The Apple Special event last week left me pondering, "who will buy the iPod video and why?" Four groups of potential customers come to mind:
1) Innovators and early adopters who are willing to get the new iPod right away, no questions asked.
2) People who were already planning on getting an iPod Photo and "might as well" get the iPod Video as it has added value for a similar price.
3) Upgraders. People who already own an older iPod and are willing to upgrade to the iPod video (different from early adopters in the sense that they will think about the decision a little more).
4) Completely new customers, who have been reticent about buying the iPod but see enough differentiating value in this new product line.
It is for the last two groups that my doubts arise. What
truly valuable content does Apple provide that will motivate people to upgrade to the iPod video or convince someone to ditch their old iPod and switch to the iPod video or spend the extra money to purchase it if they are new customers?
And is it enough?Right now, you can download four different contents from the iTunes music (or should it not be called media?) store, all priced at $1.99:
Music Videos: There are more than 2,000 music videos. This is relatively little compared to the number of songs available and is definitively only serving mainstream music consumers.
Disney TV shows: There are 3 children's TV shows that are available for download. I can not help but wonder: who is willing to download these shows onto their computer and then hand their $400 dollar iPod to their six year old? The alternative is to let them watch it on your home computer, but again, the main point of sitting your child in front of TV is to be able to work on your computer yourself ;)
ABC shows: Two popular series, Desperate Housewives and Lost, can be purchased. I can see a market for this as many adults who follow these shows may be "on-the-go" and find the iPod video an interesting solution to keep up with the episodes. Although I do not yet own the iPod video, I do download these shows on a weekly basis.
Short Pixar animated films: Pixar being so closely related to Apple, this is obvious content that can be attractive to adults as well.
Again, is this enough content to attract potential buyers? My hunch is not yet, but here's why Apple is likely to get there:
iTunes has a gigantic installed base.
As a matter of fact, it is the dominant design in the music download industry.
Apple has a well-established network externality when it comes to music and has successfully established multisided markets with customers and music labels (the number of songs and customers purchasing them is ever increasing).
So what is Mr Job's logic? Is he hoping to 'inverse' the multisided market? Is he hoping to sell millions of iPod videos before valuable content is actually ready to be supplied? Does he believe that as units sold increase, more and more media giants will be competing to provide content? Let's not forget that money is to be made off of that content as well, not just the iPods.
Without a doubt, the iPod has been a phenomenon for quite a while now and will continue to be as technology progresses. In the short run, however, I am slightly taken aback by how confident Apple is to expect demand for the new product to be there although the actual supply of content for it is so limited. Content, please.
