Apple’s Video iPod – Putting the Conversation Back on the Right Track

By Michael Greeson, Founder & CEO TDG Research

The Down-Low

The fascination with the video iPod continues, and though the press and analyst attention has slowed since product introduction, the solution continues to be a frequent feature in major journals and at most technology trade shows and conferences. As video content continues to pour onto the Internet, no doubt this treatment will continue – both for the platform itself as well as the business of portable/mobile video consumption.

My concern is not with the amount of attention the subject is receiving, but rather the focus of that attention. While the business and technology aspects of portable/mobile video devices are widely discussed, little consideration has been paid to the issue of real-world consumer usage. In other words, how consumers actually use the devices versus how the design and marketing teams believe consumers will use the devices.

This imbalance is rather curious, especially since real-world usage will ultimately determine the success of the product. I propose a little meditation to help us realign this imbalance and channel our energies into more productive vessels.

The Up-High

First, let’s all take a deep breath and step away from the “marketplace perspective.” Forget about deadlines, about market share, about margins – trust me, you can do it (an MBA is not a permanent disability).

Second, let’s take another deep breath and this time step into the “consumer perspective.” Focus on how consumers view the device, why they buy it, and how they actually use it – real-world usage focused not on the possible but on the probable.

Are you gellin’? If ‘yes,’ then you can continue reading. If ‘no,’ you need to leave the room immediately: your MBA may be contagious and terminal.

Let’s start with a basic question: Why are so many consumers (and the public press) so fascinated with the video iPod? Yes, because Apple wanted it that way, but let’s just set that aside for the moment. Let me rephrase the question. What’s so damn unique about this device such that it is perceived as different from its categorical predecessors?

Answer: It uniquely enables video viewing from virtually anywhere.

It seems that the concepts of “video viewing” and “portability” go together like, well, “listening to music” and “portability” – in other words, the assumption is that the video consumption experience is sufficiently similar to the music consumption experience such that if new consumption channels are discovered for music, these same consumption channels will probably serve video equally well.

The consensus is that consumers have enthusiastically embraced portable digital music devices and services, thus suggesting that they don’t mind the small size of the controls or display as long as the solution delivers a sufficiently robust experience.

Many proponents of devices like the video iPod make the leap of logic that given the “sufficient” similarities in experiences, a small form factor for video will not negatively impact demand. This might be true IF it delivered a “sufficiently” robust experience, and therein lies the rub.

When I watch a video, the quality of the experience is largely determined by the size and quality of the viewing screen. This is not the case with music: when I’m listening to music, if the quality of sound is awesome then I could care less if it came from a pack of gum or an iPod (of course, the iPod would make me look cooler but that’s not important). The same cannot be said for video because (a) the visual component of a video experience requires a “sufficiently” robust video screen, and (b) the size of viewing screen is an important component of a quality video experience (especially when we consider micro-screens like those found on the video iPod or multimedia mobile phones).

Apple and others are assuming that consumers are so gung-ho to watch mobile video that they will tolerate an absurdly small viewing screen, and that the lack of robustness is somehow trumped by the portability. I don’t buy this assumption, and I think Apple will soon change its mind. As has been discussed in the last few weeks, it seems that the majority of videos that are downloaded from iTunes never make it to the portable player (strikingly similar to what has been revealed about podcasting, that most podcasts are consumed on the PC and never downloaded to the portable player).

The Bottom-Line

Okay, let’s take one last breath and ask ourselves a few final questions. Will consumers watch video on smaller portable devices? Yes they will, but as TDG’s research has suggested, it will be limited to specific types of content for specific segments of consumers – a 500-channel mobile video offering is neither desirable nor much of a business model.

Will consumers watch video on absurdly small screens? No, but they might watch video on a portable device that has a “sufficiently” small screen that balances the virtues of smaller size with the very real and practical need to have a “sufficiently” robust viewing experience. Again, we believe Apple is aware of this fact and will offer a larger viewing screen on the next iteration of the video iPod.

The entire portable/mobile video industry is built upon the assumption that consumers will evolve from stationary, living room-based video viewers to on-the-go, interactive video consumers – and will do so using the same platforms that have turned them into mobile music consumers. This is a naïve and dangerous assumption because (a) it belies well-established, real-world video usage habits (habits that will take years, perhaps decades to change), (b) rests on an invalid analogy between listening to music and watching video, and (c) has caused the industry to confuse iPod hysteria with consumer desire for portable/mobile video services. The sale of 15 million digital videos from iPod in no way means that portable/mobile video is a sure-fire hit.

For more information about The Diffusion Group, visit our website at http://www.thediffusiongroup.com/.

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