Margin Note: Video iPod, MacinTiVo, and the iMovie Store

by Ralph Risch

The best news in Apple's business these days is the "hockey stick" trend line in the iPod sales graphic Steve Jobs showed in his keynote on Tuesday. Prospective investors should be concerned, however, that such trajectories are only sustainable for a short time. Assume for the moment that Apple sells the 17M iPods that analysts project in FY 2005. Are they going to sell 34M in 2006? At that growth rate they will soon pass the number of consumer PCs sold in a year, which is unlikely.

This doesn?t mean the iPod is a flash in the pan, just that it won?t propel Apple?s overall growth much longer. If Apple wants to remain the hyper-growth darling of Wall Street, they need to have another trick in their bag.

Jobs may have given us a clue to what that might be, elsewhere in his keynote. Jobs talked quite a bit about video, calling 2005 "the year of HD Video". Jobs also demonstrated QuickTime 7.0, which will be included in Mac OS X 10.4 ("Tiger") and will be based on the H.264 codec. One of the advantages of H.264 is scalability, providing high quality video for everything from mobile phones to full HD video on a Mac.

Is it possible Jobs? video vision extends beyond the Mac, to the iPod as well? The iPod photo was a logical next step, doing for iTunes (and using photos on the road) what the original iPod did for music. (I should point out that we asked for photos on the iPod two years ago, but in retrospect that was probably a bit greedy.) Mac users with digital camcorders will logically ask when they will be able to sync their Movies folder onto their iPod as well. Last week, Nyko Technologies previewed their vision of a movie-enabled iPod at the Consumer Electronics show in Las Vegas.

The "Video iPod" would enable users to carry around home movies as well as those downloaded from P2P networks (not that Apple would acknowledge P2P video sharing). For a more interesting selection of video, Apple would need to provide Personal Video Recorder capabilities in a TV-connected device. In 2003 we suggested that Apple buy TiVo and create an OSX-based home media computer. "Imagine plugging an iPod into your MacinTiVo to sync up small-screen format versions of your favorite shows to watch on the road." In 2005, Apple has the H.264 technology to make this a reality, and with the $499 Mac Mini, Apple has a device with the right form factor and price range.

Once your computer is connected to your TV, an even more compelling business model is for Apple to open an iMovie store online, to complement its dominant iTunes store. Becoming a player in the movie arena would be no small undertaking, and movie licensing issues are perhaps thornier than those that held back legal digital music distribution. But we all know who pioneered the online music store.

Of course, we've been talking about this sort of "convergence" for over a decade now. It is a measure of recent technological advances (especially at Apple) that products like the Video iPod, the MacinTiVo and the iMovie store seem within reach. But didn't you always think Apple would be the one to pull it all together? One thing is certain: if Apple expands their digital hub into the video consumer market, that could make their recent success look like the ice end of the hockey stick.

[Editor's Note: In the days since Ralph's article was first submitted, further commentary on Apple's HD video future has appeared on the Web, including article from The New York Times entitled "Does Apple Computer have designs on the living room?" and another from Australian IT with commentary from Stan Ng, director of iPod marketing worldwide. Meanwhile, a short piece on Studio2f speculates that Apple's rumored "Asteroid" project will actually be a Firewire based media bridge with HDTV-out and optical audio-out that will also provide PVR capabilities, and allow time shifting of video, slideshows and music on your TV through a Mac.]

Post your thoughts: is 2005 the year for the Video iPod, the MacinTiVo, or the iMovie Store?

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