The good stuff they're not telling you about Apple's 'same day as DVD' deal

Paul Thurrott's SuperSite Blog posted What they're not telling you about Apple's 'same day as DVD' deal

Read the full post, but here are the four points Paul makes about what you aren't being told about the iTunes 'same day as DVD' deal:

1. Apple's movies are too expensive
2. It's for purchases only, not rentals
3. It's not exclusive, and Apple wasn't even first to market
4. Apple's losing money on the deal

I am only going to talk about the top two points, since I don't think the bottom two make any difference from a consumer perspective, and then add a few of my own.

Apple's movies are too expensive
Once you look at what you can actually buy movies for at just a couple places, I think the price is on the cusp of being too expensive. Put another way, this is probably the maximum price consumers will pay for a digitally downloaded movie. Look at Cloverfield (iTS link) (Juno is now rentable since Paul's post, so I picked another movie). On iTunes, it is $14.99 to buy, plus tax depending on your state, mine (NJ) taxes digital downloads. On Amazon, Cloverfield DVD is listed at $15.99 + tax and potentially shipping, just as Juno is. I walked into Best Buy yesterday, and the same Cloverfield DVD was listed at $19.99. Even at Wal*Mart, Cloverfield DVD is listed at $15.87 + tax (also potential shipping, if you buy retail or not). Actually, the fact that Apple is paying about $16 dollars (Paul's point 4) wholesale makes a whole lot more sense now, it would appear to be the wholesale price for DVDs. What do you get for your $14.99 from iTunes? Just the movie in more ways than one because iTunes movies don't include "DVD-style features" as Paul says, aka extras, but they also don't include other annoying time wasters:

• Previews (ads) for movies you don't want to see
• Unskippable FBI warnings or movie studio logos
• Time wasting DVD animated menus
• The most nefarious, unskippable previews

I am sure there are other annoying DVD practices, but Apple has distilled watching movies down to just the essence, the movie itself, good and bad missing stuff. Even the bad missing stuff, commentaries and documentaries, most people don't watch. There are those, myself included, that do use the good extras if they like the product enough and find the time. Perhaps having these "bundled" with the movie itself will become a relic of the DVD era, with that same material released online before the movie is out, or even after. Or Apple could certainly add another purchased movie tier, one with the extras, including the extra download time that entails.

So are the movies overpriced? Based on the above, it's close. But the fact that iTunes movies aren't shareable with friends and can't be resold means these movies are overpriced, way overpriced. Either the restrictions need to be lifted, meaning I can buy a "used" iTunes movie, or I can't send the rights to my copy of the movie to a friend until they give them back or I revoke them.

It's for purchases only, not rentals
It is totally inexcusable and truly makes no sense. Well it makes sense to the studios to try to artificially inflate sales, if you can't rent you have to buy. But it just delays their revenue, I am never going to buy Cloverfield, sight unseen! What's worse, is that there are movies all over iTunes that are now to only be purchased, but not rented, like Shooter (iTS link). That movie has been released on iTunes so long, it's dropped to the $9.99 price, but still not rentable. This is really very simple, movies have to come out on iTunes so they can be rented and bought the same day as a physical DVD before consuming movies this way will or can take off. I can't have to go to my dad and explain all these crazy restrictions. The uniformity of rules and prices are a huge reason why the iTunes Music Store took off. Also, notice how there are no actual release dates on the movies on iTunes. Why is that? So you can't figure out when the price is going to drop, or become rentable? Seems likely.

On Subscriptions...
Way back in 2005, I wrote this article about renewing my Xbox Live, and here is what I thought about subscriptions in general:

...I am really done with the whole subscription model. I feel this need to try and use whatever I am subscribing to as much as possible so that I feel like if I run the breakeven analysis, I am paying a fair price..., but if I don't use it that month, I get nothing for something, and that doesn't sit well with me. A subscription is always constantly on the mental To-Do list somewhere, and I just don't need anymore of those.

And that is still largely how I feel today. I have continued to pay for Xbox Live, but for instance I have maybe used the online gameplay features I have paid for once this year. You can read most of the stuff I have ever written on subscriptions here. That said, if the price was low, maybe $9.99 or $14.99 for all you could watch that month, that is in the range where I think I could sign on, because I am pretty likely to get my moneys worth out of it. Truly though, I don't think the real solution is subscriptions, just lower prices on all digital media. When you "buy" something, you are purchasing the rights to use something as many times as you want, whenever you want, loan it to a friend giving up the second right, and that you can resell it if you don't want those rights anymore. Either the model for digital media has to accomplish everything physical did, or something entirely different has to be invented. Maybe it is subscriptions, but the subscriptions models used so far have themselves been too expensive, but you never know, maybe Apple can put something together. Like $29.99 a month for everything on the iTunes Store. Then we might really be talking...

