Month: March 2008

Why Apple will get my money

To followup on yesterdays conversation. The vision I have for the IT infrastructure of my home ( yes, I used IT infrastructure and home in the same sentence ) revolves around Apple product. No surprise there.


My vision is one where the computers in the house automatically and seamlessly backup on a regular basis without user intervention. I have already put some money into that part with the purchase of the Apple Time Capsule. Time Capsule is a wireless access point that contains a hard drive ( 500G or 1 TB ) that can be networked to other computers in the house. A single place to put my media (music, movies, photos). Time Capsule works wirelessly with the Time Machine software built into Mac OS X Leopard. It automatically backups everything so my important files won't be lost.


The second part of the plan involves thinking about how my family uses media; movies, photos, and music. Right now we have a TiVo and a cable provided HD PVR for time shifting TV and controlling the shows that our kids watch. We also have a DVD player (we have a Netflix subscription) and a Mac mini hooked up to our Sony HDTV. The Mac mini is a sort of media center for synching iPods, editing photos in iPhoto, and watching movies rented from iTunes. That's 4 devices and none of the media is moveable between them. If I want to watch a movie I must sit in front of the TV to do so. If I want to watch a previously recorded show I must switch inputs and use a completely different menuing system. I want something simpler. What I want to do is replaces all of those devices with one or two devices.

I want to be able to view or listen to any of my media from another device around the house. I want my media centralized and managed from one place. I also believe that the future of movie rental is a broadband download. The iPod touch has a screen large enough to view a movie and is small enough to take anywhere. I recently rented the movie, Next, from the iTunes store. I quickly synced the movie to my 3rd generation iPod Nano and started watching it while the kids were in Tae Kwon Doe. When I came home later, I moved the movie back to my Mac min and continued watching it from where I left off. iTunes took care of the whole thing. Why bother with the DVD player ( or Blu-ray ) and Netflix when within 10 minutes I can be watching a movie downloaded from iTunes?


I plan to buy either an Apple TV and an HD TiVo or get an Intel Mac mini and an Elgato EyeTV 250 plus. With an Intel Mac mini, I could use iTunes as a source of rental or bought movies as well as manage my music library with all media stored on the network on the Time Capsule. The Mac mini support HD and DVD quality video via as well as digital sound. However, the Mac mini does not have a tuner. That problem I plan to solve with the Elgato EyeTV 250 Plus. EyeTV 250 Plus delivers free-to-air digital TV to a Mac (ATSC), unencrypted digital cable (Clear QAM), as well as a conventional analogue TV via standard cable or antenna. EyeTV 250 Plus also comes with a break-out cable for composite video and S-Video, enabling you to connect a set-top box directly to your Mac. The Mac mini could then becomes the digital media hub of the home.

But I could take this even further and question whether I need cable at all. A lot of top TV shows are available on iTunes. Why watch Lost interrupted by ads when I can download the season on iTunes ( one episode ) for about $30? My cable connection costs $45/month times 12 months. That's $540/year. I could subscribe to 18 different shows on iTunes.


To be clear, from a technical standpoint, I do not think this solution is superior to other products on the market. There are most likely other products on the market that do one or all of the above. However, none of these solutions are well integrated. It requires the user to buy separate pieces and "hack" together a solution that works. The value proposition of an all Apple solution is that everything just works and works well. Apple is doing what Sony wishes they could do.

Do you see any flaws in my plan? Let me know in the comments.

The myth of the $500 computer

This post started life as an email reply to my bother-in-law. The text of his original email.

A few thouths on what you sent out earlier about AAPL and how is makes money.

Even at the 120 price the PE ration for Apple is double the others in the market space, so people have high hopes at this price.

the money is still in the software market, you just have to get enought people to buy it. The margins are amazing. hardware unless you can get people to buy itesm more often you will not make the money at high % over a long term period.

Apple has already shown signs of this. by having to lower its prices to compete withe other companys offering product in the same market space. Apple is still a good but at the 120 mark but will have to bit the bullet as being a special persons things, ie if they want to be a money making machine that lasts, it will have to sell to the general public (500/pcs not 1000-2000/pc)

In my opinion the $500 PC is a myth. That $500 PC or laptop becomes a $1000 computer after 6 to 12 months. You buy something at Dell or Best Buy. A few months later you start complaining that editing your pictures or that video of your vacation takes a long time. You buy more RAM and a larger hard drive and a few more applications (photo editing, video editing etc) after the trial versions expire. Add a webcam to use that cool video chat feature the salesman showed you. And then you need software (subscription) to remove all the spyware and viruses on the machine.



Dell is a lot better at marketing themselves as cheap and affordable. The reality is, however, far from it. Sure, they offer truly cheap desktops and notebooks, but a little looking around makes it perfectly clear that those cheap prices are for entirely stripped-off computers with abysmal hardware; suffice to say, not an option for a serious computer user. ( via Debunking the price myth: Apple vs. Dell )

In my opinion, Apple's competition is not the $500 Dell or HP. It is the Sony Vaio, IBM ThinkPad and the higher end Dell XPS. If a $500 PC is so good why does Dell and HP sell $1000 machines? Click here for PC Magazine's 19th Annual Reader Satisfaction Survey ( I did not find one for 2007 or 2008 ). Why is Dell tech support is so bad? Why is it outsourced to India? Costs get high when you have to provide the same support for the $500 buyer and the $1000+ buyer. Everyone suffers. The Dell brand is now seen as cheap just like a Chinese brand DVD player. Throw it away and buy a new one in a year.

I went to the Dell web site and as soon as I selected an Intel Core 2 Duo CPU and 2GB RAM ( same specs as in the MacBook line ) for a laptop the price went to over $1000 and that was for a CPU that was slower than the one the MacBook. I then select at least a 250 GB HD and CD/DVD+RW drive, web cam etc. The price was now just over $1100 about the same as a new MacBook with the same specs.

I the made a similar price comparison; comparing Dell desktops to the iMac.



 

Now imagine BMW, Mercedes, Infinity, Acura and Lexus introducing a cheap car? Mercedes tried that with the C230. It failed miserably. I admit that with the market downturn ( that sub-prime mortgage thing ) that luxury brands ( including Apple ) will be hard hit. But now is the time for them to really promote the value of their product not cheapen it. In the end it all comes down to what you want to do with the machine. If all you want to do is run a web browser and sync music to your MP3 player then a $500 computer might suit your needs. Just don't expect Apple to make one.