• Newsletter Issue #300

    August 29th, 2005

    THIS WEEK’S TECH NIGHT OWL LIVE UPDATE

    I want to thank a small group of our listeners who hung out in our new chat room on the evening of August 25th to help us solve some of the remaining reception problems. Although the show is heard worldwide, I know that a few of you can’t seem to get it to work on your Macs or Window PCs. During our online session, I called up Jay Menna, who runs the company that streams the show, to work directly with our listeners to figure out what was going on. We also did a test broadcast on the next day to see if we could get a handle on what might be causing the problem.

    We’re going to make a few changes in server setup that will, I trust, resolve the remaining issues. In the meantime, if you can’t hear our live episodes, you can always listen to the archives on the show’s broadcast page, or our Podcasts. In fact, I rather suspect that, over time, a hefty majority of you will be listening on your own time, not ours. But we’re far from ready to give up on live broadcasts; if anything, we plan on boosting the opportunities for listener participation.

    In any case, on August 25th, we presented special on-site interviews with the folks in charge of Empire High School in Vail, Arizona, where they have traded textbooks for iBooks. You also heard from two students and a teacher. This school has received worldwide attention, by the way, and you’re going to witness continuing coverage over the next few months. In fact, the day after The Tech Night Owl LIVE taped its segments, CBS visited the site. We also spoke with Bill Fox of Macs Only, who has done a thorough study of those allegedly conflicting patents on music playback interfaces from Apple and Microsoft. The results may surprise you. macCompanion’s Robert Pritchett came onboard to detail a new way to look at Apple’s user base, and we also received a preview of Toast 7, from Adam Fingerman of Sonic Solutions.

    Our September 1st show is still being developed, so stay tuned for the details. And don’t forget our weekly contests. So far we’ve given away such prizes as iPod shuffles, iPod accessories, memory upgrades, network music players, software and books. More great prizes will be offered in the weeks to come.

    If you haven’t heard our program, be sure to visit The Tech Night Owl LIVE Web site to listen to our archives. Enjoy.

    THE IPOD’S COMPETITION: THE SHAKEOUT BEGINS

    Every so often, you read a story from someone who should know better claiming that the iPod is past its peak and that sales will soon begin to tumble. There’s no way that Apple can continue to dominate the digital music player market for so long. After all, nothing is forever, and this is Apple Computer. Of course, nobody is predicting the imminent end of Microsoft’s dominance of the PC market, because that’s Microsoft. There’s supposed to dominate. It’s their destiny. Apple is destined to fail, and if these misguided folks continue to say that often enough, maybe it’ll come true.

    Well, in the case of music players, there are failures, but not from Apple. The latest casualty is D&M Holdings, Inc. of Japan. You may not have heard of the company, but you’ve surely heard of its brand names, which include Denon, Marantz, McIntosh Laboratory (which preceded the Apple Macintosh), ReplayTV and, of course, Rio. In case you don’t recall, Rio actually built the first portable MP3 player to get to market, long before Apple jumped into the game with the iPod.

    But being first doesn’t guarantee success, if you can’t stay ahead of the competition. D&M’s excuse was that “the company’s decision to shut down the Rio business followed a determination that the mass-market portable digital audio player market was not a strong enough strategic fit with the company’s core and profitable premium consumer electronics brands to warrant additional investment in the category.”

    Shorn of the corporate-speak, it simply means that Apple, which maintains a formidable 70 percent marketshare, beat them to a pulp.

    A few weeks back, Creative Labs, which makes Zen MP3 players, announced it was hemorrhaging red ink as it struggled to build market share. Will Creative hang in there? I don’t pretend to predict corporate strategy, nor am I about to suggest that the problems with the Zen will impact the future of the company’s other brands, which include Soundblaster sound cards and Cambridge SoundWorks loudspeakers. In fact, Creative’s executives blame the loss on “price competition” and promise to regain profitability by year’s end. I suppose we’ll just have to wait and see what happens.

    This doesn’t, of course, mean that the iPod is immune. Other competitors, such as Samsung, have deep pockets and perhaps the wherewithal to weather years of heated competition to gain a significant foothold of the market. Apple can’t rest on its laurels just because the Rio is on the way out, and Creative Labs has seen some financial reverses. Even cultural icons are eventually supplanted by other cultural icons, and Apple has no exclusive on brilliant design.

    Other companies out there are bound to some day find a mix of low pricing and reasonably user friendly design that may truly give the iPod a run for its money. If anything, the pressure is higher for Apple to continue to innovate with its MP3 player line. It may not happen this year, or even the next, but eventually digital music players will become commodity products, just as handheld radios and CD players are now. In that environment, the iPod may still be a significant presence, but not nearly as much as it is now.

