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Weekly Column

Beam Me Up: Apple's iTV strategy is iChat on steroids

Status: [CLOSED]
By Robert X. Cringely

An old magazine publisher friend of mine once explained why he liked his business so much. "Subscriptions," he said. "People pay for the entire year before we do anything. In what other business can you get those kind of terms from customers?"

Hold that thought.

For the last two weeks we've been discussing Apple's video download strategy and associated products, especially what Apple is calling for now its iTV video extender, which I have been calling the Video Express since I first wrote about it 18 months ago. It's evident from its High-Definition Multimedia Interface (HDMI) connector (and lack of an S-Video connector) that the iTV is intended to connect primarily to high definition televisions. Yet these were never mentioned in the product announcement by Apple CEO Steve Jobs. In fact, the term HDTV was never used despite Jobs declaration that 2005 had been the "Year of HD."

So there is a lot about this product and the underlying services it will provide that Apple isn't saying. Of course Apple will eventually sell and rent HD movies over this device. Then why aren't they saying so?

The answer is more complex than you'd guess, and might be answered best by another question: Where are the Blu-ray high definition DVD drives in Apple's latest computers? Sony is selling computers with Blu-ray drives, why not Apple? Apple long ago pledged allegiance to Blu-ray over the rival HD-DVD. Certainly Apple's top-of-the-line Mac Pro, a double dual-core machine aimed straight at rich media creators, would have Blu-ray, wouldn't it?

One would think so, but I'm quite certain we won't see any Blu-ray drives in Apple computers until the iTunes Store has a deal to sell Sony films. There is a simple quid pro quo here, not just in the lack of Blu-ray drives, but also in the on-again, off-again nature of Sony camcorder sales in the Apple stores. Negotiations are continuing, sometimes in the marketplace itself.

Now what about that USB port on the back of each iTV box? Giving his tour of the gizmo last week, Jobs rushed right past the USB port. What could that port be for? It's not for a USB hard drive, that's for sure, because the key brain in this system is back in your Mac or PC and its very large hard drive. Nor will Apple (immediately) enable the iTV to act as a digital video recorder, because that might step on TV network toes before Apple is ready to do so. The USB port is clearly intended for an Apple iSight camera, a webcam to go with your HDTV. It's iChat for Grandma.

This is the heart of Apple's emerging communication strategy. I was tempted to write "voice-over-IP strategy," except that wouldn't have been correct. For Jobs, this particular road less traveled is about video conferencing, not voice. VoIP is not grand enough, not experiential. If eBay can dominate it, Apple doesn't want to be a part of it, and won't be. Jobs will be much happier enabling a smaller audience to do multi-person chats on their HDTVs.

VoIP is replacing a $20 phone with a $1,000 computer. What Apple has in mind is creating an entirely new form of computing experience, but this time -- because it will take place mainly on a TV and not on a computer -- many users may not think of it as a computing experience at all.

All of this comes together with Leopard, the next version of OS X, which will ship in January. iChat, which started back in 2003 as a simple real-time chat client to keep Macs from being frozen completely out of AOL Instant Messenger (AIM), has grown a lot since then. iChat now has H.264 video support, and with Leopard it will integrate all the iLife (iPhoto, iCal, iMovie, etc.) functions into a system that can support remote users. So you'll not only be able to see and talk with Grandma, you'll be able to show her pictures and home movies. If Grandma's a corporate executive, you can show her a marketing presentation, too.

Moving these functions from the PC to the TV is a no-brainer from a conceptualization standpoint, if difficult technically. Videoconferencing from your computer is an alien act, while doing the same thing in front of your 65-inch widescreen is more like theater, and theater has been in our blood a lot longer than telephony.

While to some readers this may seem too subtle a distinction, what Jobs and Apple are trying to do is something fundamentally different than all their competitors. This HD strategy, for example, keeps us tied not to our desks but to our homes and offices. In a world where everything seems to be going mobile, this is an anti-mobile strategy. Where Microsoft is trying to follow its user out into the street, Apple is trying to lure its user back into the home for what is essentially a social activity conducted in a formerly antisocial setting. This is computing you'll never do by yourself.

As a wise friend of mine points out, "video is about sharing," it is a logical group experience, and perfectly in tune with Jobs' sensibilities.

And think of the bits and pieces Apple will be able to sell as a result -- Mac minis, iTV boxes, iSight cameras, eventually whole HDTVs with much of this technology already installed. Remember most people haven't yet bought an HDTV, meaning there is a huge opportunity for market leadership. Expect Apple's HDTVs to be optimized for this experience, which doesn't require much more than building in an iSight camera.

Don't forget that ubiquitous .Mac subscription, either. At $99 per year, .Mac is an expensive yet indispensable part of embracing the whole Mac experience, all without Apple having to provide any real bandwidth because iChat is based on the Session Initiation Protocol (SIP) protocol. There's that subscription thing and how Apple intends to benefit from it: users have been grumbling about .Mac, but these new services will quiet them down until Apple has made a few billion more dollars.

What has to be especially satisfying about this plan for Apple is that there is literally no response even possible from its greatest competitor -- Microsoft. The level of technical sophistication and application integration required to make this work is beyond Microsoft within the next year or five years from now. So where Windows Vista will bring a variety of older Apple OS features to the PC desktop, Apple's Leopard will go far past the desktop metaphor altogether and introduce friggin' TELEPORTATION.

Virtual reality pioneer Jaron Lanier once told me, "you can have enough money and you can have enough power, but you can never have enough EXPERIENCE." Jobs understands this better than almost anyone else and the pieces he's put together are all aimed at giving us an experience and allowing us to share that experience with others in a large and grand way.

Now let's extend this view a little bit further -- frankly further than Apple would even like us to do because it is in the middle of negotiations with most of the world's movie studios. What happens if I use my Mac mini/iTV/iSight/HDTV combo to invite Grandma for a virtual visit and she decides she wants to play for me some of her Benny Goodman records, after which we all sit down with the kids and watch a young Elizabeth Taylor in National Velvet? Would either of those actions constitute a copyright violation? I don't think so.

But what if a dozen or 100 people get together virtually to do the same thing? Would THAT be a copyright violation? I still don't think so because it would be me watching you watching a movie -- exactly the subterfuge that allows characters in new movies to be watching old movies on TV without the production company having to pay royalties to the makers of those old movies. But someone is going to feel cheated, I'm sure. I just hope it isn't Grandma.

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