Apple iPod's Amazing Video Feat

Take Steve Jobs (please!). Even when he comes late to market with a product, he claims he invented it.

The other day I was listening to Jobs spout on CNBC about how, unlike case with the portable music market (which he's willing to admit he didn't create but merely "revolutionized" with the iPod), there is no portable-video-player market.

So Apple, he said, with its new video-capable iPod 30GB is, more or less, inventing the market, and now he's going to see what happens.

Golly, I guess Jobs missed the memo about portable media centers (search).

Roughly a year ago, Microsoft and its partners rolled out a new operating system and series of handheld devices that could play music and display photos and video (TV and full-length movies).

The products were billed as the ultimate portable media devices — go-anywhere, do-anything consumer electronics wonders. The Creative Zen, easily the best of the bunch, was a slick-looking black unit that offered a brilliant and fairly large (for a handheld device) screen.

Despite the efforts by Creative, Microsoft, and Samsung, not to mention Sony with its portable PlayStation (PSP) and a slew of no-brand Taiwan-made devices, Jobs may be right.

There is no portable-video market. All the initial hoopla and the subsequent release of players from Archos, Yepp, and others was followed by general consumer disinterest. Almost a year later, virtually no one is carrying the gadgets — a far different scenario than with MP3 players (search).

What went wrong? And how are Jobs and the new iPod 30GB with video and iTunes 6.0 about to resurrect this stagnant market?

People did buy the first round of portable media players. Around 150,000 units shipped in 2004, according to the market research firm IDC, which expects that number to more than double for this year. But that amount, IDC's Joshua Martin told me, is roughly one-tenth the number of MP3 players shipped in the same time frame.

I have many theories about what's wrong — as does Martin.

First of all, people understand portable music (search). As Jobs noted correctly, consumers had been carrying portable players years before Apple introduced the iPod. The only behaviors to learn were downloading and ripping songs.

People do not necessarily understand portable video. Also, you may watch your favorite episode of "The Odd Couple" more than once, but only as it appears in rotation (as the network plays the entire series over and over again and eventually arrives back at episode 99).

You don't want to see one TV episode over and over, but you do listen to a popular song more than once a week and even multiple times a day — big difference.

And the ability to watch video and movies on the go is not really new. We all have laptops capable of this, yet I could count on one hand how many people I see on the train in a given month watching movies on their laptops. They prefer Solitaire (search).

Portable media centers also had the unfortunate luck of coming out within weeks of the Sony PSP.

PMCs and PSPs share more than just a letter: They have similar consumer-electronics styling, and you can view video on both (although Sony uses proprietary UMD discs (search)).

But consumers have taken to the PSP because of its core functionality — gaming. The screen is big and clear enough to make it the first portable and immersive game experience. And the ergonomics work.

At least one reason the PSP trumps the PMC is that people love to play games and are especially happy to play them on the road. The games provide distractions while waiting for trains or sitting on long flights, for example. Solitaire again comes to mind.

For some reason, watching a video on such a small screen is not as compelling. There's a big difference between passive viewing and active play.

Interestingly, Sony and the new entrant into the portable-media market, Apple, have something important in common.

Both are marketing mavericks. Everyone knows what an iPod is, and in the PSP's relatively short lifespan, Sony has managed to shove the game machine into the cultural zeitgeist; it's showing up in TV, movies, and articles that aren't even about the PSP.

PMCs have not yet had their 15 minutes of fame, and I'm not sure they ever will.

The other issue is, of course, content.

IDC's Martin admitted that he bought an early portable media center, but has had little use for it. There are no short clips to download, so he leaves the device behind.

I tend to agree with IDC that studio-created or long-form content won't be what help insure the PMC's success. If people are to start watching video on the train, the content will have to be in short bite-size pieces.

Who really wants to get through "Star Wars: Episode III: Revenge of the Sith" in 20-minute increments during commutes? But a 10-minute news or weather brief? That's different.

According to Martin, that kind of content — and even video blogs — could help transform the PMC market.

I have to say, though, I don't get audio blogs (podcasting's precursor). And while everyone calls podcasting a big success, I wonder if the interest in it is purely a by-product of the vast number of iPods in the field.

Interestingly, IDC is remarkably bullish on the future of PMCs. The firm predicts 9 million units will ship in 2009, and Martin told me that the second generation of PMC products (like the new Creative Zen Vision) and content announcements will transform the industry.

I disagreed with virtually everything he said. I thought the market would die a quiet death and lead to a stinging embarrassment for Microsoft (though not as bad as the Microsoft Bob fiasco). Then Steve Jobs made his recent announcement.

Darned if he hasn't positioned the new iPod to be the first truly successful, broadly adopted portable media player.

It has nearly all the right features: photo, music and video capabilities, and the ability to output video to TV. And though Jobs insists it's still a music-first device, the new unit is thinner with a wider screen, indirectly answering complaints about the overly large first-generation PMCs while making sure that the screen is big enough to make the video-watching experience passable.

In addition, Jobs made two other announcements that virtually seal the deal.

During our PMC discussion, Martin returned repeatedly to the video-content issue and then made a very interesting observation: "There is no aggregator of this content. Apple integrated podcasts into iTunes so you can find it; video needs that, too. [I'm] not sure how — maybe a Yahoo! — but someone has to do it to serve as that directory."

Steve Jobs might as well have been eavesdropping on our conversation. As part of the iPod announcement, he unveiled iTunes 6, which will offer video content, including music videos and full network shows from Disney ("Lost" and "Desperate Housewives").

This makes content providers and media companies happy: iTunes has a huge installed base, so it's an amazingly effective distribution channel.

Assuming that iTunes will soon aggregate downloadable video from other sources is no big leap; the company did so with podcasts and instantly legitimized the business.

As I said, Jobs insists that the new Apple iPod is first and foremost a music player, yet he promises it'll be the world's best portable video player, and he has done everything to ensure that it can play video well and will have a strong content pipeline. What's more, he has the legions of current iPod owners penciling the new iPod with video onto their holiday buying lists.

Say what you will about Jobs' ego. I think he just saved the portable-media-center market.