Apple Makes Latest iPod Audiovisual
Moving to keep its most lucrative franchise ahead of the pack, Apple Computer Inc. on Tuesday introduced the iPod Photo, a music player that can display digital pictures on a small color screen and doesn’t cost that much less than its cheapest desktop computer.
The company’s strategy in taking the iPod beyond music is to capitalize on the explosive growth of digital photography. Apple also hopes to enhance its appeal in a computer market dominated by machines running the rival Windows operating system from Microsoft Corp.
Analysts said that was a chief reason for the newest version of the music player.
“As people become comfortable with the Apple experience” through iPods, said Rod Bare with Morningstar in Chicago, “there’s some evidence that that has driven Macintosh sales.”
The iPod commands a 65% market share among digital music players and is Cupertino, Calif.-based Apple’s best-selling product. The device, about the size of a deck of cards, brought in $537 million in revenue last quarter, accounting for 23% of Apple’s total sales.
Other companies have recently come out with hand-held media devices that play music, movies and TV shows and also display photos but “they’re too big, too heavy,” said Apple Chief Executive Steve Jobs at a promotional event here Tuesday. He then cued a clip from “Raiders of the Lost Ark” in which Harrison Ford as Indiana Jones and another character turn to each other and exclaim with alarm, “They’re taking us to the wrong place!”
“We think the right place is photos,” Jobs said. “Everybody has a digital camera -- they’re even in cellphones. Everyone has the content. And there are no copyright issues. We think music plus photos is the next big thing.”
Jobs was joined on stage by members of the rock band U2, including lead singer Bono. And along with the iPod Photo, Jobs presented another new iPod in ebony black with a bright red “click wheel” -- the colors on the cover of U2’s forthcoming album, “How to Dismantle an Atomic Bomb.”
U2 was one of the first musical acts to embrace Apple’s iTunes Music Store, which pays royalties to artists for songs purchased on the Internet.
“A black iPod is something we coveted,” Bono said. “We wanted to flip the campaign around” from the all-white model, said the singer, whose shirt, jeans, leather jacket and platform shoes were all black.
The iPod’s popularity is still growing three years after its release in October 2001. More than 2 million of the 6 million iPods in circulation were sold in the last quarter, and they’re expected to be popular gifts this Christmas.
But analysts figure the real value of the iPod lies in its potential to draw customers to Apple’s more profitable, though less popular, line of Macintosh computers.
“The iPod itself has introduced a lot of people to the Apple interface through iTunes,” said Morningstar’s Bare.
Charles Smulders, an analyst in San Jose with technology market researcher Gartner Inc., said he viewed iPods as potential storage devices for any type of file.
“If the market could deliver a cost-effective video device I think that would be very well received,” he said.
Apple investors were optimistic Tuesday, lifting the company’s shares 42 cents to $47.97 on Nasdaq.
The iPod Photo, which Apple began shipping to stores Tuesday, will come in a 40-gigabyte version for $499 and a 60-GB version for $599. (Apple’s least-expensive PC, the eMac, starts at $799.) Both will have 1 1/2-by-1 1/4-inch screens and will be sold with cradles and cables so that their photos and slideshows can be displayed on TV sets.
They will synchronize with photo lists in Apple’s iPhoto software for Macintosh computers, but will also be able to download photo lists on Windows computers and from libraries created with Adobe Systems Inc. software.
The compatibility with Windows shouldn’t hurt sales of Macintosh computers, Morningstar’s Bare said.
For his part, Jobs said Apple “made the decision a long time ago to make iPod available for Windows” because “a lot of people out there who love music use Windows. Since we made that decision we’ve made everything available for Windows customers at exact parity. We are totally neutral.”