Apple's Media Strategy: For All Those That Don't Appear to Get It

Daniel Eran at RoughlyDrafted Magazine has posted How Apples iTV Media Strategy Works which Apple telegraphed with the iTV in yesterdays Its Showtime event. Daniel doesn't address one of the chief complaints other bloggers like Paul Thurrott have which you can read in his thoughts on the Its Showtime event, which is DVR functionality.

I thought it was obvious, but obviously not. Microsoft and Tivo for example are trying to add computer technology onto the legacy TV distribution technology, be that cable or satelite based. Apple is trying to REPLACE two legacy content distribution systems, cable/satelite TV and physical media distribution. Not only that, but they are trying to blow up the standard TV business model. I think Steve Jobs hates subscriptions to content where you just rent and rent and rent. The philosophy of subscription rentals encourages gorging, its eat as much as you can, it doesn't make you think about how much you are consuming because the primary inhibitor to stop consuming is spending more money, which you already did, you better get your monies worth

I may eat my words at some point, but I truly believe Apple will never release anything with DVR functionality, why would you need a DVR when you can already get Season Passes to iTunes and download the shows. I think there are some very big holes in Apple's strategy which I will talk about in my Email to Steve Jobs.

Apple's Leopard Attacks Part 1: Microsoft Exchange Server

Update Roughly Drafted has started publishing articles on this very topic. Of course Roughly Drafted has a lot more history on the topic of groupware and email servers in general.
Apple Takes On Exchange Server
Apple's Open Calendar Server vs Microsoft Exchange
MacDailyNews has has picked up on Roughly Drafted's articles and I posted a comment on the article saying I originally talked about this back in August 06.

Original Post
Leopard Server was not demoed in the WWDC 06 Keynote in any capacity, but the preview site and subsequent reports (see the References section at the bottom), makes something very clear. Apple is about to attack Microsoft at it's linchpin server product, the one enterprises get shackled to first: Exchange Server.

Microsoft's Server Playbook
Microsoft Exchange Server (4.x-2003) is a Trojan Horse, it gets other MS server products in the enterprise. This plan become obvious once Exchange 2000 was released. In one of the most stunning instances I can remember of tying two software markets together, Active Directoy in Windows 2000 Server was required. Exchange 200x will not function without it. Why is this is insidious? Look at the cost for a medium sized company from the MS Exchange Server site and theWindows Server 2003 R2 pricing site:

Product	Number of Users	Cost
Microsoft Exchange Server Standard Edition	N/A	$699
Microsoft Exchange Server user CAL	50	$67
Microsoft Exchange Server device CAL	50	$67
Windows Server 2003 R2 Standard Edition	5	$999
Windows Server 2003, Client Access License 20-pack x 2	20	$799
	Total	$9,996

Organizations can acquire the licenses listed above at lower prices through volume licensing, but that is exactly the point. The list prices are so high (I haven't even added in hardware and possibly consulting costs), organizations feel like they are getting a bargain if they sign for volume licensing, they are getting a "deal". Once an organization signs on for volume licensing, they hardly ever switch away from MS, the opposite happens, they add more products (e.g. SharePoint Portal Server, SQL Server). The entire machine is too costly to replace, you have the Exchange Server admins, the experts just to understand all the licensing and audit them, the backup specialists, the AD specialists, I am sure I am missing someone. Volume licensing is the same reason MS with their partners have been pushing rental music (wrongly called subscriptions): they automatically get paid every day/month/year whether they deliver you something new or not. The revenue is guaranteed. Customer aquisition costs are high, if you can't cut that costs out of every sale, it's nearly like printing money. Make no mistake, figuring out the licensing and pricing if any organization thinks they might be interested in MS products is a full time job, there are so many possible permutations, and the wording so ambigious at times, you are never perfectly sure you have only the licenses you need and nothing more. Often you are penalized if you guess wrong, because features and capabilities are walled off from use unless you get the higher priced version, and there is no incremental upgrade costs if you aren't on volume licensing. Look again at the table above, MS is getting organizations that sign onto Exchange for 2 CALs per user, 1 for AD and 1 for Exchange, and for additional CALs if you use your SmartPhone/Blackberry/Outlook Web Access terminal to get your mail.

