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Apple Rumor Chitchat: Tea Leaves and Goat Entrails

By Chris Maxcer MacNewsWorld ECT News Network
Feb 13, 2009 4:00 AM PT

Speculation, rumor and unnamed sources: They're often the three main food groups of Apple blog chatter, and this week was no exception.

Apple Rumor Chitchat: Tea Leaves and Goat Entrails

Reportedly, Apple retail stores are getting ready to undergo a software-focused makeover, and Apple will start storing customer movies in the cloud. Meanwhile, the US$99 iPhone rumor/prediction just won't die.

What's in Store?

ifoAppleStore reports that on the heels of Apple revamping its iPhone/iPod table displays to focus on applications that are available for the iPhone and iPod touch, Apple is taking the software focus even further.

"Apple plans to entirely reorganize and refocus space within the stores to emphasize customer education, and software over hardware," ifoAppleStore reported. "According to plans still being rolled out, hardware will become a secondary focus of the stores' marketing efforts, making way for a spotlight on applications and the digital features of Apple products. The front section of the store will promote, 'Why You'll Love a Mac,' catching visitors when they first enter the store."

The reorganization could occur as early as next week, the report noted.

"I believe this is a great move. Apple uniquely has the ability to address perception issues. Unfortunately, by shrinking the software section in favor of iPod add-ons, they've only added to the perception of limited software availability. This is a VERY good move and long over due," Steve commented on the ifoAppleStore post on the subject.

"Good move. I was in Apple store in Dallas last week and as owner of two Macs, 3 iPods and an iPhone, software was what I bought, iLife, Bento and an iPod case. It was all in the back of the store, which is where the action was. Still spent over $200. Economy is slow. Software sells," added Sandra.

If the efforts reported by ifoAppleStore pan out, Apple may be able to catch a new generation of switchers who weren't wowed by Apple's elegant hardware -- at least, not wowed enough to switch from a PC.

Still, Apple has often made attempts to highlights its software.

"Apple has consistently promoted iLife as part of its integrated offering to Mac buyers since its inception, and Apple has positioned it as a differentiator -- software that you get with the machine that's actually useful and will help you create media-rich videos, Web sites, and DVDs versus the 'trialware' that has been installed on other PCs," Ross Rubin, director of industry analysis for consumer technology for The NPD Group, told MacNewsWorld.

Of course, the image of pulling a MacBook Air out of a manila envelope is indubitably a great move, but is it enough to drive sales for more than a year? Probably not. And with Apple's iconic MacBooks and MacBook Pros becoming readily seen in coffee shops and airports these days, Apple may have to work harder to get beyond the hardware cool factor to attract new switchers, and new software could be a new angle.

"It's not necessarily the software per se that will drive switching -- it's part of the overall value proposition, the integration of hardware, software, and services in a retail environment where the consumer can be exposed to all of them at once," Rubin said.

"It may simply be Apple reminding consumers as to what it perceives to be advantages," he added.

iTunes Movies in the Cloud?

AppleInsider is reporting that Apple may be wrapping up a new feature in iTunes 8 that lets customers stream their iTunes video purchases directly from Apple's servers for playback. The gist of it would be both a play for both convenience as well as a way to let customers buy movies or TV shows without requiring them to store the content on their hard drives.

Of course, the idea is not new --'s Video on Demand service, for example, already lets users watch movies and TV shows, and it has a "Your Video Library" feature that stores the videos for customers.

"By storing their video content for them and allowing users to stream it for viewing as often as they want, Apple would essentially be offering a media center alternative," AppleInsider reported.

Of course, for such a play to work well for users, the viewer would need good broadband Internet connection.

"These guys must have great confidence on bandwidth growth and ISPs over the next few years," commented dasein on the AppleInsider post on the subject.

And Apple may indeed run into other issues with such a plan.

"I like this idea as long as the pricing structure for TV shows is different. Why would I pay to stream the show when I can stream it from Hulu for FREE?" asked nace33.

Are We Heading Toward a Streaming World?

"This is a necessary step if digital media is to ever overtake physical media," Cory Bauer commented.

Lots of additional comments started speculating on the cost of such a service and whether it might end up including a subscription service that would include a certain number of videos or unlimited viewing -- a la the Netflix streaming model.

Either way, is this just another sign that we're heading to a world where most every bit of content is streamed? Is the age of the file download dying?

"Besides the early behavior of Apple iTunes and Apple TV rentals, you've got to look at Hulu -- Hulu's streaming is a pretty compelling way to view TV content and some of the movies they have in the tank," Mike McGuire, a vice president of media research for Gartner, told MacNewsWorld.

Of course, you can't ignore the benefits and issues that come with a hard drive. The Apple TV comes with a 40 GB hard drive on the low end and a 160 GB hard drive on the high end model. And while those units will hold quite a bit of content, it's pretty easy to fill up a 40 GB hard drive, especially if consumers are adding digital photos and their music libraries to the Apple TV's hard drive. Apple has provided some streaming capabilities between Apple TVs and iTunes running on a WiFi connected Mac or PC, but it's not perfect.

And once that hard drive is full, how many consumers really want to spend time moving content around -- or worse yet, upgrading their Apple TV?

"How do you keep getting a new hard drive in the box? You just need a certain amount to enable a streaming model," McGuire said. Such an option, he noted, would remove the need to upgrade an Apple TV or force Apple to continually offer new models with bigger and bigger hard drives.

Either way, McGuire said, consumers tend to have a pretty simple basic desire: "I just want to watch it when I want to watch it," he said.

The Cheap iPhone Rumor Just Won't Die

It seems that every few weeks someone new either predicts a new, cheaper iPhone ... or they claim some new insider source. Most of the rumors tend to hit the magic $99 price point. The latest assertion comes courtesy of MSNBC and a report by BC Capital Markets analyst Mike Abramsky, who says an entry-level $99 iPhone will arrive in June or July alongside an upgraded iPhone 3G.

While most everyone expects a new iPhone model in late June or July to fit Apple's annual iPhone development cycle, the rumor of a low-end option with less memory is hardly new. Abramsky, however, reportedly believes a cheaper iPhone would also come with a slower and cheaper data plan. He also throws in the idea that the next flagship iPhone might have a larger screen resolution.

"Not this worthlessness again ..." commented Tallest Skil on the post on the subject.

"This sounds very far-fetched to me. We explicitly heard Tim Cook suggest that a cheaper iPhone would diminish a reputation that is already selling plenty of devices. Apple doesn't do cheap-o," ntrigue added.

"I don't care if they add a cheaper version (I find it unlikely though), as long as the new 'real' iPhone will have a decent upgrade instead of a minor specs-upgrade ..." Stormbringer noted.

So what's real and what's supposition? And does it even matter any more?

"There are always -- and I stress always -- rumors of new products from Apple, cheaper products from Apple, and products that defy the rules of physics from Apple. I do not comment on any of them," Avi Greengart, research director of consumer devices for Current Analysis, told MacNewsWorld.

"Do consumers like lower prices? Yes, yes they do," he added.

Either way, if we're lucky, this might be the last low-end iPhone rumor we have to weather until June.

(But don't bet on it.)

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