Thursday, October 13, 2005

They Never Get It

“The question is whether anybody will want to watch videos on a small screen like that.”

Flicking back and forth between the two baseball games last night I chanced upon a news clip of Steve Jobs, pacing a large stage and holding aloft the new video iPod for the adoring Apple fanatics, while a 55 year-old newscaster solemnly reported on some facts and figures regarding yesterday's stock market reaction to Apple's earnings report.

Then the solemn 55 year-old newscaster pronounced, quite rhetorically, his question of whether anybody will want to watch videos on a small screen like that.

It cracked me up, having just come from the café of our local Borders, where, in the course of doing some work on my wireless, I had observed a pair of students hunched over a “small screen like that”—in this case, a cell phone—playing some kind of game for an hour while their books (this particular Borders is a mile from the nearest university) sat opened and unused on the table.

And that, oh solemn 55 year-old newscaster, is why anybody will want to watch videos on a small screen like that.

Jeff Matthews
I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations.


tahoe kid said...

Agreed. The news guy is out of touch. My 10 year old is in love with mobile phone games and whenever we're somewhere and have to wait for a few minutes I get asked, "Hey Dad, can I play a game on your phone." No problem with a small screen there. Now that Verizon has introduced Vcast and Apple now has the video iPod, it's easy to see how this will be a strong candidate for the next "Big Thing."

dthorn said...

While a small screen is not an absolute deterent, particulary to those with young eyes, it is also an opportunity. KOPN, EMA and MVIS are all companies working on virtual or head mounted displays. If you dont think that small displays create a large opportunity take a look at KOPN stock chart. They are the only company with a product currently on the market (~$100 for a low res version this xmas). Their technology is not that exciting, however. MVIS on the other hand has game changing technology but they are still in development. Not sure at this point the exact timing or who gets the winning design, but I predict that virtual displays will be as common as headphones in five years. Personally i am keeping a close eye on MVIS, if only they could execute outside of their R&D department....

rip said...

agreed viewing small screens will not be big, but this will complete the product as a media storage/output solution.

what is really dumb beyond belief is video cell phone

fiat lux said...

It's a youth market thing, obviously.

I'm definitely not that market. I don't even get the point of watching downloaded videos on your PC -- if I'm going to watch a TV show or a movie, I want to be siting on my nice comfy couch in the living room, not in a task chair at my desk.

Sam S. Park said...

Steve Jobs mentioned that there currently is not a market for portable video devices, and that Apple will need to create one. They also cover their claims by reassuring people that their main function still focuses on mp3s. I don't know about you, but I remember those tiny portable television devices in the 80's; but the only place I saw them were at baseball games, where fans would bring them to anxiously see if they might be caught on tv for a slight second. Yeah... that fad died out quicker then SUV's popularity in current gas price trends.

Going back to portable video players, Apple isn't the first to do this... there is Samsung's Yepp players, among others, that already brought this to the market. I've noticed that kids favor this product, but they get this product for bragging rights. I'm sure there will be other uses for portable video functions, but I guess Apple will have to create this market... time will tell.


The video is angle is secondary - there are thousands of DAP to choose from - from standalone Archos Gemini to the PSP. But what they are doing with Itunes and selling tv shows - this is going to blow up big. Plus did you see what they did with their new software and remote (I forget the names) They will do what Gateway and Dell couldn't and become the ultimate home electronic consumer experience

m said...

With the trend to big screen TVs, why would you want to look at such a little screen, but more importantly why pay for TV shows or movies that you can only see on a small screen.

Even if you load it on your computer what resolution are you getting? Is it full DVD quality even if you have a video out on the computer?

The end result is that most iPOD use is when people are moving. They are walking down the street or in the car and use it as a way to block out the world. This is why the small units have been very successful.

Video is different. You can't watch it in your car or when you are walking down the street.

The fact is this is mearly another type of portable DVD player with a particularly small screen. Yes there is more content available, but does that make up for the smaller screen than the existing DVD players.

My conclusion is that it will sell very poorly and that this is not the innovative product that Apple is known for. It was the obvious answer to "what's next?", but obvious answers are frequently not innovative, not well received, and end up leaving the company and people involved wondering "What happened?"

Dan said...

Buses, bus depots, planes, terminals, trains, train stations, waiting rooms, dorms, cafeterias, parks, beaches, if you've ever seen people in these places. You've seen the market for these devices. Any place you read a magazine or newspaper, you could be watching the news/favorite tv show/movie instead.

aralls said...

m – Do you realize that the new units are superior in many ways other than video capability? Longer battery life, larger screen, more storage, and thinner to boot! So even if you don’t care about video, why wouldn’t you buy it? If you don’t need the storage, then the Nano is pretty cool, too.