Apple Attacks
Before OS X, Apple did not have an OS capable of being a true server operating system (i.e. no preemtive multitasking). This point is important because gaining traction with a server OS takes years. It took MS 8 years before Windows NT, rechristened as Windows 2000, really took off (it helped that Windows 2000 was also the best version of the product at the time). But what was the appeal of Windows NT vs. Solaris/Digital Unix/AIX? NT used cheaper commodity (Intel) hardware, undercut the pricing models of the big Unix servers, met the needs of the bottom end of the market first (small and medium businesses), specialists were cheaper, and yes NT was easier to use in a lot of cases for people that grew up on Windows. Now look at the moves Apple is making with Xserve and Leopard Server. Apple has moved to Intel hardware. An Xserve with Leopard Server starts at $2499. That includes Mac OS X Leopard Server for UNLIMITED users (retail is $999 for the upgrade) and includes a number of servers built-in (Mail, Calendaring, Directory, DB, Teams) which MS charges seperate CALs (AD, Exchange) and seperate servers (Exchange, AD, SQL Server, SharePoint) for very low pricing. In Leopard Server, Apple looks to be targetting the bottom end of the server market first with the new Server Assistant and Server Preferences. No administrators required, just plug in your Xserve, run through the Server Assistant, and you are ready to use. You have to wonder how realistice "No administrators" is, but that is a huge chunk of cost if Apple can reduce the number of servers operators to near zero. What about backup? Imagine if Time Machine is built-into Leopard Server? Who needs to manage backup when its always running and the bits are just there if you go looking for them, as long as you have enough disk space. Notice I mentioned Server Assistant and System Preferences. If anyone can focus on a hard problem and come up with an easier way to convey the same ideas as others, it's Apple. Take a look at Time Machine for an example. If you have ever seen the MS Exchange Management Console? Be afraid, be very afraid. This is very telling, listed on the iCal Server preview page:

Networks with an existing directory service — such as Active Directory — can deploy Leopard Server for local hosting of all calendar and collaboration data while continuing to use the existing directory for user log-in and authentication.

How can Apple offer all of this at such low pricing?
Create a disruptive union of open source and closed sourced development models. Apple has been on this path for years, using the parts of various open source project that best met its technical and licensing needs. Apple announced the most recent and obvious commitement they have ever made, Mac OS Forge, including there iCal Server that is going to be in Leopard. How is this cheaper? Open source has a near chronic inability to put the finishing touch on any project (exceptions exists, e.g. Firefox), but that's one of Apple's core strengths, meticulous attention to detail which distills a problem down to its essential parts, and bubbling that to the surface. Add to the fact that iCal Server has been open sourced.

Worms in the Apple
Will Apple have problems executing this plan? You bet. Enterprises are steadfast that they need multiple hardware sources to use with their monopoly software, with Apple you are stuck with the hardware and OS, but not that Apple is Intel, if OS X Server doesn't work out, you could always install Windows anyway. But that's not the rub, its that if Apple makes the hardware prices really undesirable, you can't move your software elsewhere. Another issue will be getting the data out of Exchange. MS and Lotus have both spent millions writing conversion tools, sometimes even for different versions of their own products. If Apple doesn't have a way of getting data out of Exchange, their market is only the companies that don't have a solution already, not very appetizing. Apple needs to start pounding he pavement to once Leopard Server is out the door to get people to convert if it wants to sell Xserves. But they really don't have to sell a lot, take a couple percent of the Collaboration Server market, and it would be tremendously disruptive. Finally, since the server is open source, you will get people that build iCal Server on Linux and deploy for free. But the geek's that do that aren't the market Apple is targeting, so I don't think this is a huge worry either.

Conclusion
Apple is being very aggresive, they want a piece of the enterprise. If this wasn't clear before, it certainly is now. Exciting times indeed.

