t included in the tally. (There was no mention during the event of how many iPhone 3Gs Apple has sold so far, however.) Growth can only come where there’s room to grow, which is why even Mac sales are growing faster than iPod sales.

Speaking of Macs, contrary to speculation, there were no announcements regarding new Mac notebooks. Such speculation was misguided; Apple has held an iPod/music special event in September or October every year since 2001, and, to my knowledge, has never once used such events to announce new Mac hardware. Those of you holding out for a new lineup of MacBooks will have to wait until October 14, according to sources who, as they say, are familiar with Apple’s hardware plans.

iTunes 8

The high-level new features in iTunes 8.0 are the new “Genius” recommendation engine, a revamped iPhoto-like grid view, a new visualizer, and improved accessibility on both Mac OS X and Windows.1

The Genius feature is exposed in two ways. First, you can create a new on-the-fly “Genius playlist” by selecting any one song and clicking the Genius button at the bottom of the window. This creates a 25–100 song playlist based on songs in your library that the Genius algorithm determines go well with the song you started with. (The button is disabled if you select multiple songs, so you can’t start with, say, two songs and ask for a Genius playlist of tracks that go well with both.)

Second, there’s a new Genius Sidebar on the right side of the iTunes window. After opting in to the Genius system, the sidebar contains recommendations from the iTunes Store based on the first song in the current selection. (If you have more than one song selected, the Genius Sidebar only shows recommendations based on the first song in the selection.)

The recommendation engine seems pretty damn smart. The Genius playlists are a clever idea, like the shuffle feature but with a hint. After a few hours, I like the results better than either my own manual playlists or purely random shuffles. The store recommendations in the sidebar seem equally good, but imperfect, in that it sometimes recommends songs which I already have in my library, ripped from CDs. At first I thought the problem might be with the Genius engine not recognizing songs that weren’t purchased from the iTunes Store, but that’s not quite it, since it does correctly recognize most of the ripped-from-CD tracks in my library. For example, the Genius Sidebar’s recommendations based on The Beastie Boys’s “Sabotage” included “Intergalactic”, a song I already had in my library. The problem seems to be with track metadata; if, say, the album name on the track in your library doesn’t exactly match with the album name in iTunes, it doesn’t recognize it as the same song.

If I select “Sabotage” and click the Genius playlist button, I get this error:

Invoking the “Update Genius” command in the Store menu, as prescribed in the dialog, had no effect. The album name on my version of the track, ripped from CD and filled in by iTunes using the CDDB database, is “The Sounds of Science (Disc 2)”. The version from the iTunes Store has the album name “Beastie Boys Anthology - The Sounds of Science (Box Set)”. Changing my copy’s album name to match the iTunes Store’s made no difference either — iTunes still claims “Genius is unavailable for the song ‘Sabotage’.”

The new visualizer is stunning. The old one remains available (View → Visualizer → iTunes Classic Visualizer) but it’s hard to see how anyone wouldn’t prefer the new one.

In the details, iTunes 8 introduces a few noteworthy changes. The Preferences dialog has been simplified. Podcast settings are finally adjustable on a per-podcast level.

Visually, in the new grid view, Apple has introduced yet another new scrollbar flavor — black ProKit-esque buttons with a dark gray background. But the scrollbar thumb itself is the same as iTunes’s regular slate-blue scrollbar thumbs (which don’t look like system-standard thumbs) — except when the window is not frontmost, at which point the scrollbar thumb changes to dark gray, rather than light gray.

New grid-mode scrollbar, active.

New scrollbar, inactive.

And speaking of background windows, the main iTunes window now supports click-through for a small number of elements, including everything in the toolbar (e.g. the playback controls) and scrollbars. iTunes 7.7 did not support click-through for these elements.