    In fact, I very much believe that Apple may have to begin to reconsider its music strategy as the competition becomes more fierce. Take subscription music services. Today, they don’t count for much compared to the iTunes Music Store. In addition, ongoing negotiations over royalties for music delivered on a subscription basis have hit a snag, which may, in the short term, imperil such iTunes rivals as Napster, Real and Yahoo The music companies still have to be dragged kicking and screaming into the 21st century, and things may get nasty before the issue is resolved.

    But there are benefits to the subscription model. It may not be the best route for the long-term, because your music library only exists as long as you pay the monthly fee. But it allows you to legally sample an entire song before you buy a copy, not rely on just a 30-second sound bite to make a determination. That might just give the fledgling artist a better chance to deliver hit product which is, as you might expect, what the business is all about.

    Assuming current negotiations over royalties succeed, should Apple consider this route? Perhaps not while it’s sitting pretty far ahead of the competition. Surely Mac users must also feel somewhat alienated because those subscription services, which use Microsoft’s digital rights management scheme, do not support Macs, and the iPod, except for Real’s hack, is not a player either, if you’ll forgive the pun.

    You can bet, though, that Apple has a “Plan B” and no doubt a “Plan C” if the market for iPods and music sales begins to sour. Profit margins on iPods are sufficient to allow for price cuts, and adding an iTunes music subscription service with a unique Apple slant may indeed be part of the picture.

    But if more and more music player brands bite the dust in the months to come, don’t expect to see any big changes from Apple in the foreseeable future.

    THE TECH NIGHT OWL: THE DELPHI XM2GO MYFI IS A NO GO

    Don’t get me wrong. I really love satellite radio, and I keep my home and car XM players running overtime. But the thought of a portable satellite radio player is tempting. So I got ahold of Delphi’s highly advertised MyFi, which lists for $299.99, about the same as the basic 20GB iPod, to see if it had any possibilities. Now I didn’t expect anything approaching an iPod in terms of interface or ease of use, but there are basics that I require, such as good sound and good reception.

    Unfortunately, the MyFi only bats .500 in that regard.

    When you open the MyFi box, you’ll find a mess of stuff. There are cables and antennas for auto, home and portable use, plus the requisite headphones, battery and battery charger. The device tries to be all things to all people, a multiple purpose satellite receiver. I suppose there’s logic behind this approach, because both XM and Sirius charge you for each receiver you activate, and think of all the spare cash you can save by schlepping a single gadget around with you.

    From an aesthetics standpoint, the two-toned silver unit is attractive enough, but prepare to become quickly bewildered by the mass of multifunction buttons that nearly put a mobile phone to shame. The LCD-based interface tries to straddle the line between a music player and what you see on a typical mobile phone and fails on both counts.

    Hookup isn’t as bad as it sounds, nor is the interface once you get accustomed to the layout. The MyFi lets you listen to live XM broadcasts, or record up to five hours worth on its built in flash memory. Unfortunately, there’s no way to expand the memory allotment, which may or may not be of importance to you.

    As a practical product, MyFi works fine as when hooked up to a home audio system or the one in your car. The unit contains a built-in FM transmitter that, like the ones built for iPods, lets you play the signal on a free FM station. The supplied earphones sound good enough, and, like the Delphi Roady2 that I normally use, the FM reception in a car audio system is adequate.

    But as a portable player, MyFi is a work-in-progress and needs some help. The achilles heel of the unit is its inability to ferret out decent signals when you are simply walking around or jogging. Delphi supplies a little accessory antenna that you can clip to your lapel, belt buckle or shirt pocket. But satellite radio is a little more finicky than that. It works fine on an auto in the great outdoors, and in the home if you take a little care positioning the antenna. But just walking around in random locations doesn’t cut it. I understand that some folks do get decent reception with their MyFi. I tried several different locations and came up short. Sometimes it worked, sometimes the signal simply cut out. Too bad Delphi didn’t add the ability to receive terrestrial radio; it would at least provide a substitute when satellite signals can’t be retrieved.

    Several other companies have come out with satellite players based on the XM2GO concept, and hopefully they deal better with the reception problem. There’s also a Sirius-based variant coming late this year. But until I can test them, I won’t make any predictions as to whether the fundamental failings of this design have been resolved. For now, if you want to take your satellite radio on a long walk, a jog, or a trip to the gym, try this: Login to satellite radio service site you subscribe to, capture the audio with a program such as Audio Hijack, and download it to your iPod. It may seem a somewhat awkward and time-consuming process, but there will be no reception problems.

    THE FINAL WORD

    The Mac Night Owl Newsletter is a weekly information service of Making The Impossible, Inc.

    Publisher/Editor: Gene Steinberg
    Managing Editor: Grayson Steinberg
    Marketing and Public Relations: Barbara Kaplan
    Worldwide Licensing and Marketing: Sharon Jarvis



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