References Some people have started to put this together, it's there in bits and pieces, so instead of linking it all above, here are my sources so far for this info: http://weblog.infoworld.com/enterprisemac/archives/2006/08/wwdc_2006_repor.html http://www.macworld.com/news/2006/08/08/caldav/index.php?lsrc=mwrss http://lists.apple.com/archives/darwin-dev/2006/Aug/msg00067.html http://www.apple.com/server/macosx/collaborationservices.html http://www.eweek.com/article2/0,1759,2001617,00.asp?kc=EWRSS03119TX1K0000594

Why I am not getting an Xbox 360 (or renewing my Xbox Live subscription)

Microsoft's great hardware, software and services hope, the Xbox 360, as just about everyone remotely interested knows launches tomorrow. I will not be getting one for a number of reasons. Sure, Wow's Impact has something to do with it, but it's not the whole story. I have gone back to the Xbox recently to give Star Wars Battlefront II a run through and I am totally enjoying it. The most startling aspect, load times are quick compared to my summer of PSP loading hell, and I don't think I can deal with the PSP load times at all anymore, since completing my Madden 2006 season (a total non-event, not even a trophy ceremony) I haven't touched the PSP. Back to the 360, here are my reasons for not wanting this box:

• Too Expensive. MS knows the $400 price point is too much, so they offer the $300 version, which you can't even save to or play previous Xbox titles because you have no storage. The cost/benefit it heavily in favor of the $400 version, and that is too much.
• Not backward compatible enough. I know, 215 titles, but no Battlefront I or II, the game I am playing, and something smells funny
• No Must Have Game. I am really disappointed that all the games are just re-treads of previous versions or sports titles, and the only thing being upgraded is the graphics. Maybe I am getting old on this, but I expect the graphics upgrade, there is no surprise, the gameplay hasn't changed, so I am disappointed.
• Need a TV upgrade SDTV has a fixed resolution, the 360 graphics can only get so good. The Xbox Classic already looks pretty good, so to really see the 360 outclass the Xbox, I need an HDTV, bringing the price for gaming nirvana into the thousands. Ah, no thanks.
• None of my friends are actually playing Xbox Live. This is the main reason I am not renewing my Live subscription. Everytime I boot the Xbox to watch a movie or play some Battlefront II, no one I know is playing anything. Most of them are hard-core into WoW or won't play on Live because they are hardcore mouse and keyboard control freaks. I like the Xbox controller, but I appreciate the mouse and keyboard precision.
• I am tired of subscriptions. Here is another reason I am not renewing Live, I am really done with the whole subscription model. I feel this need to try and use whatever I am subscribing to as much as possible so that I feel like if I run the breakeven analysis, I am paying a fair price. I know, Live is only $4.16583333 a month, but if I don't use it that month, I get nothing for something, and that doesn't sit well with me. A subscription is always constantly on the mental To-Do list somewhere, and I just don't need anymore of those.
• I am waiting for all next-gen consoles to ship. Sorry MS, but I saw this story before and believed the hype of the last great white hope, the Sega Dreamcast. Unlike the 360 though, the Dreamcast actually had extremelly compelling games that I wanted to play, like NFL 2K, which redefined video game football. Sorry, Madden 2006 Another Console Edition, is not on my buying list. Plus, you never know if Sony can pull off greatness in the PS3 or if Nintendo redefines console caming with Revolution.
• I am holding out for all the next Apple gear. This one is much much lower, cause I could make new Apple gear happen if I wanted to in the 2006 and get a 360, but the coming Intel Mac's are really affecting my buying decisions.
• I am not repeating the Sony PSP. Same kind of games were out at launch (seasonal sports titles adjusted) for the PSP as 360, and then nothing forever. Call me crazy, but I suspect this is the best MS and partners could do for now and we won't see anything truly new until say March or maybe next fall (Halo 360?). Sure, some stuff will trickle out that will be decent, but I haven't heard of a true system seller yet (Gears of War?).

To anyone getting a 360, I hope you enjoy the system and feel like your getting your moneys worth. I saw a demo of King Kong attached to a Samsung HDTV, it did look good.

iTunes 4.9 Review

As most into tech now know, Apple released iTunes 4.9 on Tuesday with podcast support. Until iTunes 4.9, I hadn't listened to a single podcast. Sure I knew about them, just didn't have the time to figure this stuff out. iTunes solves all that. The Good

• Apple updated all iPods to support Podcasts, even back to the original with scroll well. A friend of mine has the click well "brick", and podcast support seems to work here just like in my 4G
• Subscribing couldn't be simpler, just like buying an album, only free. Same thing with episodes, one-click easy and free
• Good organization. Searching only works when you have an inkling of an idea as to what you want, good taxonomies can still be helpful.
• Podcasts in AAC format. Bookmarks, art at bookmarks and links. They make the MP3 podcasts look dated and this is just getting started. Check out Podfinder and New Music Tuesday for example
• Getting new episodes and synching, just as you would expect, just work, very sweet
• iPod Integration. With AAC Podcasts, bookmarks are really sweet. Plus you have the show notes if you click on the middle button enough, real nice. And the fact that shows resume from where you left off, exactly like Tivo and what you would expect, is great.

