Piper Jaffray analyst Gene Munster didn’t get to list Apple under “areas of expertise” on his CV by not knowing a fair bit about the Cupertino company, and the smiling soothsayer has been addressing fifteen key Apple-related questions this week in a report to his flock of investors. Covering all aspects of Apple’s retail, Mac, Apple TV and, of course, iPhone business, Munster describes his predictions for a family of 2-3 Apple cellphones, why lower price points are an inevitability, and how he expects the company to move to being carrier agnostic. His suggestion of 2-3 new iPhones that diversify the range isn’t a new one, but he has decided that China will get the handset in 2009.
“We continue to expect Apple to offer a family of iPhones (2-3 separate models) in the first half of 2009, including lower priced ($200-$300) models. Just as the company slowly diversified the iPod lineup and entered lower price points with every new version of the iPod, we expect Apple to launch new models of the iPhone at lower price points in CY09. This expectation, along with the expectation for lower price points, and world wide availability of the phone, is critical to our CY09 iPhone estimate of 45m units” Gene Munster, analyst, Piper Jaffray
“[W]e believe Apple is not hesitant to try business models other than the exclusive models the company has chosen during the iPhone’s first year. It has enabled Apple to maintain tight control on the user experience of the iPhone, but expanded availability will likely become a higher priority, and we believe it will eventually drive Apple to offer the iPhone on multiple carriers in each country” Gene Munster
Munster also addresses Apple’s introduction of the App Store, describing it as a recognition that the iPhone user base was “dissatisfied with the simplified Web 2.0 apps available on the iPhone’s web browser.” He describes the developing iPhone and iPod ranges as a sign that Apple is looking to “transform the MP3 market into a portable computing market” and that the iPod touch is the first of many WiFi-enabled, internet-friendly PMPs. For anybody hoping for an Apple Tablet, Gene suggests it may take a few years, but will come as an evolution of the MacBook’s MultiTouch trackpad (which itself will evolve to an embedded color touchscreen):
“Eventually, we expect Apple to change the trackpad to backlit color screens for a more dynamic user interface on the Mac. And ultimately, we expect Apple to develop a full touch-screen MacBook, although not until the technology has fully matured over the next 3-5 years” Gene Munster
Nothing especially new on the iPhone, overall, but the omission of the 3G iPhone from any of Munster’s answers is a curious one. You can read the full list of questions and answers at Apple Insider.
I now have all the pieces in place to build the Home Media Center that I’ve been dreaming of. Sure I’ve got HDTV’s, TiVo, surround sound, Blu-ray, Apple TV’s, and a pretty extensive DVD collection of over 350 movies. However, the one piece of the puzzle that was missing was having those movies that I love, the top 25 to 50 or so movies that I could watch over and over again on a hard drive that could be streamed to any one of my HDTV’s. There is nothing new about ripping DVDs to .MP4/.M4V format and serving them up. As a matter of fact I had already tried it months ago. What stopped me dead in my tracks back then was the fact that I was missing the 5.1 surround sound. The original Apple TV software 1.x did not support 5.1 surround sound playback without some cleaver hacking/encoding. It was just a bit more than I was willing to go through. However, with the latest software update to Apple TV (take 2), Apple has turned on the 5.1 surround sound playback if your movies are encoded properly.
Once Apple updated the Apple TV, I knew it would be just a matter of time before my favorite media conversion apps would be updated to take advantage of this. Sure enough, the first one, "Visual Hub" was updated almost immediately with an Apple TV 5.1 preset. Then the other shoe dropped. The other utility and probably the more important of the two, HandBrake 0.9.2 (a freeware app for both Mac and PC) was just updated a couple of days ago to support 5.1 surround on Apple TV as well. So now with a computer running iTunes and a large hard drive, an Apple TV or two around the house, I can rip my DVD’s to an Apple TV 5.1 surround format and access them at any time using the Apple TV remote.
A true 5.1 Dolby Digital signal coming through to my Bose receiver from The Matrix running on my Apple TV
What’s my setup?
I have an iMac G5 dedicated as an iTunes server. It currently has a 250GB internal hard drive in it and I plan to update it to a terabyte drive now that this is all working. This iMac is on my network via gigabit ethernet. This iMac already has my entire music collection on it. I have some Apple TV’s in various rooms connected to HDTV’s. Using HandBrake (a freeware app for both Mac and PC) with a simple settings change, I can encode my DVDs while preserving the 5.1 surround track.
The main setting change I made in HandBrake was to change the Codec to AAC + AC3 Audio
Once the movies are encoded then what?
