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As someone who often doesn’t like Apple products (although I do like the iPod with some caveats… like the lack of a delete button) I must admit that what Apple introduced today (the Apple iPhone) is pretty damn revolutionary. They leveraged university research on multipoint touch devices, but what they made from it unites alot of powerful technology in a very easy way.

Kudos, Apple, kudos.

http://www.engadget.com/2007/01/09/live-from-macworld-2007-steve-jobs-keynote/7#comments

Update, 3/27/08: With some chagrin I must add that Leopard is significantly better than Vista, so while I find the Mac often frustrating in small aspects of its design, I do think Apple has the edge right now.

The largest collection of knowledge in the world was once contained in the scrolls of the Royal Library of Alexandria in Egypt. As the story goes, Ptolemy III by royal decree required all visitors to the city of Alexandria to surrender all books and scrolls in their possession for copying by official scribes. Alexandria became a haven for knowledge and knowledge seekers (until the library was burned down).

The Internet is now likely the largest collection of knowledge in the world, distributed but still accessible. Yet the Internet has to date been an imperfect substitute for a book, just as a book is an imperfect substitute for the Internet.

For a reader, the advantages of a book over the Internet are (a) a book has a particular tactile feel and easy to read appearance, (b) a book is always on, (c) a book has a certain kind of durability and yet is low cost, (d) a book is difficult to copy elegantly without specialized equipment and therefore book publishers easily attract authors who wish to be compensated for their work, and (e) the audience of readers are accustomed to buying books.

Although electronic books are available, there has never been a particularly graceful way of reading them. That, I believe, will soon change. A number of companies have tried to devise an electronic device to replace the book exactly.  Meanwhile, a number of websites allow consumers to download many books that are in the public domain.  Storage capacities are increasing so swiftly that soon 1 terabyte drives will be coming to laptops and ipods.

At some point the displays of electronic books will improve sufficiently, download services will be easy enough to use, and the storage capacities of electronic books will be so much better than they used to be, that the book publishing world will be forever altered.

A number of news and blog sites (NYTimes, Reuters, Engadget, Tai-Pan Way) have noted that Microsoft has agreed to pay a record company, Universal, a certain undisclosed amount ($1.50?) for each Zune device Microsoft sells. They note that this is a major concession by Microsoft, since Apple only pays record companies for each song sold, not for each sale of an iPod device.

The record companies are upset by the deal they originally struck with Apple, since Apple has a tremendously large business with rich profit margins based on iPod device sales, but each iPod has on average only 20 or so songs sold on iTunes. That’s alot of music on iPods that was either legally ripped from CDs, or illegally traded.
Many parties seem to think Universal has done a number on Microsoft by convincing Microsoft to make a payment for each Zune sold. However, to my mind this isn’t so bad for Microsoft either. The true loser in this deal is … Apple.

Microsoft’s Zune has just been introduced, so it doesn’t cost much to Microsoft to make a payment on each hardware device sold to Universal today, and it will take awhile for its sales to ramp up to a point that such payments cost Microsoft much. Microsoft also hasn’t historically put the same emphasis that Apple has on trying to make money from the hardware (PCs, Xboxs, cell phones); Microsoft is content to make money from its software (Windows, Office, Xbox games, Windows mobile).
Apple already has a huge number of iPods it sells every month. And Apple’s contracts with the record companies are going to expire in a year. If Universal insists on the same deal from Apple that they got from Microsoft, in both dollar amounts and in business model structure this is going to cost Apple alot more than it costs Microsoft.

Microsoft is therefore using Apple’s strength (the massive lead in devices sold) against Apple, a neat act of business model judo.  …and since record company contracts often contain a provision that states if you give another record company a better deal you will give me the same deal as well, it’s not just Universal that will get this payment from Microsoft, or demand this type of payment from Apple…  all of the record companies will.
Of course for Microsoft to truly succeed, and for the record companies to obtain some real type of leverage against Apple, the Zune and its successors must still be great products. The early reviews indicate the Zune is a promising device… but time will tell.