Apple's Photo Finish

The Internet rumor mill had it right several weeks ago when whispers circulated that Apple was readying a retooled iPod music player and had entered into a special promotional deal with the mega-famous rock band U2. Yesterday brought confirmation of both, with most of the media focusing in on the official news that the quirky computer-company-turned-digital-entertainment-pacesetter has given its portable music player the ability to store digital images.

The unveiling of the iPod Photo certainly ratchets up Apple's bid to stay atop the heap in the portable digital entertainment wars, putting the heat on Microsoft, Sony, Dell and a long list of other competitors to follow suit with similar products.

But for the time being, Apple's new toy may only appeal to a fairly high-end crowd, given that iPod Photo's price tag of $499 ($599 for a model with even more memory) rivals that of some desktop computers. But for anyone looking to save up to 25,000 color images on a portable device, Apple says the iPod Photo will debut in its retail stores this week and be available through its Web site.

Apple chief executive Steve Jobs showed off the new player yesterday at a Silicon Valley news conference. "In focusing on still pictures, Mr. Jobs showed he was moving in a direction different from competitors in the consumer electronics industry, which have been adding video capabilities to hand-held devices. Mr. Jobs disagreed that video was a must-have feature in new devices. 'Our competitors are saying it's video,' he said, 'but they're too big to fit in your pocket,'" the New York Times reported.
• The New York Times: Newest iPod From Apple Holds Photos and Music (Registration required)

Apple offered up more defense on why it just offers still images and not videos on the new iPod. "Other companies have recently come out with hand-held media devices that play music, movies and TV shows and also display photos but 'they're too big, too heavy,'" Jobs said, as quoted by the Los Angeles Times. "We think the right place is photos," Jobs said. "Everybody has a digital camera -- they're even in cellphones. Everyone has the content. And there are no copyright issues. We think music plus photos is the next big thing."

And for Apple, it's not just about winning in the digital music space. It's about turning people onto its Macs and other products. The Los Angeles Times said "analysts figure the real value of the iPod lies in its potential to draw customers to Apple's more profitable, though less popular, line of Macintosh computers."
• The Los Angeles Times: Apple Makes Latest iPod Audiovisual (Registration required)

Under a Blood Red iPod

Apple fanatics have yet another reason to sing "In the name of love" these days after Bono and U2 guitarist The Edge joined Jobs yesterday to unveil "a special $349 black edition of the iPod, which has the signatures of members of the rock band ... The company said it would begin selling a complete collection of U2's music for $149 next month from the iTunes Internet music store," The New York Times reported. Maccentral gave a round-up of Apple's U2 partnership and other announcements. And Wired News quoted Tim Bajarin, president of Creative Strategies who said of the U2 deal: "This represents a very unique twist on the concept of music distribution. It shows how somebody like Apple can be the best friend of a musician. I'm most interested to see how other major bands will try to work with Apple or some other MP3-player vendor."
• Maccentral via Yahoo: Apple Intros iPod Photo, iPod U2, iTunes 4.7
• Wired News: iPod Bloody iPod

In other Apple news yesterday, CNET reported that the company "announced that, starting today, its iTunes Music Store will be available in more countries -- namely Austria, Belgium, Finland, Greece, Italy, Luxembourg, Netherlands, Portugal and Spain. Jobs also said Apple would add a Canadian store next month."
• CNET's News.com: Apple Unveils Color iPod, U2 Edition

All three announcements gave one analyst reason to pull out his crystal ball. "You're seeing bits of the future here in how the leadership power centers of media are shifting," GartnerG2 analyst Mike McGuire, told Reuters. "These are the companies that are going to be the next media titans. Does that include Apple? Yes. Does that include Microsoft, Starbucks and others? Yes."
• Reuters: Apple Rolls Out iPod Photo, Rocks With U2

E-music Price Cutting?

Could the price of music downloads fall? CNET's News.com, in a piece focused on Apple, noted that the company "has played an undeniable trend-setting role in the digital music market, with other companies' prices, usage rights and available catalog often following in iTunes' wake. Already, online music stores are desperately trying to distinguish themselves with exclusive or prerelease tracks not available on rival services. Though most have also experimented with putting together their own suggested playlists for potential consumers, the addition of the [U2] digital box set is likely to set off a race to bundle new collections and compilations that are unavailable elsewhere, online or off. This may require some new flexibility from record companies and other license holders, who have typically received about 65 cents of every 99 cents spent on digital music."
• CNET 's News.com: Apple's U2 'box set' a sign of shifting music pricing?