CanuckInTX said...

The video market is still going to be just for those with the good young eyes, whereas the iPod was great for everyone. When I travel frequently on planes I see as many 'older' people (30+) using iPods as anyone else but I can't imagine a lot of them getting the new iPod to add a tiny video screen.

I agree with m, this one is going to be overblown and the iPod is not likely to blow open a whole new segment to sell this product to. I smell disappointment coming up.

stealthelephant said...

Technology improvements are typically self evident. In this case, the solemn newsman sounds as if he was talking out of his ass and hadn't tried the thing. I think this may have been Jeff's point. The convergence of portability, resolution, ease of use and compatability appears in the Apple device in a way that no other tech firm had either imagined or delivered. One might be inclined to say this will be a disappointment or a youth marketing thing--but that is probably only in the context of Apple's stock. Expectations are spectacularly high, so yeah, I'm sure a holder might be disappointed. Don't miss the trend though. This is not a fad. Apple/Steve Jobs are defining convergence. It seems to me everybody else is just talking about it. Three industries are being shaken up and shifted by Apple and the iPod: music, movies, and videogaming. Polandspringsenemas is on to it. This isn't just filling out the delivery of technology through the iPod but the beginning of personalizing entertainment delivery(and who knows what else) through a sophisticated, stylish, user-friendly machine. These newshounds miss the big picture all the time!

btb73 said...

I can see kids buying music videos for such a device. Being able to clearly see whats going on in those isnt that important, and it might be hip/fun to show them/discuss them.

However.. I'm on the newscasters side on this one when it comes to buying TV shows, very few people are going to pay to watch shows like lost in 320x240 resolution. Thats vcd quality, aka total crap. You cant even download a version of Lost with that poor quality on the internet!(normal Lost xvids found there are either 640, 960 or 1280 res). I cant see this becoming much more than a showoff item(as far as TV-shows are concerned), not until they up the resolution quite a bit.

Aaron Koral said...

Jeff: I think Apple's newest product idea, while great and well designed, is a little misguided.

It's great that you can download content such as TV shows and music videos to the iPod device, but manufacturers like Samsung and Nokia are already working with cellular carriers to bring the same content to people's cell phones.

So the real question is: why buy the iPod when you get the same content delivered to your cellular phone?

Now, I could be wrong if a majority of the content providers (i.e., Disney, NBC Universal, et al.) line up behind Apple and support the iPod as the "standard" by which their content should be delivered to consumers in the future.

tahoe kid said...

Don't forget the ability of Apple to create a hip new thing. After all, there were lots of MP3 players in the market pre-iPod. Apple made the iPod cooler, more hip and redefined the market. They may be able to do the same thing with the video product. The success of Apple in these markets is technology AND marketing.

Johnny Debacle said...

How many of you are even under 30 much less close to the age of people who may find value in this?

Your kids may like to play games on the "Tiny House" screen of your cellphone, but how does playing a limited simple game designed for a small simple screen compare to watching a TV show or Film content designed for a 34 inch TV or a theatrical experience, respectively? It's apples and oranges.

This will not take off to a large extent; even though there is probably a market for it, it will be niche and never approach the levels of iPod. As a bonus feature, it won't turn anyone off, so if Apple can do this cheaply then good for them.

If they can start doing things like serving up local news or the morning CNBC shows to people VidPod so they can watch them on their commute, it would begin to get interesting. Or content that is less reliant on graphics and movement or even specifically designed content.

The real problem is as the post above alluded to: the instances in a given day when it would be possible(safe) for your eyes to be glued to a screen are < the instances in a given day when it would be possible for your ears to be glued to headphones.

Re: The shows sold in iPod stores -- $1.99 for crippled versions of content? 320x240 QVGA? I think that's a tougher sell to "kids" who are savvy enough to deftly prerecord what they want via DVR or find what they want via the shadow digital distribution channels.

Sam S. Park said...

Johnny D makes a good point. Programs like those on CNBC are the only thing I'd subscribe to and watch on a tiny screen. I'm under 30...barely, so I'm at an age where I could talk to both the older and the younger. I doubt the "Lost" and "Desperate House Wives" viewers will watch them on a small screen. However, kids who already own video functioning players watch them at schools or elsewhere to cure bordom. I've heard that some teachers actually allow kids to watch them in class during test days, if they finish early. Apple doesn't need to create this "not yet existing market"... it already exists, he's tapping the wrong waterhole.