Apple’s Secret Weapon: The IPod, Revamped

Apple’s Secret Weapon: The IPod, Revamped

Think the iPod is dead? Think again.


Updates to Apple’s iPod Touch will keep the music player a valuable player in its lineup of products.

The iPhone received the lion’s share of attention with Apple’s announcement on Wednesday, and many debate whether the iPhone 5 is just “business as usual” for Apple or a worthy iteration of a now-iconic smartphone.

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But Apple’s most significant product revamp was actually for one of its most enduring yet under-appreciated devices: the iPod, particularly the high-end iPod Touch. It’s arguably Apple’s secret weapon in helping it keep up market dominance and grow its audience and user base as the mobile era marches forward.

Apple introduced the first iPod in 2001, and the portable music device played a huge role in helping to turn the flailing company around. The company has sold more than 350 million iPods since then, which helped to fuel its bustling iTunes digital content platform. The company introduced a premium version, the iPod Touch, in 2007.

The iPod Touch has become a top seller since then. By 2011, 60 million units sold overall, according to sales figures released as evidence during Apple’s tangle of lawsuits with Samsung. iPod Touch sales are second to only to the iPhone, and iPod Touch users tend to buy and use more apps than their smartphone and tablet brethren, making them powerful revenue drivers.

Despite the role iPod Touch devices play in Apple’s product lineup, they’ve been eclipsed in recent years by game-changing iPhones and iPads. Markets for both smartphones and tablets have exploded in the years after the iPod’s release, and Apple has cemented its reputation for innovation and elegance with these mobile devices. The company also hasn’t offered a significant update to its portable music products in comparison to its market-defining handset and tablet.

Wednesday’s announcement, offers Apple’s biggest product refresh to the iPod line, particularly the iPod Touch. The next-generation iPod is bigger, thinner and lighter, echoing its slimmed-down, elongated handset cousin. It’s 6.1-millimeters thick, and weighs in 3.1 ounces. It features a larger 4-inch retina display, packs a dual-core A5 processor (the same one in the iPhone 4S), and touts longer battery life.

Beyond more powerful guts, it will offer a 5-megapixel rear-facing camera, featuring auto-focus and flash, and will be available in pink, yellow, blue, black, slate and a white-and-silver combo.

The refreshed iPods’ software will also put it on par with the iPhone. It will ship with iOS 6 and will also come with voice assistant Siri, expanding its capabilities even further.

The significant update has many re-examining the long-overshadowed iPod Touch within Apple’s bigger picture, offering clues on its place in the company’s overall strategy. Some have wondered if Apple would eventually phase out or edit down its music player product category, but the update proves the company understands how integral a role it plays in its overall operations — and how important it is to keep its iPod Touch devices competitive. This is especially vital considering the role it plays in its iOS landscape, particularly with young people and in apps and gaming, offering a powerful alternative to the iPhone and iPad in broadening its user base.

Long-considered a product for those who are looking for an iPhone without the phone, the iPod Touch has cultivated a big following with parents looking for something for their tweens and teens. The iPod Touch gives users mobile access to a half-million Apple apps, social networking activities, music, movies, books and even fitness options.

The latest iPod’s range of bright colors bond directly to the body and are not just painted on, making them super vibrant and especially appealing to a younger demographic. Also, Apple’s AirPlay feature streams content to other devices or wirelessly mirrors what’s on a specific iPod Touch to everyone in the room, providing endless sharing options.

For many kids, accessories are critical, and the iPod Touch hits the mark here, with the latest iteration’s new earbuds. They are re-designed “based on the geometry of your ear,” so they feel and sound better.

Finally, the Touch’s upgraded camera is great for Instagram and for people who enjoy FaceTime for video chatting.

The iPod Touch is also popular because it doesn’t need a carrier contract. You can do use its Wi-Fi to do just about anything but make a phone call — and thanks to FaceTime video calling, users can almost do that too.

That will change with the latest-generation iPod, though. The iOS update later this month, means FaceTime is being offered over cellular networks. AT&T said it will offer the program as an added benefit of Mobile Share data plans, meaning consumers will pay to use the service where before it was free on Wi-Fi.

Sprint, as the only carrier to still offer unlimited data with the new iPhone 5, and Verizon, which is moving its customers to data plans, both announced they will not charge extra for FaceTime calls or make customers change contracts. And customers on T-Mobile’s network, which is the only one not to offer the iPhone, can have their piece of the Apple pie with the iPod Touch.

These FaceTime changes affect iPod Touch devices with LTE capability, not those that are Wi-Fi only. Still, the bigger point that you can have a powerful, useful Apple device without the commitment and cash of a contract is a huge selling point for families, Android smartphone users, and T-Mobile customers.