NBC and HD TV Shows

NBC withdrew its TV programming from the iTunes Store last year. As of yesterday, it’s back. It’s hard to see that NBC gained much of anything in the form of concessions from Apple. NBC executives stated publicly that they wanted Apple “to take concrete steps to protect content from piracy, since it is estimated that the typical iPod contains a significant amount of illegally downloaded material.” I.e. they wanted Apple to somehow magically prevent iPods and iTunes from playing NBC content obtained from sources other than the iTunes Store. That didn’t happen.

NBC also wanted variable pricing for its shows. They sort of got that, in that library content — old shows like “The A-Team” — are available for just $1 per episode. But NBC also wanted to raise prices for episodes of popular new shows, and that did not happen. Standard-def episodes of all new shows on iTunes remain at $2.

High-def shows are $3, but that’s not variable pricing — it’s the same for all HD shows, not just NBC’s, and as far as I can see all HD TV shows in the iTunes Store are also available in SD. There are no shows which are only available in HD.

It’s a win for everyone — Apple, NBC, and customers — that NBC shows are back, but there’s nothing NBC has today that they wouldn’t have had if they’d never pulled their shows from iTunes a year ago — except for millions of dollars in lost revenue.

New iPods

The hard-drive-based iPod Classic continues to fade toward irrelevance. Last year it was available in two capacities, 80 and 160 GB. The bad news is that it’s now down to a single capacity, 120 GB. The good news is that it’s in the same slimmer form factor as last year’s 80 GB model, and at the same $249 price. To my recollection, this is the first time that the size of the highest-capacity iPod has gone down year over year. Jobs stated during the event that the 80 GB model out-sold the 160 GB model, but for those people who value maximum storage capacity above all else, a 40 GB drop is significant.

The design effort regarding traditional click-wheel iPods all went toward the new Nanos. On the outside, they’ve returned to the long-and-narrow form factor, abandoning last year’s “fat Nano” design. And they’re now available in a full spectrum of vibrant colors: all six colors of the old striped Apple logo, plus pink, silver, and black. In a change from previous years, all colors are available in both capacities — 8 GB for $149; 16 GB for $199.

On the inside, Apple added an accelerometer, which allows the display to rotate when you rotate the iPod. Video plays horizontally, and when you rotate the iPod to horizontal while playing music, it switches to Cover Flow mode, just like with the iPhone and iPod Touch. You can create Genius playlists directly on the Nano. It even has a voice recorder, which works if you connect a microphone. Even the iPhone doesn’t ship with a voice recorder app.2 The iPod Classic gets none of these new features other than Genius playlists. [Correction: According to the iPod Classic User Manual (PDF), the Classic has the same support for voice notes as the Nano.]

The new iPod Touch gets closer to being a thinner iPhone sans phone. The original iPod Touch lacked hardware volume controls and a speaker; the new Touch has both. Significant price reductions bring the prices closer to the selling prices of the subsidized iPhones: 8 GB for $229, 16 GB for $299, and 32 GB for $399. (I strongly suspect these new prices for the Touch are the margin-reducing “product transition” Apple alluded to in its quarterly finance call in July.)

The portable gaming angle was promoted heavily during the event, and is the crux of the “Funnest iPod ever” slogan. Apple is clearly positioning the iPod Touch as a competitor to handheld gaming devices from Nintendo and Sony.

Discussing the 2.1 release of the iPhone OS (available as an update for iPod Touches now; slated for release for iPhones this Friday), Jobs was brutal regarding the quality of the 2.0 release, saying:

“2.1 software update is a big update. It fixes lots of bugs. You’ll get fewer call drops. You will get significantly improved battery life, for most customers. We have fixed a lot of bugs where if you have a lot of apps on the phone, you’re not going to get some of the crashes and other things that we’ve seen. Backing up to iTunes is dramatically faster. And so just a lot of bugs have been fixed.”

His tone wasn’t so much apologetic as it was scornful.3 One gets the feeling Steve Jobs was about as happy with the problems in the 2.0 iPhone OS as the rest of us.