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The Apple Triumvirate

Apple has built a holistic solution with the iPod/iTunes/iTunes Music Store that provides the means for a user to buy, manage, and play media. The relationship among the three products is so tight that no one really thinks of them as three products. It’s simply the collective iPod experience: the Apple Triumvirate.

The iTunes media manager (the name really needs to change) allows you to easily manage audio and video files. This doesn’t simply cover music and TV, but audio books, podcasts, video podcasts, and more. The relationship between iTunes and the iLife products is even more symbiotic on the Apple Macintosh. The tool is easy to use, allowing you to find your music fast and manage how you distribute your music—whether to iPod, to CD, or through AirPort to a stereo. It’s all neatly done in one product. No muss, no fuss.

The iTunes Music Store has Sony licked when it comes to music delivery. On average, each registered user of the iTunes Music Store purchases 60 songs. Not one song as a test, but 60 songs. To me, this statistic demonstrates that users are no longer "trying out" iTunes, but using it in place of buying a CD. The delivery mechanism is trusted.

The iTunes Music Store now includes TV shows, Pixar movie shorts, and 2,000 music videos. If you factor in the 50-plus video podcasting shows currently delivered to iTunes users, you can see that Apple is generating a whole new platform for video delivery.

Apple hasn’t yet begun delivering movies. Meanwhile, Sony is banking that we’ll want to invest in their proprietary UMD disc format for the PSP to watch new movie releases. What Sony is missing, though, is that the iPod has clearly demonstrated that new users don’t want to buy discs; they want digital media. The other problem facing Sony is that the UMD format is more expensive than DVD. Apple has set a landmark price of only $1.99 per TV show. Can we expect movies at $9.99? How can you justify paying more than $20 for a UMD disc when the same movie is cheaper on DVD and possibly cheaper through iTunes?

Maybe we’ll be lucky and Apple won’t start with blockbuster movies, but rather will resurrect classics such as Edge of Darkness.

The final killing blow Apple can deal the PSP is with the iPod. The video experience on the iPod is actually very good. The reason is that you become immersed into the experience through using headphones. The screen is also only a couple of feet at most from your face, as you hold your iPod in your hand. The image is very sharp. It may not be high definition or widescreen, but for TV and music videos that’s okay.

The iPod has a second killing blow: disc space. Today, storage on the PSP is limited to UMD and memory sticks. The iPod is at a minimum 30GB—you can play 75 hours of video without having to swap multiple discs in and out. In other words, you can watch every broadcast episode of Lost and Desperate Housewives without clutching a handful of discs.

The final killing blow Apple sends with the iPod to the PSP is size. Unless you’re a basketball player, you’ll need two hands for the Sony PSP. Also, you can’t easily slip the PSP into your pocket. The iPod is light, with huge battery life (nearly 20 hours if you’re listening to music, and nearly 5 for just video). The PSP is much larger and sucks batteries dry.

Certainly Sony will react to Apple’s attack on the personal video market. Unfortunately, it won’t happen with the current release of the PSP. Apple expects to sell almost 10 million iPods this Christmas period. With only 2.5 million PSPs sold in total, it’s clear that the numbers are in favor of Apple. Factoring in the success of the iTunes Music Store, it’s clear that Sony needs to go back to the books to rework the PSP’s distribution model.

In many ways, the iPod versus the PSP is today’s equivalent of VHS versus Beta. Beta lost—and, yes, it was a Sony product.

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