The Reinvention of Apple Computer

Below are a few "predictions" for 2004 and beyond. I'll give no reasons why you should believe any of this. "Faeylyn" isn't my real name. And, you folks at Apple Legal will never find out who I really am, so don't bother trying.

And now....

Sit down before you read this and prepare to pull your jaw up off the floor.

The 20th anniversary of Apple Computer brought a new, very cool 20th anniversary Macintosh. The upcoming 20th anniversary of the Macintosh will bring a new, insanely great reinvention of Apple Computer itself. Timeframe: 2004. Not all at once (unfortunately), but all in 2004.

Everything EVERYTHING is going to get an update.

The rumor mills are flying with seemingly conflicting information. Its not conflicting, just confusing because most people cant imagine the across-the-board changes coming.

1. G5 XServes: Of course. Nothing unexpected here. Already announced. Expect XServe updates to keep better pace with PowerMac updates for the foreseeable future. 3U 4-processor and 8-processor XServes are in the labs, but its unclear whether these will be released in 2004 (or at all).

2. PowerMac Updates: All Dual, starting at 2GHz/$1999. New impressive internal specs as well. $1999 for the entry-level tower model? People will surely revolt! Not when they see whats coming next.

3. AIO (All In One) iMacs are bye-bye. Take the pod/base of the iMac, chop off the display, redesign it to look uber-cool as only Ives can do, plop in single G5s and impressive (albeit less impressive than PowerMac) internals, and price-points of $999/1.6GHz, $1299/1.8GHz, $1599/2.0GHz. No super-drive or oodles of memory at $999. This effectively takes care of the new cube or headless iMac rumors. But what about AIO lovers? AIO iMacs are gone, but were not done yet. Keep reading.

4. Display Update #1: Why would anyone buy a pricey Apple-brand monitor for their new iMac when they can get better price/performance from brand-x. (1) Form-factor. While you technically could tack a blasé display to a mondo-cool iMac, no one will want to just based on the looks alone. Expect the display look/feel to perfectly match the new new iMac. Taken together, they will appear to be all-in-one-ish. Or, put the new new iMac under the desk and the new displays will still look very, very Apple. Also expect a reduction in price for the base model and larger displays.

5. Display Update #2: Kill me now. Think large. Think ULTIMATE viewing experience.

6. PowerBook Updates: Yes. Q1/2004 PowerBook G4s at 1.4, 1.6, and 1.8GHz. Other impressive internals to take advantage of the new IBM-based G4. An even better form factor (is that possible?). New, higher-resolution screens and better video cards across the board. G5 PowerBooks wont appear until late 2004. There are just too many heat and power issues to work out without compromising the portables form factor.

7. iBook Updates: Yes. Basically a crippled PowerBook. No new displays for the iBook this time around. Expect the high-end iBook to top out where the bottom-end PowerBook begins. Look for price points starting at $999 for a 1GHz 12 model. 1.4GHz will appear in the top-end. With the slight reduction in price and the better performance, these babies should fly off the shelves. Expect the following round of iBook updates to go mimic the 1.4/1.6/1.8 G4 PowerBook updates above. When the PowerBooks go to G5's the iBooks will go to high-end G4s.

8. eMac Updates: But of course! But first, for those who think Apple should abandon this design, forget it. Theres a market that requires this design and is willing to shell out your tax dollars in order to get it. Get over it already. However, while the form-factor is needed, that doesnt mean a design makeover for the thing isnt in order. Next to all the other updates the current eMac design would look pretty shabby. Add to the new design the new IBM G4s running at 1.4, 1.6, and 1.8GHz. Faster memory, better graphics, and like that.

Thats it for the existing hardware updates. As mentioned, not everything will be available at once. Expect at least one significant announcement per quarter though. So if you dont see something above by end of Q1, that makes it much more likely for Q2, and so on.

Apple wants a LOT of press out of the 2004 updates. They have been slowly (very slowly) tugging away market share from Wintel in 2003. What theyre looking to do with these product releases is to give a good solid yank on that chain rather than the gentle tug that has been happening up to this point. [A side-note rumor is that this is one of the reasons Microsoft purchased Virtual PC. Microsoft is EXPECTING Apple to make significant inroads into the PC market-space in 2004-2005.]