Once I rip a DVD to the hard drive using HandBrake, I then import it into iTunes. I have to option of actually syncing the movie(s) to the hard drives of the Apple TV, but this really isn’t necessary with the latest version of Apple TV, nor is it feasible because the Apple TV hard drives just aren’t large enough. With the latest software update of Apple TV the movies and other media in your iTunes library and the movies and media on your Apple TV hard drive show up together in the Apple TV menus. So Apple TV will play the movie you select regardless of which drive it actually resides on. The streaming experience has been flawless so far.
Scene from The Matrix streaming through Apple TV from my iMac G5 to my home theater
What’s next?
Now I have to decide if I really want 350+ movies at my finger tips. If so then I will definitely need to upgrade the iMac to a larger hard drive. A 2 hour movie weighs in at 2.54GB once converted to .M4V (.MP4). So 350 movies could easily take up just under 1 terabyte of drive space. The truth is that I realized some time ago that there aren’t very many movies that I could watch over and over again. So chances are I won’t be converting all of my movies. I will definitely rip my favorites. There’s also the HD issue. The vast majority of my current DVDs are in standard definition DVD. While the Apple TV does support HD content, these standard def DVDs still look pretty good or at least as good as the original DVDs did (to my eyes) using this setup. If I do buy any new movies, I will likely buy them in Blu-ray format. Hopefully iTunes will start to offer HD movies for sale. I don’t plan to buy many new flicks, but given the choice of buying a digital download vs. a disc, I may lean towards a digital download now.
It would be nice to have ONE device that does it all. However, in reality it just doesn’t exist (yet). I have 3 set-top boxes in my home theater. Those 3 boxes are TiVo HD, Sony Playstation 3 and Apple TV. Each device has some overlap in functionality to the other two, but not enough to be eliminated. My focus here is on one aspect of entertainment and that’s movie rentals via electronic download. Since your budget may not allow the purchase of two devices that do a lot of same things, I thought I would compare the two that are the most alike.
Apple TV (take 2)
Apple provided a FREE software update to the existing Apple TV. So no new hardware is required. While I’m an early adopter of Apple TV, I was never behind the whole "buy movies from iTunes thing." It just never made sense to me. I said it from day one, "If I really like a movie enough to buy it, I’d rather own it on DVD (now Blu-ray)." There wasn’t really a cost advantage in buying a movie from iTunes and they tie up space on your drive. So my reason for buying an Apple TV was mainly to showcase my photography to friends and family, watch video podcasts, watch purchased TV shows, music videos and home movies. Well the Apple TV just got a lot more useful in several ways and of course the main new feature is support for Apple’s iTune Store movie rentals. I rent movies all the time. My main rental source is Netflix (and after you read this entire post, you’ll see why it will remain my main source for a while longer).
The new Apple TV interface is as you would have guessed, very slick! It’s so inviting and easy to navigate. Apple has blurred the line between what’s stored on the Apple TV’s hard drive and what’s stored on your Mac or PC’s iTunes library. So if you go to "My Movies" for example, it shows the movies from both places (the built-in hard drive and your iTunes library) all together. Pick a movie to watch and it plays it no matter where it’s located. This applies to music too. Apple has also gone a few steps further with photo slideshows by implementing direct support for .Mac gallery and Flickr online photo albums. This makes it so easy for you see photos from friends and family right on your TV. Another big improvement is the ability watch podcasts directly from Apple TV regardless of whether you’re subscribed to them or not. It will stream them right from the source. You can even bookmark your favorites such as my Creative Suite Podcast.
This is all GREAT, but what about movie rentals? The good news (make that GREAT news) is that no computer is required. You can use the Apple Remote right from your sofa/theater chair and browse movies, do searches, watch previews and RENT them on the spot. If you choose to rent a movie your iTunes account will be charged and the movie will start to download immediately. Once enough of it has downloaded, you can begin watching the movie (in my case after about 4 minutes with an HD movie). Movie rentals are priced from $2.99 to $4.99 depending upon the age of the movie and quality. Older movies are $2.99 in standard def and $3.99 in HD and newer titles are $1 more in their respective formats. Sounds great so far right? It is! However, doing my best to always do a balanced review, there are some downsides: The biggest downside for me and the reason I won’t give up Netflix is that Apple won’t get new releases until 30 days (yes one month) AFTER they come out on DVD. I’m sure this was done intentionally by the evil movie Hollywood houses, but it is what it is. Another downside is that (to the best of my knowledge) you only get 5.1 surround sound on the HD rentals. Also unlike renting from iTunes on your computer, if you rent a movie directly on your Apple TV it CAN’T be moved to any other device. This last one isn’t a big deal, but I thought you should know so that you can plan accordingly. Just like renting from iTunes on your computer, you’ll have 30 days to start the movie and then 24 hours to finish it/watch it as many times as you like. Like many of you, I feel that 24 hours is just not enough time. They should do it like they do at the rental stores. If it’s a new release you have 24 hours. If not, you have a few days. Or they should do it like Netflix, offer a monthly subscription to have a set number of movies out (downloaded) at one time to take as long as you want to watch them or watch as many times as you want. Another one of my pet peeves hasn’t been resolved in this update and that is the ability to play a playlist of music videos. Just like the original Apple TV, the first video plays and then stops returning you the list of videos. There is no technical reason that I can think of as to why it just can play one right after the other!
