Analysis: When Apple Waits, Competitors Strike | iLounge Article

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Analysis: When Apple Waits, Competitors Strike

July 2, 2004
By Jeremy Horwitz

Though iLounge’s mission is to cover news of interest to the iPod community, we’d be remiss if we didn’t occasionally glimpse outside to see what Apple’s competitors have been doing. Starting a few months ago, we began to look at new offerings from Microsoft and Sony to see how they might fare against the iPod. Since then, it’s become increasingly apparent that Apple’s officially in every major electronics company’s crosshairs, and even the companies themselves are openly admitting it.

In the absence of news from Apple this past month regarding either a next-generation iPod or price cuts on existing models, competitors have had the mainstream media’s spotlight mostly to themselves. Creative, Dell, and Sony have recently attracted attention - some positive, some negative - with new offers aimed directly at current and prospective iPod buyers.

Since last we looked at competing products, Creative announced its latest device, the Zen Touch, which parrots the iPod’s white casing and touch-sensitive controls. Dell made a few headlines by offering to buy old iPods in exchange for its cheaper Digital Jukebox players. And Sony been on a rolling rampage of product releases in recent weeks, announcing or releasing five separate hard disk-based devices under different brand names and product lines. While none of these companies’ announcements may actually impact the iPod, each raises the same question: if Apple stands still, will its competitors tear it down?

Creative: You’ve Got the Touch (thanks, Stan Bush)

We’ll confess, we have a soft spot when it comes to Creative, makers of the Zen series of iPod-competing hard drive-based players. We really like that the company thinks about things like replacement batteries, longer battery life, integrated FM tuners, remote controls, and real-time speed adjustment of audio files. Sure, we didn’t like squinting at the Zen’s screens, how often they used to crash, the relative complexity of their controls, or their comparatively (not offensively) bulky bodies. But for techies, the Zens can be great players. And they’re cheap.

picA couple of weeks ago, Creative announced that it would update the Zen line with the Zen Touch, a device which clearly (but unimpressively) mimics three features from the iPod: casing, touch-sensitive controls, and general size. Zen Touch drops the prior generation Zen’s all-metal case for a two-tone white and gray plastic shell, and incorporates a single vertical touch strip to navigate through menus. Well, that and ten buttons (just in case you wanted dedicated buttons for “random” and “back”). And it’s almost the size of the iPod - it just looks bulkier because of the oddly shaped case.

Otherwise, the Zen Touch is like its Zen predecessors: same small blue and black screen, interface, and functionality. But it has an attractive price (20GB for $269.99) and boasts 24-hour battery life, which Creative typically actually matches in real-world performance.

We’d like to say that the Zen Touch is Creative’s best shot yet at taking market share, but we would be surprised if it presented a contest for anyone but Dell. Creative excels in value and battery life, but they’ve never won critical acclaim for style, ease of use, or reliability. Hard drive failures are surprisingly common, perhaps a result of the low prices Creative persistently offers for these products. Like its predecessors, the Zen Touch looks like a good alternative for those who are willing to deal with inconveniences, but it’s not a replacement for the iPod.

Dell: Dude, Where’s my Rebate?

Dell had an interesting idea: what if someone offered a deal where you could take your old iPod and trade it in for a discounted 15GB Dell Digital Jukebox? Nevermind that the interfaces are different, your legal downloads for one won’t work with the other, and oh, that one’s an iPod and the other’s a Dell Digital Jukebox (DJ), the device a reporter from Fortune Magazine once called Bizarro to the iPod’s Superman.
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If that sounds harsh, sorry: it’s reality. As such, Dell’s announcement was viewed by many as a desperate ploy to attract publicity for the DJ, which has suffered from slow sales despite a price tag and design expressly engineered to undercut the iPod.

Available in two sizes (15GB at $199, 20GB at $279), the DJ is a physically larger and less attractive device than the iPod but tries to emulate its simplicity. With a horizontally mounted scrolling wheel and five face buttons, the DJ also has an iPod-like remote control and a good monochrome screen. Besides price, twenty-hour battery life has been Dell’s main selling point for the product, but unlike so many of Dell’s other offerings (and even the iPod, when the company sold it at incredibly discounted prices), the DJ just hasn’t taken off.

Staunchly convinced that the DJ is a winning design, Dell was most likely unprepared for the response it received after announcing the trade-in program. Analysts laughed off the promotion as a cheap publicity stunt. One person amusingly dubbed Dell’s offer the equivalent of a Porsche for Volkswagen swap. Instead of coming across as a good deal, the offer may have only underscored the considerable differences between the elegant iPod and the cheaper, clumsier Dell product.

iLounge would be more concerned about the mechanics of Dell’s deal than the value it supposedly offers.  In order to get your discounted Digital Jukebox, you have to buy the device at full price, then send your iPod to Dell and wait for a $100 rebate check to arrive. Unfortunately, Dell’s rebate process has historically included plenty of opportunities for rebate submissions to be “lost” or otherwise invalidated for no apparent reason, and so we’re not so sure that Dell’s promised $100 would make it here on time, if at all. Having dealt with these problems ourselves in the past, we would never again take the risk - or trade in our iPods. But then, you knew that already.

Sony: The Shotgun Approach to Anti-iPod Marketing

They did it with digital cameras, now they’re trying it with music players. After sitting on the sidelines of the hard disk-based digital audio player market for three years, Sony is using a familiar approach to gain market share: release a collection of similar products and see which feature differences attract buyers. Since May of this year, Sony has announced not one, not two, but three different hard disk-based portables, each marketed by the company as an iPod beater.

