Whats Inside Apples iPod Strategy?

The second edge of Apple Computers finely honed marketing sword nearly lopped off a couple of the companys fingers this week, when CEO Steve Jobs took the wraps off Apples first non-Mac hardware product in nearly three years.

Last weeks cryptic summons to witness the unveiling sparked a level of anticipation that would be absurd if applied to any other PC company. Indeed, one major tech news site built an entire lead story atop the impossibly slender reed of the two-sentence press invitation - especially the words: "Hint: Its not a Mac."

Meanwhile, Mac enthusiasts - present company included - worked themselves into a luxurious lather trying to parse the nuances of meaning concealed within Apples minimalist missive. I was especially amused by one school of thought that suggested Apples assertion that the device was "not a Mac" denoted a new line of Macs - plural, not singular.

I never actually encountered a debate over how many of the new devices could dance on the head of a pin. Nevertheless, the sheer volume of passionate speculation about the nature of the new hardware - echoed and amplified on a thousand sites across the Web - did take on the sort of theological fervor that PC rivals such as Compaq Computer or Dell Computer can only dream of.

While many of us in the Mac mix had gotten strong hints that the new gizmo would be some sort of MP3 recorder/player, some of the most popular candidates strayed far from this relatively humble category. The strongest candidate in the rumor sweepstakes was probably the iWalk, a super personal digital assistant (PDA) with Newton-derived handwriting recognition - aka InkWell - and wireless AirPort networking.

Compared with the chimeras conjured up before the fact, its not surprising that many Macolytes were crestfallen when the new product turned out to be a - wait for it! - sort of MP3 recorder/player, albeit a rather nifty one.

Dubbed the iPod and due to ship in November, the gadget bears a FireWire port; when its connected to a Mac running the forthcoming version 2 of iTunes, Apples free MP3 play list software, the iPod will automatically store as many as 1,000 music tracks in MP3, variable-bit-rate MP3, AIFF or WAV format.

While the most prominent innovations are the devices FireWire interface and its tight integration with the Mac OS, the iPod offers plenty of niceties. The 5-gigabyte drive within the petite, 6.5-ounce device can also be mounted on the Mac desktop as a volume for data files, and users can even boot their systems from it - though Apple doesnt officially endorse that particular maneuver. The iPods slender, lithium-polymer battery, which Jobs called the "most advanced" the company had ever shipped, its high-res LCD display and its scroll wheel are all very slick.

Premium Pricing

At $399, however, the iPod hardly ranks as an impulse purchase, especially in a season when consumer confidence is going downhill faster than Tony Hawk heading into a half-pipe.

There are plenty of compact MP3 players on the market already, many with most of the iPods features and most priced cheaper than Apples offering. Whatever inroads this gadget might make for Apple, they wont be opened by underselling the competition.

Nor is world domination on the agenda - at least not beyond the very restricted world of Mac users. While Jobs told attendees of the press event that Apple may offer a Windows version of the gear "down the road," the current iPod will exclusively stuff the stockings of owners of FireWire-equipped Macs.

So what is Apple hoping to accomplish with the iPod? Im figuring that Apple sees its main importance as a brand builder in a year when box makers are clawing for any competitive toehold. Few companies indeed could garner this much press for a peripheral, be it ever so shiny. Even if the new toy doesnt sell like hotcakes, its bound to help underscore Apples marketing message to consumers seeking a stylish, media-friendly platform.

It also serves as the first hardware salvo in the Jobs-led quest to increase the cachet of the Mac operating system by providing eye-catching tools and trinkets exclusive to users of his companys platform. Like the Web-based iTools services that Apple debuted in January 2000 - with mixed results - the iPod-iTune combination is presented as an exclusive club; the price of admission is a Mac of recent vintage.

As the last of the big-time vertical integrators, its Apple alone that is going to roll out this sort of hardware lure to Mac users, and I assume the company is hoping to add further gadgets in a similar vein to the iPod line.

In the latter half of the 1990s, Apple divested itself of a slew of hardware products - from printers to PDAs - that it considered peripheral to its task of moving Macs. Any new gear the company introduces now will have to promote that agenda - and if Apple can make a profit, so much the better.

Mac veteran Matthew Rothenberg is best practices editor of Ziff Davis Medias forthcoming Baseline magazine.