Oh yes. One more thing.

iPods and iTMS.

Consider the iPod. Technically, its not really very advanced at all. Theres really nothing special about it. The fact that its currently the best music player out there really speaks to the complete ineptitude of other companies more than it speaks to the technical prowess of Apple (not speaking Marketing prowess here, okay?) Technically, its just a so-so device.

Others will soon (end of 2004) catch up and pass (end of 2005) the iPod in the coolness factor. Apple cannot compete in a commodity market like this in the long-run. Others will continue to make improvements and eventually surpass the iPod. And when the iPod is no longer the cool kid on the block, what will become of the iTMS? Yes, the interface of the iTMS is better than the rest, but like all things Wintel theyll continue to make minor updates until they finally get it right. Or, more accurately, good enough.

So if people are flocking to the cool new sPod from Sony, and if people can connect to another music service to feed music to that device, where does that leave Apple?

Apple knows this. And they have no intention of letting yet another market that they pioneered be pirated away by the leeches of Silicon Valley.

First, the hardware. Apple knows they cannot compete long term in a commodity hardware market. Not only are better music devices coming, but better integration of existing devices will occur in 2004. Think phones. There is a HUGE market for people looking to carry just one device. One device they must carry is a phone. A phone with 1GB or 2GB of memory could hold a decent amount of music and would be a heaven-sent device for these people. Apple has nothing to offer these people. And they never will (hardware-wise).

So what to do? What happens when a mondo-cool phone with a decent music player appears that has a decent interface into a decent music service? How will Apple compete with that? Answer: Apple must offer their DRM technology to other hardware manufacturers. Apples DRM must be on the latest and greatest gadgets out there. Note that the latest and greatest music players out there are all currently made by Apple. When that changes, expect Apples DRM model of iPods only to change too.

But why would another company, like Sony, put Apples DRM on their devices? Whats in it for them? And, especially, why PAY Apple a royalty fee (and Apple WILL be charging royalties) for this privilege? And, even if other companies did include Apples DRM, how then would iTMS make any money? It barely breaks even now. Apple only makes money because it helps them sell iPods. So what happens when the iPods are no longer supporting iTMS?

First, expect the iPods to continue to evolve. Expect that little portable HD to be put to a lot more use than simply playing music. Expect the iPod to turn into your LifePod. Lots of cool stuff surrounding this, but most of it will not come out until 2005.

But again, what happens when the iPods are no longer supporting iTMS?

OneMoreThing

This is where the reinvention of Apple Computer comes into its own. Apple Computer will become Apple, Inc. There will be two major divisions (initially): (1) Apple Computer, and (2) Apple Studios. Apple Studios will be a combination movie/music studio. This will happen with the purchase of (a) Pixar, and (b) Apple Records. You heard correctly. Apple Computer will announce that they have purchased both Pixar Animation Studios and Apple Records. Several things will come of this.

First, the entire collection of a certain musical group will become available exclusively on iTMS. This may not happen in right away, but the goal is by the end of 2004. These tracks have yet to be made available (legally) on any music service. And the only music service they will every see will be iTMS.

Second, Apple Records will become an active record label again and start signing other artists. Whats in it for the artists? A LOT better deal than with any other record label. Whats in it for Apple? Online exclusives and tracks that actually make them money. They will now get to keep most of that 99 cents rather than forking it over to the RIAA. If you want these tracks, you have to either buy the album or come over to iTMS. Either way, Apple makes money out of the deal.

This will all ensure that Apple continues to be a major force in this market. Apples DRM will be included because companies cannot afford to not include it. So even if someone buys a Sony MP3 player and never looks at iTMS, Apple will still be getting a little kickback through DRM licensing. And if they do use iTMS, all the better.

Its all about content and providing the ultimate user experience for that content. Whether general computing tasks, the internet, iTMS -> iPod -> iMac or Apple/Pixar -> Mac -> uber-Projector/set-top-box. Using one to sell the other. High-end, best-of-breed hardware for the ultimate computing/listening/viewing experience. 2004 will be a VERY good year for Apple. It will only be topped by whats in store for 2005.

And the beat goes on.

Why would Apple make that format? Who would want it? A projector wouldn't take the place of anything Apple currently sells. There will still be a need for the current form factor and current monitors. Completely different product line (but with links to current products).