The Apple TV works exactly as described and is way more versatile than the original model. Apple also dropped the price down by $70 to $229 for the 40GB model. Speaking of which, a lot of people were really complaining early on about the original Apple TV ONLY having a 40GB drive. With the new software, and they way it seamlessly blends content from your computer and its built-in hard drive, the size of the internal drive is really irrelevant for most people. The only time it would be a concern is if you didn’t want to keep your computer on for live streaming of content that didn’t exist on the Apple TV’s hard drive. There’s even a new option in iTunes to have iTunes automatically figure out what content should be sync’d giving priority to newer items. However, the streaming works so well that this really isn’t an issue especially if you have an 802.11n network.
Moving back and forth
Just like before the update you can sync content from your computer to an Apple TV. You can also MOVE rentals from your computer to your Apple TV, but not the other way around. If you PURCHASE music or movies on your Apple TV they CAN be transferred to your computer so that you can sync them with iPods and such. So if you RENT a movie on Apple TV, you are only going to be able to watch it on Apple TV. Everything else goes both ways. Also if you have multiple Apple TVs there is no way to move (or watch) content between them directly.
AirTunes Bonus!
Apple also threw in an AirTunes bonus. Since you will likely have your Apple TV hooked up to your booming sound system, you can now direct your Mac or PC to stream music from iTunes directly to your Apple TV and out through your stereo. No need to buy an AirPort Express just for iTunes streaming. It would have been nice if the Apple TV was also an AirPort base station, but I’m guessing that was too much to ask for for a FREE update.
If you want more info and to see an actual demo of Apple TV, check out this guided tour. Check out the complete specs here.
What about TiVo HD?
How does TiVo HD compare? Apple has an advantage in that they make both the hardware and the software. So it will always be hard for hardware manufactures to out do Apple when it comes to user interface and user experience. However, TiVo’s user interface is legendary and should be the model for all DVRs! When it comes to movies though, TiVo has hooked up with Amazon.com (Amazon Unbox). Amazon Unbox provides movies for purchase and movie rentals with direct download to TiVo HD boxes, Windows PCs and portable devices like the Archos and Creative Zen, but NOT iPods. Although you can choose to rent movies from the website OR directly from your TiVo, trust me you’ll want to do it from the website. The TiVo interface to Amazon Unbox is nowhere near as slick or fast as Apple TV. As a matter of fact, the first time I tried it I remember saying that "I’ll never do it this way again." It works, it’s just SLOW!
Amazon Unbox links up with your TiVo Central account. Since your TiVo connects to the internet every 30 minutes or so, it will see the request/purchase from Amazon Unbox within 30 minutes and start downloading your rental. Of course if you want it sooner you can either rent directly from the TiVo HD or force an immediate connection. Like Apple TV, once enough of the movie has downloaded you can begin watching it.
Although the TiVo HD outputs an HD quality signal (up to 1080i) to your HDTV, the movie rentals themselves are NOT in HD format. They are in widescreen format and seem to be in the original movie aspect ratio. So you will get even more letterboxing than you do with a DVD. The quality is decent, but the Apple TV/iTunes quality is BETTER!
Amazon Unbox rentals can cost less too. They often run 99¢ rental specials. The first movie I rented (Shooter) cost me only 99¢ and that was certainly cheaper than going anywhere else to get it. Amazon Unbox seems to also be restricted by the movie houses in that their movies come out well after the DVD versions. Movie rentals from Amazon Unbox cost from 99¢-$3.99. They also sell TV shows for the same $1.99 as iTunes.
Although TiVo HD doesn’t hold up as strong for movie rentals, the one thing that it has that Apple TV doesn’t is DVR functionality. Not only can I play back my purchases and computer generated content, but I can RECORD TV shows and move those TV shows to my computer for viewing or downloading to my iPhone/iPod/Apple TV.
When Apple TV first came out, it was exactly the same price as TiVo HD $299. That coupled with the limited functionality it was pretty much a no brainer to go with TiVo HD if you were going to pick one device. Now Apple TV costs less and has a lot more functionality than the original model so you would have to decide which features are more important to you. For me, I need BOTH devices. If Apple TV were a DVR, I’d potentially be saying good-bye to TiVo. If TiVo HD improved in the areas of movie rental interface, streaming from Macs, etc. I could live without AppleTV. However, neither device is strong enough to run solo in my theater. Since I still need disc playback capabilities the Playstation 3 isn’t going anywhere either. It makes a great Blu-ray player.