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First was the VAIO Pocket, a $500 40GB device with styling and branding reminiscent of Sony’s computer line. Larger than the iPod and equally expensive, the VAIO Pocket’s chief advantage is a color screen, which enables the display of digital photos stored on the unit hard drive. Unfortunately, Sony only guarantees that you can transfer photos directly to the device from Sony digital cameras, or from a computer with the VAIO Pocket’s docking cradle. Similarly, the device only supports native playback of Sony ATRAC3 format music files, not MP3s. An odd control scheme called Grid Sense (G-Sense in Japan) uses a square collection of touch-sensitive dots instead of the iPod’s intuitive wheel controller.

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The second announcement was more intriguing: only two weeks later, Sony debuted the HMP-A1, a $570 device featuring a large color screen and the ability to play back both audio and video. Even better, the device - which was not released as either a VAIO product or a Walkman - actually supports MP3 music playback, plus MPEG 2 and MPEG 4 video playback, amongst other formats. Digital photos can also be displayed on the screen. The only hitches: with only 20GB of storage space and 4-6 hours of video playback time (8 hours of audio playback), the HMP-A1 is likely to win over experimental early adopters but underwhelm average consumers for the price. But if we were betting on one Sony technology to win at a lower price tag, this would probably be the one.


picThird but actually not last, Sony unexpectedly showed the NW-HD1, the company’s first hard disk-based product to bear the Walkman name. Though prior flash memory-based generations of the Network Walkman have proved unpopular, the newest 20GB version is launching for $470 in Japan, then in August for $400 in the United States, with a slightly-smaller-than-iPod profile (thanks to Toshiba’s 1.8” hard disk) and a black-on-green screen. Sony’s proprietary Jog Dial will be used to navigate through menus, and battery life is said to be upwards of 25 hours. Yet the problems with the NW-HD1 may sound familiar: it only supports the ATRAC3 audio format, and it’s very expensive considering that it doesn’t do anything the iPod can’t do (it actually does less).

Lest you think that Sony’s products only sell for $400 and up, the company announced plans in January to have its lower-end subsidiary Aiwa release two hard disk-based devices called the HZ-WS2000 and HZ-DS2000. The WS version was set to become a direct (albeit screenless) competitor to the iPod mini, using an impressive business card-sized footprint and newly developed 2GB drives, while the DS version was bulkier, shock resistant, and had a built-in screen. Sony’s only problem was that they couldn’t actually manufacture them: both devices were postponed until May because the hard drives were failing, and the company actually had to downgrade the devices to a different 1.5GB hard disk model as a result. There’s a little good news: these devices support the MP3 format rather than ATRAC3. But the bad news: they sell for around US$307 in Japan. Who would have guessed that the iPod mini could ever look like a bargain?

picWill any of Sony’s new hard disk-based products out-iPod the iPod? It’s hard to imagine. High prices are consistent across Sony’s line, and the company’s use of ATRAC3 in certain devices has dramatically limited their appeal. But there are other concerns, as well.

The company’s once legendary reputation for manufacturing quality has nosedived in recent years. (Try a Google search for Sony Recall.) Defects in products ranging from inexpensive PlayStations to its most expensive Qualia digital cameras have left Sony with black eyes, and the company is starting to develop a reputation for showing products it does not actually deliver on time or with the originally promised features. Sony has also developed a spotty history when it comes to measuring actual battery life, such that it’s now somewhat hard to believe any of the company’s bare claims without independent verification.

More troubling is that Sony has recently devolved to downright misleading marketing of the ATRAC3-based devices, telling people that their 40GB device can hold 26,000 songs by comparison to the 40GB iPod’s 10,000 because of “advanced compression technology.” But as experienced digital music listeners will attest, songs compressed with Sony’s low bitrate “26,000 song” ATRAC3 just sound poor compared to the 128kbps MP3 compression that safely stores 10,000 songs on the iPod. It goes without saying that the iPod could store 26,000 comparatively awful-sounding songs if it wanted to stoop to that level.

For now, we’re taking a “wait and see” attitude on these Sony devices. Given their prices and the questions they raise, they’re certainly not going to be at the top of our impulse buy lists, but if Sony can just convince a million people to buy one of their new players, maybe they’ll merit another look.

Parting Thoughts

Though this article may seem partisan, we’re certainly not closed-minded to the possibility that something could come along and really blow away the iPod. At the moment, however, we can’t help but be surprised that such major competitors have been embarrassing themselves with cheap knockoffs, weak promotions, and scatterbrained product designs.

Apple’s been more than lucky to date. It designed so well and acted so fast that the iPod was clearly ahead of the pack for two years. And we know that Apple has fantastic new things just waiting in its labs to be unveiled.

But as we’ve suggested before, even if the war over digital music players has already ended - which isn’t entirely certain - there are still important battles yet to be fought over other features, from photos to video and games. This past month hasn’t brought any serious challenges to the iPod, but who knows what this next month will hold? As always, we look forward to seeing what Apple has in store, and expect that exciting new announcements aren’t too far off.

Jeremy Horwitz is Senior Editor of iLounge and practices intellectual property law in his spare time. His recent book, Law School Insider, has been called the “best book about law school - ever,” and he continues to contribute to Ziff-Davis electronic entertainment magazines.

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