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Steve Bell reports from Macworld 2008 San Francisco

Tuesday, January 29, 2008

Macworld Show MacBook Air Exhibit three hours after launch

Steve Jobs shows the rest of the industry "how it should be done" -- again -- launching and marketing three significant new product line initiatives at this show which is put on annually by Macworld Magazine.

The well-reported introduction of the MacBook Air 3/4" thin sub-notebook computer;

Apple moves into the movie rental business with the support of all of the major Hollywood studios;

Time Capsule, an innovative wireless network attached storage product. Time capsule is intelligent storage capacity integrated into an Apple Wi-Fi access point, and designed to play with Leopard's "Time Machine" capabilities. Time Capsule, working in concert with Time Machine, can automatically protect the clients attached to the wireless network with recovery points down to a 1-hour level of granularity. Wicked clever!

Launch 1: The "MBA" (MacBook Air)

Just try to get your hands on a MacBook Air!

The "MBA" is an attractive sub-notebook form factor at a premium, but still reasonable price point ($1800 for a 1.6GHz/80GB duo; the solid state drive version is pricey though $3,100 for 64GB); with room to come down (but not like the iPhone came down). [I have close-up photographs of this ultra-slim machine to post. I also follow sub-note and UMPC products developments, and will have more commentary on them when i finalize our 2008 Consumer Electronics Show report.]

Criticism of the MBA has focused on the lack of a hard Ethernet connector, the lack of a built-in optical drive, and the lack of a removable battery.So you would have to download movies, use Wi-Fi, and/or use some portable USB accessories. Apple's cutting-edge products often edge towards some uncomfortable compromises. The one that hurts the most is probably the battery, which is sealed into the notebook iPod style. So much for the road warriors switching batteries on that coast to coast flight. However, the TSA is likely to seize the warrior's extra batteries now, with the new policies! And for $49, MBA owners can buy an Apple airplane power cable adapter. And there are simple external workarounds for that, for example APC's battery extender slate with universal cable converter tips. To workaround the Ethernet port problem, a USB Ethernet adapter is only $30, and it's really no bigdeal to carry and plug in (we'd velcro one to the AC adapter). Same for the special MBA-compatible optical drive; $99; or use Apple's wireless software install from a remote optical drive instead. I haven't needed an optical drive, hard Ethernet port, or extra battery for my ThinkPad subnote in months. However, the idea of becoming dependent upon a single USB port connector might make me a bit nervous.

Walt Mossberg at the Wall Street Journal / "All Things D" and others bashing the MBA based on comparing these shortcomings to mainstream laptops, I think, missing the point. This is a new class of futuristic sub-note; it is not supposed to compete directly with more full-featured subnotes! The MacBook Air still looks to be a major winner for Apple, to us. The "Air" reportedly started to show up in Apple stores Jan 30, and is already selling like hotcakes (many Apple stores are sold out).

Launch 2: Apple moves into the Movie rental business

iTunes Movie Rentals is a result of Jobs' deal with all the major movie studios: 20th Century Fox, The Walt Disney Studios, Warner Bros, Paramount, Universal Studios Home Entertainment, Sony Pictures Entertainment, Metro-Goldwyn-Mayer (MGM), Lionsgate and New Line Cinema (Amazon already has a similar deal in place). Apple expects to offer 1,000 movie titles within a month, including 100 HD titles. Movie rentals are $3.99 for new releases and $2.99 for library titles. You have up to 30 days to start watching; once a movie has been started you have 24 hours to finish it. Apple will use their existing DRM (digital rights management) technology. Netflix has not met with much success in streaming movies to customers online; but this is different. Apple's iTunes customer base is a different demographic, and they are accustomed to accessing their digital media online. I see the iTunes movie business as eventually becoming as big as, most likely bigger, than Apple's online music business.

Launch 3: The "Time Capsule" (closely related to Leopard's "The Time Machine" capabilities)

Apple also launched the "Time Capsule" product mentioned at the start of this report. This product is an entry level intelligent network attached storage (NAS) device; part of an extremely well-conceived and executed disk-to-disk (D2D) data protection system. The real intelligence is called Time Machine; and it's a software component which is built into the OS/X Leopard operating system (for a great detailed explanation go here). But the time capsule is more than just extra hard drive capacity sitting on your home or small business/SMB network -- because Apple has cleverly integrated the hard disk drive storage capacity right into this new wireless access point - so it is located where it needs to be, in order to back up clients wirelessly. Apple's Time Machine client keeps each machine backed up to within a one hour interval, to semi-automate data protection of Mac networks. To get a full handle on the burdgeoning product realm of "intelligent data protection systems",see my article in the January 2008 "Bell Report". The Time Capsule falls into the category of (entry level / "pro-sumer") standalone/NAS D2D DPS appliance; Apple treats is as a SOHO/Retail product, but it will be used heavily in SMB-scale networks as well.

The products will be aggressively priced, at $299 and $499 respectively, including the access point functionality. It will be interesting to see how the reviews come in on this innovative product once they are available in Apple stores (February) and are 'put through the paces'. Looks like another winner to us. It is quite the study in contrasts when you look at how Microsoft is addressing the same need in the Windows world, with their "Windows Home Server" products. Initially, there will be two versions of Time Capsule - 500GB and 1TB.

Steve's takeaway

The predominate industry and trade press reaction is to not be too excited about this MacWorld -- in part because both the biggest news items were leaked over the weekend. However, I would like to point out that the three launch announcements are very material "news" items pertinent to Apple's future growth and profitability. They will both likely turn into large-scale, long-term new sources of revenue & profit growth for APPL. As far as their impact on Apple and their competitors, are they significant? No doubt.

We have a database of photographs and notes from the MacWorld 2008 conference; contact us if you'd like to discuss a particular aspect.

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