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Apple (Nasdaq: AAPL) is sailing in the calm eye of the hurricane these days, cruising serenely with rapidly rising Mac, iPhone and iTunes sales.
This week in the Apple-focused blogosphere, however, Mac bloggers are showing how Apple can sometimes have smooth water on one side of the Cupertino boat and nasty waves on the other.
First, the rough stuff. Mail-order DVD rental powerhouse Netflix (Nasdaq: NFLX) announced a new streaming media set-top television box that competes with Apple TV and Apple's iTunes business model. Then, as if that weren't enough for one week, Napster announced that it's now selling MP3 songs devoid of any digital rights management (DRM) schemes -- and that it has the support of all the major record labels.
The Netflix Knock
Netflix launched its Netflix Player by Roku, a US$100 device that works with a customer's Netflix account and an Internet connection to stream movies and television shows from Netflix's on-demand library of titles that number about 10,000. For the company's 8 million subscribers, using the player doesn't incur any additional charges beyond their existing DVD memberships -- except for the lowest possible tier, which only lets a customer rent two DVDs per month. The service plans that include unlimited free movie streaming start at just $8.99 a month.
At only $100, the Netflix Player by Roku costs less than half of an Apple TV, making it an interesting option for existing Netflix customers. Bloggers and commenters, of course, debated the pros and cons.
"I think the AppleTV still has key advantages but it would be nice to see this progress from 'hobby' status in the R&D department. I prefer being able to navigate from the TV for rentals. ... I also like having access to the whole digital library on my network from one location," commented Tokolosh on the AppleInsider post on the subject. The Netflix Player by Roku requires that users set up their streaming video queues via a separate Web browser, and the device connects to the queue at Netflix, which says that browsing for movies on a PC or Mac is much easier than trying to do it from a television screen with a remote control.
"I also like having the storage space on apple tv because if internet is slow or down ... you are still in business and you don't need a computer. I have about 40 movies on it now and all my songs," stevetim commented.
Others argued that Netflix couldn't make a profit from a streaming model, claiming it would be a money loser, while others argued that it might not matter -- Netflix could retain customers in the face of Internet delivery, as well as possibly attract new ones.
"You guys seem to be missing the point. If you rent more than 2 movies a month, from a cost perspective (which would seem to be most important considering that the movies are the same between the two services) the netflix box is a better deal. Apple is going to have a hard time competing with this. If you rent 4 movies a month, Netflix would charge you $8 while Apple would charge you $16," explained Davvi28 on the AppleInsider post.
"That's a big difference, especially since the apple box costs more than twice as much. Additionally, you can watch old tv seasons and other special content. You can also put tons of movies in your computer queue at a time, so for all [intents and purposes] you can operate it from your sofa. Apple needs to start looking into all you can eat plans for their content in addition to their current offerings or they will get left behind," Davvi28 added.
However, to put the argument into perspective, online set-top box services are all still niche services, Van Baker, vice president of media research for Gartner (NYSE: IT), told MacNewsWorld. "And the Netflix box is even more niche than Apple TV in that it's only of value to somebody who is a Netflix subscriber," he said. "It's a very narrow function box, targeted at a narrow audience."
Netflix, Baker also noted, has the Apple TV-iTunes model beat hands-down compared to the available list of titles, though it may not matter much in the near term. "This is a tough market to figure out how to evolve," he noted.
The Napster Nick
Napster rolled out a big new weapon in the online digital music battle -- which Apple has been dominating for years with iTunes -- by announcing that all of the MP3 tracks for sale on its online store are now available free of DRM for 99 cents each. The tracks are available at a high-quality 256 kbps bitrate and include high-resolution album art. They are compatible with the iPod and the iPhone and include songs from major record labels as well as independents.
At first glance, this seems like a big deal, but upon closer inspection, many bloggers concluded it's unlikely that lots of iTunes users would jump ship. First of all, Napster doesn't support the Apple Safari Web browser, though it does support Firefox.
"Forcing me to use a browser I hate? No sale, napster bozos," TomWBrowning commented after reading a review of the Napster service on The Unofficial Apple Weblog (TUAW) site.
By the way, the reviewer, Mat Lu, wasn't particularly impressed with the service overall, reporting that it was essentially too cumbersome to bother with. So can Napster really take a nick out of iTunes?
"I think consumers are following the path of familiarity and convenience," Mike Paxton, principal analyst of consumer markets for In-Stat, told MacNewsWorld.
"That doesn't mean DRM or the lack of DRM fits into either one of those categories -- outside of the tech-savvy group that abhors DRM, most people have no problem going to iTunes. They don't care -- it's already easy and it plays on their iPod," Paxton explained. DRM-free content, he noted, does still have value as a marketing point for Napster, but that fact alone isn't going to reshape the playing field.
The 3G iPhone Frenzy Builds
The latest rumors to hit the blogosphere surrounding the secret launch date are calling for Apple CEO Steve Jobs to unveil the new 3G iPhone at Apple's Worldwide Developer Conference (WWDC) on June 9. Gadget blog Gizmodo claimed to have received confirmation from an inside source at Apple that Jobs will indeed give the world its first glimpse of the device at the WWDC kickoff keynote.
Meanwhile at the Over the Air Mobile Weblog, Eric Zeman urged his readers to take the rumors with a grain of salt.
"Also, remember that the 3G iPhone hasn't been cleared by the FCC yet. With only three weeks to go before the keynote, that's cutting it awfully close. Legally, the iPhone cannot be sold in the United States until the FCC says so. It'll sure spoil Steve Jobs' party if the FCC doesn't get around to approving the device until after June 9," he wrote.
Still, one commenter noted great confidence in Apple's abilities. "Apple plans and re-plans every possible detail. Everything will work perfectly with FCC. The last iPhone's FCC approval was not even opened to the public until the week of the release. Apple knows how to play the game right, that's how the excitement is created," vlad wrote on the Over the Air post.
Of course, there's one point only a few have seemed to pick up: Just because Steve Jobs might announce the next generation iPhone from the stage of the WWDC, it doesn't mean he has to sell the device on June 9.
"I think they'll announce at WWDC but not actually ship until late June," Raven Zachary, research director for The 451 Group, told MacNewsWorld. The announce-then-launch-later plan would let Apple announce the iPhone at WWDC, generate even greater buzz and excitement, and still have some sort of late June anniversary release so that lines of eager buyers can begin forming outside of Apple and AT&T (NYSE: T) stores.
"Plus, in that two-week window before a product launch, it's really difficult to keep secrets; you've got to have printers involved and distributors. ... The number of people you have to keep in the loop with a secret gets significantly higher in the days before a product launch, and that's why I think you'll see them roll it out in late June," he added, noting that Apple has already stated it would launch the App Store in late June.
