Thursday, August 17, 2006

Could Apple replicate the iPod+iTunes model to video chat?

One of my primary use cases in October 2004 for getting a Mac was the quality of video chat with an external iSight and iChat. The system has worked beautifully even as I moved from CA back to NJ and went through a number of ISPs before getting to my current configuration. The iSight+iChat experience has been so much better than anything else I have seen, anything on the PC (though I haven't tried the latest Windows Live Messenger, it's like why bother, iSight+iChat is awesome). I even tried connected the external iSight (I am making a distinction here because Apple has an embedded iSight in most new products) to a Windows PC back in 2004, but the results were not good, including garbled video and Windows crashes.

What's changed?
A few new pieces of information have surfaced that have led me to question if Apple isn't missing out on a huge opportunity with there iSight+iChat combination. First, Apple released Boot Camp 1.1 Beta, which includes a number of enhancements, but the one that's relevant here is:

Support for built-in iSight cameras
This reads like its only the embedded iSights which are supported on the Intel Macs, but that would leave Mac Pro buyers out in the cold because the Cinema Displays don't have an embedded iSight. It was only a matter of time, but Mac Only confirms the new Windows iSight driver supports the external iSight as well. iSight+iChat for Windows I am not suggesting the iSight driver is proof of anything other than Apple's intention to completely support the hardware in their machines completely under Windows. If there was speculation to the contrary, this Boot Camp update should put that completely to rest. What I am suggesting though is that Apple is closer to and could release an iSight+iChat for Windows combination, ala iPod+iTunes.

Reasons why Apple won't release iSight+iChat for Windows
There are many reasons Apple won't do this, or wouldn't be as successful as with iPod+iTunes:

  • iChat feature enhancements are a key selling point to OS X upgrades, and by extension a key differentiator of the Mac
  • iChat has no incremental revenue model
  • Video chatting has been historically so poorly implemented it might be difficult to convince users this is real
  • iChat can't call mobile or land line phones
  • Crowded market for IM/video chat/audio call applications on the PC
  • Porting iChat to Windows adds another Windows application that needs to be supported
The hurdles are pretty significant or with significant downside risk (OS X appeal reduced somewhat).

Reasons why Apple should release iSight+iChat for Windows

  • iPod is nowhere near as successful as it is today without iTunes for Windows.
  • Yahoo, Windows Live, Google, and Skype are all going to or already have started to attack the video chat market with force. iChat as a OS X differentiator from Windows might be in jeopardy anyway if Apple leaves iChat on OS X
  • iSight+iChat for Windows gives those users another taste of the OS X world, it's an upsell opportunity to the sacred applications of OS X, the iLife suite.

Enhancements iChat needs to truly make this model succeed
On either OS X or Windows, iChat needs a number of important + fun enhancements, not just fun enhancements to remain competitive or increase it's lead over other applications in the space.

  • Phone calls, both mobile and land line. This is such a no-brainer, Apple already has a billing relationship through the iTunes Music Store with millions of customers
  • Micro-transactioned content - Similar to songs on iTunes, emoticons, pictures, backgrounds (look at the green screen style background stuff in Leopard), and ringtones all purchasable through the iChat Store using your iTunes account

Apple's Endgame
iSight+iChat for Windows could be the first step to expansion into another market with the iPhone. Online presence and communication can be unified using this device. Move from a Mac at home, or on the go with the iPhone, or at work on your Windows PC and maintain the same friends list and high feature parity between all platforms, with text, audio, or video dependent on the hardware (PCs can do it all, iPhone does audio and video, or all 3 with a BlackBerry style device). Everyone expects the iPhone will be a cellular based technology. It's possible Apple is going to go the WiFi, or WiMAX route, or even a hybrid approach that uses cell or WiFi depending on the network technology available wherever you are. Vonage and Skype are releasing WiFi phones that are modeled on cordless telephones, not very innovative thinking. The Vonage V-Phone a USB keychain that lets you take your Vonage account to any PC to turn it into a Vonage compatible phone looks a lot like an orange iPod shuffle, why can't Apple put iChat on all iPods? iChat on OS X is using the same network technology, SIP, as Vonage, so network connectivity can't be a major hurdle.

Apple's iPod millions should allow an expansion into another market. Apple's CFO Peter Oppenheimer said recently when asked about cell phones eating into the iPods market for stand-alone music players:

...we're not sitting around doing nothing.
I think that's clear they have to enter the mobile phone market, exactly what form that takes is the question. If they port iChat to Windows and unify the friends presence and communication problem across PCs, Macs and mobile devices, I think Apple could be a hugely disruptive force in the mobile phone market. Even if Apple just released the iSight+iChat properly for Windows, it could be very disruptive. Microsoft is now selling webcams in the same price range as the external iSight, and as this article about the announcement of the MS webcams states the webcam market is growing, Logitech reported earnings of $273 million with 36% growth. With Apple's great looking iSight and the elegance and ease of use of iChat, I easily think they could have a winner on their hands.