.... Remember when we were kids and we used to go to the video store?
My son and I just sat down and watched the Keynote address from MacWorld with my daughter stopping in from time to time. Nothing earth shattering in terms of technology. No new iPhone, iPod, or iWhatever. What we saw was Apple building upon their world class operating system, no no no, not OSX Leopard, but the backbone of their fortune iTunes.
What? Let me tell you about the genius of iTunes. Unlike OSX it can run on almost 98% of all PCs in the world. I am sure the number of PC's running iTunes in the US is staggering. Why wouldn't it? It's free, and it is a portal into an amazing amount of content.
Let me give you an example of how iTunes is changing the world in which we live. As a kid we used to spend hours in the music stores at the mall. In my little mall there were three music stores loaded with just music. My kids on the other hand, spend no time in the music stores at the mall. And yes, they buy more music than I ever owned. Walmart you say, I don't think so, my daughter buys all her music on iTunes. At times she downloads vintage music that we already own on CD or worse on Album. The music store doesn't exist in the same form it was just five years ago. The reason is iTunes. iTunes has emptied the mall music store. Not alone mind you, there were accomplices like napster, illegal downloads, Satellite Radio, Walmart, and BestBuy.
Today we saw the future. It wasn't shiny, fast, or portable, it was iTunes video rentals. The next store to be emptied by iTunes is the local video rental store. There will be accomplices here as well like NetFlix, On Demand, Walmart, and Best Buy, but the lions share will once again go to Apple. The magic is iTunes. Last year Apple expanded the iTunes ecosystem when they gave us a sub $150 portable video player, a phone video player, a video player (iPod Touch), backup technology, and a device to hook your new flat panel to iTunes (sorta). Today, they fixed the device which connects iTunes to your high def flat panel and they launched content from every movie studio that matters. That content will be delivered directly from the iTunes store to your PC, MAC, or Flat panel TV. The platform they care about most is iTunes, the benefit is that the Apples influence continues to grow. This is a perfect example of building on your strengths.
What can we expect? Expect Apple to continue to announce massive rental numbers, expect your kids to ask you to get an Apple TV box or download movies from iTunes. Expect blockbuster, family video, hollywood video to start closing stores. Are you kidding, we heard this kind of stuff before with the advent of on demand video. Yes, I would say to expect it. Right now the limitation on Apple is that they must give the video stores a 30 day head start on new release but this will change. The price is slightly higher for Apple rentals than at the local store but I don't have to leave my house, waste gas, or get those annoying late fees. Plus, the movie I am looking for is in stock, not damaged, and I don't have to walk around the store for an hour trying to find a movie. The price difference will come down on library titles, but new releases won't change at all because it doesn't have to.
So why did I write this article. Today everyone is bashing Apple for a lackluster MacWorld keynote but I saw something very different. I saw a company that understands the engine which drives their revenue. I saw them leverage that platform to expand all areas of their business. I saw another business model being swallowed up by Apple. Apples stock dropped drastically today, it usually does after the keynote. But imagine an Apple with their current revenues plus 50% of the US video rental market. But Apple isn't making inroads into the business market you say, they will, but for now they will be content with households like mine which use PC's at work, but have five Apple devices in my home which all link into their cash machine... iTunes.