Netflix still wins the bulk of my business
Why? Netflix offers me something that Apple TV/iTunes and TiVo HD/Amazon Unbox don’t and that is I can watch my rentals whenever I feel like it, anywhere I like with an all-you-can eat price. The movies are available immediately when they are released on DVD. I can take my time and no have to watch a 24 hour clock. There are no late fees and as their commercial suggests, "there’s always something to watch!" I usually have two DVD’s that I haven’t watch at home almost all the time. So I’ll probably only do iTunes/Apple TV rentals when it’s a spur of the moment kinda situation OR if I’m already on the road and want to watch something for the flight home. Netflix has also promised Mac support in 2008 for their online movie stream service. So things should really start to heat up when that happens.
Yesterday afternoon, Apple TV Take 2 was finally released, after a long wait for the software update to be finished. The new software is available for download directly onto the Apple TV, free of charge, so early adopters will not be stung by this addition.
Movies expire a day after playback, but can be kept on the Apple TV hard drive for a full 30 days. User feedback has been generally positive, with increased performance from the Apple TV itself and a few nice additions, including full Youtube capabilities (login, favourites etc), Airtunes integration (iTunes music can be controlled from Apple TV) and a new startup video.
Films cost $2.99 and the latest films are slightly more expensive $3.99. Another dollar is added for HD versions .
I was really let down by the Macworld 2008 keynote yesterday. Steve Job's keynotes are a thing of lore, and yesterday, his legendary speeches lost a bit of their allure. There was a lack of 'BOOM's, no 'one more thing', and actually, an obvious empty spot, bereft of new, exciting products.
For the last year, Apple could do no wrong. They have released a stream of complete, advanced products, which has directly translated into a build up of momentum, and their shares ballooning to $200. Given these circumstances, the keynote was never going to live up to the collective Apple communities' expectations.
The online community tends to glorify these speeches, but I have already noticed websites such as Gizmodo and Engadget turning a accusing eye to Apple's court. The only way to sum this up is to take an objective look at what Apple 'really' released yesterday. Firstly, we have the success of Leopard, a solid release that really helped Apple to increase their market share following Vista, or 'OS Version Hell', as I like to call it. So far, so good. But from here on, things turned a bit sour.
Next came the release of Time Capsule, essentially a promised feature of the original beta version of Leopard which was removed from the Gold Master at the last minute. After a long wait, we are offered a 'new product', essentially an Airport base station and a hard drive in one. What was wrong with my original Airport Extreme and Hard drive that I had set up for Leopard? Instead, now I have to fork out for a stand alone product, when third party peripherals are cheaper, probably more reliable, and generally preferable. There was much controversy surrounding the failed first incarnation of Apple TV, the most recent occasion where risky innovation hasn't worked for Apple. Apple TV 2, however, looks set ot work, and the Movie Rentals idea is a solid one. The price is right, with the $4.99 fee sitting somewhere lower than your average Blockbuster. Next exhibit- the iPod/iPhone debacle. The reality of an SDK is getting ever closer, but Apple thought it would keep us sated to release some new applications for the iPod, ported over from the iPhone. How cool! We get stocks, weather, notes, mail and maps, all for 'free'. That is, if you don't already have an iPod. Early adopters get stung by Apple, just as usual, by having to fork over $20 for five free applications. And finally, the Macbook Air. I was initially wowed by this thing, and its hard to deny Apple's marketing plan- it fits inside an envelope? 'The thinnest laptop ever' is an excellent piece of computing design and minituarisation, but could have been oh so much more. There are a few areas where the target market (road warriors), will find issues, such as the non-replaceable battery. I respect and adore Apple, but yesterday they came dangerously close to losing my interest altogether. Its isn't a coincidence that the shares have fallen to $160, and the 'Keynote Index' theory is broken. All in all, Macworld 2008 wasn't successful, and Apple will have to reel out some special products over the next few months in order to regain their impetus. Where were the new Apple Cinema Displays? Where was my iPhone 3G announcement? Where was my Macbook Pro refresh? These, and many more glorious products, were noticeably absent...
Piper Jaffray analyst Gene Munster didn’t get to list Apple under “areas of expertise” on his CV by not knowing a fair bit about the Cupertino company, and the smiling soothsayer has been addressing fifteen key Apple-related questions this week in a report to his flock of investors. Covering all aspects of Apple’s retail, Mac, Apple TV and, of course, iPhone business, Munster describes his predictions for a family of 2-3 Apple cellphones, why lower price points are an inevitability, and how he expects the company to move to being carrier agnostic. His suggestion of 2-3 new iPhones that diversify the range isn’t a new one, but he has decided that China will get the handset in 2009.