Many of the changes will help the redesigned iPod gain favor as a premier portable gaming device, providing a powerful boost to the App Store.

The iPod Touch already connects millions of Apple users to popular games. Developer Dave Castelnuovo, who co-created the popular game “Pocket God,” said to CNN more than 50 percent of its players play on an iPod Touch. Smartphones and other mobile devices have leeched market share from traditional portable gaming consoles like Nintendo’s DS series of devices. Apple’s latest change brings the product fully into the forefront of the mobile gaming era, and major improvements to screen size, battery life and processing power will only further boost its status.

The larger display also boosts gameplay. Game developers will likely welcome a larger market and create premium HD products to take advantage of its beautiful, clear graphics. The new dual-core A5 processor means it has twice the processing power of older-model Touch devices and runs graphics up to seven times faster. Finally, the longer battery life — up to 40 hours of music playback, or eight hours of video — offers gamers more juice.

Apple also will offer AirPlay Mirroring for the first time with the new iPods, allowing users to wirelessly display the iPod’s screen on a HDTV screen. This means more complex, premium games that take full advantage of stronger computer power and graphic rendering, all in a lightweight, portable device.

Apple says more than 100,000 of the 700,000 apps in its App Store are games. Senior vice-president Greg Joswiak says the iPod Touch is the world’s most popular music player, but also mentioned “a lot of people don’t realize that it’s also the world’s most popular video game player as well.”

“A large group of users still use the second-generation iPod Touch, which was holding back our implementation of new features,” said Castelnuovo. “I believe that these users were not upgrading the new hardware because there hasn’t been a substantial iPod Touch iteration until now. With the larger screen, new design and assortment of colors, I think we’re going to see a very large adoption of the new hardware.”

The iPod Touch may be an enduring, though under-appreciated, device in Apple’s lineup of mobile products now, but the mobile device — often cited by fans as an “iPhone without the phone” or “a tiny iPad” — could play a higher-profile role of the company as it helps to answer the threat posed by Amazon’s Kindle Fire tablets.

Apple’s iPads still lead the premium tablet market, but Amazon’s offerings have found momentum with a sector of users hungry for a tablet without the premium price. The Kindle Fire’s popularity proved that smaller screen sizes don’t deter many customers. Amazon announced a direct competitor to the iPad with a high-end HD tablet device, but Apple has yet to directly answer the challenge for a smaller, cheaper “iPad Mini,” which has been long rumored for the company. Kindle Fire tablets will likely continue to eat away at this increasingly valuable segment of customers until the company comes up with a solution.

The major changes to the iPod Touch could help fill that gap. Upgrades in both front- and rear-facing cameras, the addition of Siri, and a dual-core processor puts the device on par with both the iPhone and iPad. Yes, the 4-inch screen size is likely too small to make the iPod Touch into a true tablet competitor, and in reality the iPod Touch is more “iPhone without the phone” than a smaller iPad.

The iPod’s new pricing certainly positions it at a lower tier than the iPad — and also forces questions on where exactly the rumored iPad mini fits into Apple’s roster. The new-generation iPods will run $300 for the 32-gigabytes version and $400 for 64-gigabyte version, while the new iPad’s pricing starts at $500 for the base model and the iPad 2 starts at $400. The pricing structure leads questions on where a mini iPad would fit in — or if there is a place for a smaller, cheaper iPad.

The high price tag for the iPod Touch devices raises eyebrows, though the hardware is more powerful, storage more abundant and software more robust. Its pricing may be Apple’s answer to the rumors about a smaller iPad. True to late founder Steve Jobs’ antipathy to a smaller tablet device, there may not be a smaller iPad for now, and the role of the smaller, cheaper iOS conduit will fall to the iPod Touch for the time being.

If the mobile experience is moving towards software, and hardware is less of a factor as products begin to level out in terms of power and pricing, then the iPod Touch’s significant refresh certainly makes it a powerful entrance to Apple. It’s not likely, though, that Apple will market it as an iPad Mini and against the lower-priced Kindle Fire.

Instead, iPod Touch will remain Apple’s quiet, though formidable secret weapon in its arsenal of products: sold as a music product, but with profound strengths as a gaming and media device — and an accessible, more economical gateway to the Apple experience.

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The Uncertain Future of ITunes

Apple has big plans to update and redefine iTunes, but strangely enough the most positive sign of what’s to come is how the company is making everyone wait for it.

ITunes hasn’t been the centerpiece of any of Apple’s lavish announcements for quite some time. The experience had modest updates on Macs and PCs, but the service hasn’t had any real shake-ups or attention since consolidating its dominance of the digital music market.

