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Weekly Column

Apple controls Amazon?: When it comes to mind control, Steve Jobs has it over Jeff Bezos

Status: [CLOSED]
By Robert X. Cringely
bob@cringely.com

So Apple has an announcement to make next Tuesday and the tech and business publications are falling all over themselves guessing what the news is likely to be. Why not just wait and find out? Because that's not how newspapers (whether electronic, such as this one, or cellulose) are sold, that's why. But I think there is something to be learned from taking a look at this entire "What-is-Steve-Planning?" experience AS an experience.

Apple had an announcement planned for July 6th but cancelled at the last moment. Interestingly enough, Amazon.com also had an announcement scheduled for that same day in July and it too was cancelled at the same time as Apple's. Both companies planned to talk about their movie and TV Internet download services. The fact that both announcements were cancelled at the same time is especially curious given that the Wall Street Journal tells us that Apple and Amazon are using completely different technologies, with Amazon's being based on Microsoft code.

Channeling Steve Jobs now, I'd say the delay came down to this: Apple was still struggling to put together the right list of participating movie companies and needed to postpone the announcement so Steve could beat up on a few more studio honchos. What got Amazon to postpone their announcement was indirect pressure from Steve, who didn't want to be shown up by Bezos & Company delivering more titles -- a LOT more titles.

So Apple got Amazon to postpone its announcement by holding out the lure that Amazon might get Disney to participate in a later event. According to the Journal and elsewhere, the only major studio Amazon doesn't have is Disney, which I am sure they would sorely like to have. Meanwhile, the only major studio Apple reportedly has IS Disney. That connection and Jobs' role on the Disney board (as well as being the company's largest shareholder) made it possible for him to force Disney to force Amazon -- well you get it.

And yet, next week's announcement reportedly still has Apple with only Disney films to sell. This suggests the other studios are ganging up on pricing, trying to force Jobs to change the $9.99 and $14.99 price points that have been bandied about. Evidently these discussions have failed and Apple, not wanting to miss the Christmas season entirely, has to move forward now or wait until next year.

I am sure Apple will be negotiating with the studios until the last possible moment, but it may take Amazon trouncing Apple during the Christmas shopping season to have any real impact on those negotiations.

Frankly, I'm on the side of Apple on this one, because I like lower prices and tend to think that they discourage piracy much more than does the hated Digital Rights Management. With my kids on their 400th viewing of Shark Tale, I'd far rather pay $9.99 for a movie I know I can play than grab one for free that I'm not sure I can. On a dollars-per-hour basis, it is still cheap.

And while my kids are in the room, let's pull up the single greatest selling point for digital downloads that has been missed by every story to date -- fingerprints. I'm not talking about reverent movie buff fingerprints, but the brutal peanut butter-and-Doritos fingerprints of a frenzied two year-old in need of his Dora the Explorer fix.

Probably half of the DVDs at our house have problems being read -- problems that don't appear at all on the dozens of Arthur and Clifford episodes I captured and now play through my MediaMVP network box. For families with small children -- millions of families in the U.S. alone -- having movies and TV shows on a server, safe from destruction by little fingers, is a huge argument in favor of electronic delivery.

But back to Apple. Many pundits correctly predicted that Apple was about to announce new iMacs only to have that announcement take place earlier this week without an associated event. That's typical Jobs marketing, casually presenting what we would have accepted as pretty big news in itself, which implies that whatever is coming next week, well it is REALLY big.

Maybe, maybe not, depending on those studio negotiations.

What I think is coming next week is exactly what I thought was coming last January when Apple at the last moment changed its mind about an earlier set of announcements. We'll see a bunch of iPods, two televisions, and the Video Express adapter I first wrote about more than 18 months ago.

Yes, we'll probably see a larger screen video iPod, a larger capacity flash-based iPod, and some models with yet larger hard drives. All of those are no-brainers. The televisions are no-brainers, too. Gateway started this trend, but now HP and Dell both sell HDTVs so it's logical for Apple to do so, too. Apple was set to deliver a pair of plasma models back in January, but those may now have LCD displays, I don't really know. But with the HDTV market booming, Apple would be crazy not to grab a piece of that action.

However, the most interesting announcement I am expecting will be the Video Express, which I sure hope is finally here. If you don't remember, this is a gizmo that plugs into a power outlet just like an AirPort Express, only where the AirPort Express sends WiFi AND audio around your house, the Video Express will send WiFi and audio AND video.

This is key, because what's been missing throughout this conversion to Internet television has been a way to incorporate our user device of choice -- the TV. People don't really want to watch movies on their computer screens. They'll do it, some of them, but most people won't, so for the Internet and downloadable video market to explode the way it is supposed to do, we need an easy way to get the movies out of our computers and onto our TV screens. The Video Express will do this in an elegant and typically-Apple fashion. It's a simple device with no user interface at all, just ports. You plug it in the wall, it finds your WiFi network and video servers, then makes those servers available to your TV. But of course it is Front Row and iTunes-only, thanks -- an iPodlike extension of your hard drive, viewable through your TV. And since the H.264 video decoding takes place in hardware inside the Video Express, your TV doesn't even have to be a fancy one.

That's what I think is coming. A week from now I may look like a dope, but thanks to Apple and Steve Jobs, I'm sure it will be a heck of a show.

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