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Apple vPod Concept Hasn't Ripened Yet

Cody Willard

The vPod (what I'm calling the video iPod concept) and iShows: I first wrote about the concept of these two new products from Apple(AAPL Quote) more than a year ago. Now the mainstream press, along with Wall Street, is fully aware that Apple will head in this direction with its consumer electronics line at some point. Apple eventually will roll out video-capable iPod-like devices capable of playing shows, movies and music videos that will be available for purchase at a Web-based store such as iTunes.

But the operative phrase in that last paragraph is "at some point," and that point is very unlikely to be anytime this year or early next. Not that Apple should be in any rush to get the product out -- on the contrary, even.

Anybody who has ever heard of Apple Computer knows that the iPod changed the course of this company forever. Apple was a sleepy ol' computer vendor in danger of falling to 1% market share of the PC business before it veered into the portable MP3 player industry. Let me rephrase that: before the company recreated the portable MP3 player industry.

The iPod has caught the world's fancy, and Apple has sold more than 21 million units, with more than 80% market share. Now, anytime Apple schedules an appearance at a tech conference or even just a press conference, the tech world goes crazy speculating that another new major product release is coming from the world's reigning most-innovative company.

Last week, word hit that Apple has scheduled a "special event" for Sept. 7, and right on time, the rumor mill around new product introductions kicked in. Initially, many analysts were sure this would be the video iPod announcement. As more information has come out since the event was scheduled, those video-product rumors have died down.

Next week's announcement is probably going to be just the formal rollout of the iTunes-enabled Motorola phone, which will run on Cingular's wireless services. That product itself is going to be great, and if I hadn't just bought a brand-new cell phone from Verizon last month, I would be first in line to purchase the new Motorola iTunes phone.

And that's despite already owning and using both an iPod shuffle and an iPod photo. The Motorola phone would enable me to always have on my phone some of the songs I've purchased from iTunes or burned from CDs. There are certainly times -- believe it or not -- when I don't have an iPod with me, but find myself standing in a line, or riding on a bus or in some other situation where a song or two would fit the bill.

Apple is going to try to dominate the portable (and stationary) video player world and duplicate the success it has had in the music world. But the video iPod and iShow products just aren't reality yet, and the market is probably not ready for them anyway. Part of the secret of Apple's success in the MP3 market was that it had let the market develop and get beyond the very early adopter stage before it got into the business. Being the first mover is not always advantageous, especially in the consumer market.

Millions of people had been freely trading MP3 files and burning CDs from MP3s and listening to those CDs in their cars and stereos before Apple made its move. While there are millions of video files being traded on piracy networks and sent via email, and hundreds of millions of videos available for download on the Internet, the mainstream user isn't exactly downloading those files, burning DVDs from those video files and watching them on a TV set. That day is coming, and Apple is certainly going to make a move into that market when the time is right. But that's not next week. And probably not anytime in the next quarter, or two or three.

I continue to believe that there are all kinds of ways to win with Apple here, and video consumer products will be added to the list, most likely in 2006. In the meantime, let's not get ahead of ourselves. From the iPod to iTunes and the new Motorola iTunes phone and especially given the growth of Apple's computer sales, I see plenty of growth drivers for now.

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