The Bad

• Glitches abound. Don't get me wrong, these don't detract from subscribing and listening to podcasts, but they still need to be fixed.
• Podcasts Settings Default. The Keep setting should default to All unplayed episodes. Feels closest to Tivo but recognizing you don't want an episode once it's played, could just be me.
• Time. How come the Music Store doesn't have time for each podcasts? I don't think this is that important, but it annoyed me.
• Release Date. This should just work, every episode should have the release date in meta data without issue. Don't know what the problem is here, but needs to be fixed in a lot of podcasts
• Descriptions. The need to have links. Adam Curry's The Daily Source Code is most in need of this, silly not to have them in the description, even in the pop-up
• Click on Podcasts in the left on iTunes, the summary data on the bottom says X Songs, this should be X Episodes
• Subscriptions are locked up on a copy of iTunes. I have 3 different computers, why can't iTunes at least use .Mac to keep them in sync, ideally the iPod. This is the same complaint I have with me having 3 computers and wishing iTunes, via the iPod , kept all the libraries in sync. I would buy so much more music at work if I could just get it immediately.

Conclusion iTunes 4.9 with Podcasts is a great addition to the program, and it really demonstrates Apple's agility. Are all the features you can think of in iTunes 4.9? No, but they don't have to be since the basic functionality is here now and works. Properly prioritizing functionality according to user need is one of Apple's great strengths, I can't wait to see what they add next.

Could the iPhoto Picture Store be far off?

With rumors of a 60GB iPod with Photo features already in production for release before the holidays and an update to iPhoto to enable synching capabailities just like iTunes, I started thinking about the big picture on what Apple could do with iPhoto. iPhoto is currently all about storing and sharing pictures you take with friends and family. iTunes is all about storing and listening to music you have purchased. What if Apple created an iPhoto Picture Store? I am thinking of iTunes Music Store but with "digital prints" from professional artists. I am a huge fan of Digital Blasphemy. The site contains both free desktop wallpaper and also members content. Members is a subscription based thing, and I don't need Yet Another Subscription™. If I could buy individual pictures for decent prices, lets just say, $0.99, I would have bought a bunch of pictures already. Another example is the Roger Dean Store. I don't know if $9.95 is worth it for a pack of wallpaper, but I surely would have bought a few wallpapers already at $0.99. Just think of all the prints in college book stores, print shops, and framing shops that could be rebuilt for desktop wallpaper use. But that's only the tip of the iceberg. The iPhoto Picture Store could also provide print to canvas or poster services. Apple already has a photo book ordering service, they could put high-quality framing services available in the store. For the consumer, you buy rights to the print, and you can always get another size digital print. I think you probably need a different file format because artists will want DRM, though this is debatable because artists like the examples I mentioned already sell their work without DRMed files. Licensing art for sale through the iPhoto Picture Store must be easier for Apple than licensing music. As a regular end-user, I could also upload my own photos to sell. Think of iMixes, but I think Apple has to approve you picts for sale to avoid the pornography issue. Effectively Apple becomes your gallery, so maybe it's like the iTunes Affiliate program, not everyone can try and sell their own photos. You also can provide subscriptions, perhaps to unlimited numbers of photos, but also to individual artists. Two different price points would obviously make sense here. You could then set your screen saver to the iPhoto Picture Store subscription and get constantly updated pictures. Can Apple make money doing this? I think they can because the licensing fees have to be smaller than licensing music. Will this help sell PhotoPods? This is more difficult to say, but it takes buying art in all forms to an innovative new level that opens up to just about anyone. Storing and sharing digital art with the PhotoPod would be a breeze, so I think it increases the value of the device. If Apple does launch a PhotoPod, I think it pretty much means that iPhoto gets ported to Windows XP. That by itself is pretty intriguing because that's almost half the iLife suite. I wonder if this counts as Prior Art when contesting a patent.... :')