The Mothers of Invention at Apple

Rumors about Apple are swirling a week after Steve Jobs’ open letter to the music industry (for an excellent summary of reactions, see Engadget’s “DRM: the state of disrepair” by Thomas Ricker). But several developments warrant particular attention:

1. Apple is patenting wireless docking. According to AppleInsider, Apple is developing a dock connector for handheld gadgets that lets you dock the device at different angles of orientation and, in some cases, charge the device with power wirelessly. (See “Apple may turn to induction for iPod docking, charging” by Slash Lane.)

2. Car manufacturers are looking at ways to integrate iPods and, more importantly, the iPhone. Reliable sources tell Audiospies.com that BMW will be the first to announce full integration of the iPhone features into the next 7-Series.

3. Apple TV, which wirelessly extends the media on your Mac or PC to your television/stereo system, includes a 40-gig hard drive, ostensibly for synchronizing with iTunes just like an iPod. But the Apple TV hard drive and user interface, which makes it a computer, could be put to use in other ways, such as acting as a node of a peer-to-peer (P2P) home network. According to Robert X. Cringely, a centrally controlled P2P system is powerful because it enables prepositioning of content.

Put all three together and you have, at the very least, a wireless multimedia home network that not only links together all your PCs and Macs and television/stereo systems, but also extends out to your car and to all your iPod and iPhone devices, seamlessly. A scenario out of the Jetsons TV show of the Sixties.

But examine #3 more closely. According to Cringely, it would mean “nothing less than the undermining of TV.”

Say Disney releases Cars 1.5 — a direct-to-DVD release expected to sell millions of copies in its first few days. There is no way iTunes could even hope to participate in a launch like that simply because there isn’t enough bandwidth at a good price — or any price. Even BitTorrent would have troubles handling a small part of such a launch until enough seeds were populated and running. But what if the movie was effectively pre-seeded — loaded over a few days on a distribution tree of thousands of Apple TV boxes which could then deliver the movie locally at high speed if purchased. Or if not purchased the seeded copies could still work together to serve other Apple TVs on the same ISP subnet…

First Apple would eliminate its current dependence on Akamai, reducing its network costs for iTunes by about 100X, making the network costs effectively free. Hello HDTV!

Second, Apple would have one or many content channels roughly equivalent to an HBO, Showtime, or perhaps Discovery. Yes, I think Apple will do direct content deals, buying programming that it will then either distribute to subscribers or support with Google ads, thanks to Google CEO Eric Schmidt’s position on the Apple board. Apple’s network will give you the same content with or without ads, delivered from the same servers, one of which may be underneath your TV.

Nice to think about, but Apple’s stated position is that the hard drive is for synchronizing videos and music with a computer so that, if the computer is off, you can still play the content on your television. Makes sense by itself, but Cringely’s idea also makes sense from a business point of view. “Lowering network costs by 99% will enable the company to add to its portfolio the equivalent of half a Time Warner. Apple becomes a cable company without trucks or network costs. It becomes a whole bunch of cable networks with an instant audience the exact size of the iTunes registered user base, which is frigging enormous.” Not only that, but Apple could suddenly be major competition for NetFlix (see “The Apple iTV, Netflix has been gutshot!“).

Digital Rights Management (DRM) technology is one obstacle to this vision. And, lo and behold, Steve Jobs is for dropping DRM. Steve… good luck with that, seriously!

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.Mac (Apple Computer, Inc.)

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