In fact, Apple has increasingly moved customers away from dependence on the service, with introductions like iCloud and wireless back-up and syncing. Gone are the days where users had to routinely connect their iPhone, iPod or iPad with iTunes in order to transfer songs and download updates, relegating the service on computers to little more than a music player.

But Apple’s initial announcement of iTunes 11 in September promised major changes to the service, like iCloud integration, a redesigned interface and a new mini player, all certain to give iTunes a boost. They represent more of a polish to the service rather than a fresh injection of something new, but they also hint more is coming.

However, Apple has delayed iTunes 11 to the end of November, saying it needed to fine-tune its offerings. While the wait is likely a sign of caution from the company, it’s also the clearest sign yet that there is more to this update than meets the eye. Many analysts believe Apple will launch iTunes 11 with a streaming component, but streaming is more than likely on its way and the company is taking its time to ensure it has its core product working correctly before expanding into new territory. Backlash from Apple’s early missteps with the debut of iOS 6 and its Maps app are only now starting to subside, and launching a buggy version of iTunes so soon after would be a public relations nightmare, dampening the launch of a highly anticipated streaming service.

Answering the Threat of Pandora and Others

A streaming service from Apple is no surprise, considering how digital music consumption has shifted in the past few years. Services like Pandora Radio have been outshining iTunes, particularly on mobile devices, for some time now. The ad-supported app lets users stream 40 hours of music a month off of customized radio stations. A Pandora member can select the artist or artists they wish to hear and enjoy an uninterrupted stream of music from them and similar artists.

Pandora streamed 4 billion hours of music from more than 20,000 different artists last year, and those numbers are expected to be much higher for 2012. The irony is that much of this listening is being done on iOS devices. One can imagine this doesn’t sit well with Apple, a company that prides itself with guiding the digital revolution of the music industry.

With the success of Pandora and other streaming services like it, iTunes feels dated in a way that simple aesthetic changes and iCloud integration cannot repair. The task of transitioning the iTunes juggernaut into a new era now falls on the shoulders of Eddy Cue, Apple’s senior vice president of Internet software and services, to adjust the company’s passive state in the streaming business. Cue is the mastermind behind all of iTunes’ past success and its surge to becoming the world’s largest music retailer.

After the dismissal of Apple’s senior vice president of iPhone software Scott Forstall, Cue is faced with more responsibility than ever as he attempts to once again make iTunes relevant for more than buying and playing music. Cue’s assumption of many of Forstall’s duties is key to the next step of iTunes. With Forstall’s departure, Cue is now a leader in the division of iOS as well as iTunes, and he has the opportunity to marry a new mobilized version of the service with his vision for the product on computers like never before.

Why Apple Is Waiting

Many have wondered why it has taken so long for Apple to dip its toe into the music streaming arena, leaving Pandora, Spotify and others to enjoy its benefits. Part of the answer is licensing agreements, which Apple is reportedly working hard on hammering out right now, but another theory hinges on the recent executive shuffle at Apple.

Analysts know Forstall had issues playing nicely with others inside Apple. This divide may have kept Cue from implementing his full vision for an iTunes streaming service, which would likely have a large iOS component that requires working closely alongside Forstall. With this divide now lifted, Cue is free to build the new service as he pleases, speeding up the process for an iTunes streaming component.

Still, Apple has no need to rush a service to market. Analysts believe a streamer from Apple could launch as soon as early next year, but the company can only benefit from taking its time in this area. Pandora and others may have a head start on Apple, but with such a large iTunes user base, the streaming service business is Apple’s for the taking, as long as it can produce an app that works better than the competition. Granted, that’s easier said than done, but if the company can create an experience that matches or exceeds what customers get on Pandora, everything else will take care of itself.

From there it comes down to Cue and his team. Apple needs to capitalize on what Pandora doesn’t do well. Things like limited skips, songs cutting out when a user loses cell service, integration with iOS, social networking components and the size of the music libraries the customized stations pool from are all areas of opportunity for an iTunes streamer.

Apple has sold more than 400 million iOS devices, and as of earlier this year, claims to have 435 million iTunes accounts registered with active credit cards. All the company has to do to leverage this massive user base is put a free download in the App Store. If it really wants to attract customers, it can make its streaming service a native app in the next version of iOS. This could almost instantaneously erase Pandora’s multi-year head start in building user numbers

Cue has been handed a lot of responsibility as he attempts to carry the iTunes brand further into the mobile and streaming revolution. The stage has already been set, and he just needs to perform.


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