Last year over 5,000 persons attended WWDC. At the time it represented a new record for the annual Apple developer event. The result was fueled by the imminent launch Mac OS X Leopard. This year, with 25 days to go before Steve Jobs addresses developers at the keynote speech, Apple has announced that for the first time ever, the conference has sold out.

I am sure that most do not realize the significance of this announcement. In the past, Apple has used many dirty tricks to artificially increase the number of attendants to WWDC. For example, there used to be a separate conference for Quicktime content creators. I believe that Apple cancelled that event two years ago and folded it within WWDC. Last year there was a session track for web developers, presumably to pave the way for new web applications targeting iPhone users. The result was that if you engaged in conversation with people you didn’t know you were likely to find out that they had absolutely no clue about Objective-C or XCode.

This year things are likely to be quite different. Apple no longer needs tricks to fill Moscone West up. Gone are the tracks for web developers and video content creators. There still is a track for System Administrators but the rest of the sessions are designed exclusively for developers. This means that even if attendance only grows to six thousand (the Convention Center was already packed last year), this will still represent a very significant increase in the number of real programmers attending the event. It is a clear sign that many of those 200,000 persons who downloaded the iPhone SDK are actually using it and want to be prepared for the launch of the app store at the end of June. This is going to be the best WWDC ever!

The 2008 Consumer Electronic Show is winding down. As usual, there were lots of announcements, although very few were actually significant. Following that trend, Bill Gate’s farewell keynote was fun but light in content. This certainly marks the end of an era. We will miss you, Bill.

In fact the most discussed topic during this week at CES was the decision taken by Warner to abandon the HD DVD format. It is widely expected that this announcement will quickly lead to the demise of this format. This is certainly a victory for consumers, even though Blu-Ray is more expensive than HD-DVD, and sends a clear message to the CE industry (Sony included) about the need for standardization.

Many have been quick to point out that Blu-Ray’s victory may be short lived and that in the near future digital downloads will replace physical media for high-end video. No need to be a rocket scientist to know that this is true. Still, it will take a couple of years before most people in developed markets can download a 20GB file in less than two hours (the average movie viewing time). That means that there is an opportunity for movie studios to make some real money out of HD media over the next five years or so.

What is interesting, is that unlike previous revolutions (CD, DVD, Blu-Ray), digital downloads will not compete with previous the standard by offering higher quality but instead will focus on convenience exactly like the iPod which offered less audio fidelity than CDs but was much more convenient. Right now we still do not have the iPod equivalent for digital video. Sure, media centers and next-gen consoles like the XBox 360 and the PS3 are attractive for those who get their content illegally and store it on a collection of big hard drives but what about the average user who wants access to a large library of content, potentially all movies ever made? The solution is clearly a video on demand (VOD) system and not a media centre.

Apple, Microsoft, Google, cable companies and many others seem to have understood that trend perfectly well and are racing against each other to be able to be the first company to provide a viable solution. Right now cable companies offer a very limited amount of titles and CE companies until now had no rentals, which is key to succeed in this market. That will change quickly, starting next week with Apple expected announcements. However, competitors will follow quickly as this is in the best interest of content owners. Since there is no standard for video rentals we can expect competition to be as harsh as the blood bath we witnessed during 2007 Blu-Ray vs HD-DVD death match. However, in this case the consequences for consumers may be much more beneficial. Since rentals disappear after viewing the movie, the is no concern about losing your investment. Consumers will take their decision based exclusively on price, ease of use, media quality and library size (as well as product availability and awareness).

Who will win this war? Google, Apple and Microsoft are already well positioned as they have demonstrated that they know how to handle large collections of digital media. In the short term Apple has an edge with the popularity of the iPod, while Microsoft can leverage their huge XBox installed base. Right now I am discounting Sony which is in my opinion more focused on making Blu-Ray a complete success than in competing in this emerging market. In the end, it will come down to each company’s ability to partner with content producers as well as creating attractive, reasonably cheap devices. Since this will be a long war, expect the company with the most focus to ultimately win.

Yesterday the Mac press was abuzz with a new patent filing from Apple regarding an iMac-like notebook docking station. While many companies patent ideas just to prove to shareholders that they are innovating, many seem to believe that this patent is indicative of things to come next week at MacWorld Expo.

I am not convinced, although the idea seems intriguing. Having a laptop that can dock behind a large monitor could allow Apple to sell more monitors and make MacBooks more attractive to potential customers who want to enjoy more screen real estate at their usual workplace. It is an incremental improvement over existing solutions. The problem is that Apple rarely settles for incremental improvements, they tend to prefer radical new designs. So, what if that laptop was not really a laptop but instead an Internet tablet, a larger iPhone if you prefer. This device would work as a standard Macintosh computer when docked and as a portable internet device when used as a stand-alone product.

I have been thinking about how such a device would work and it is clear to me that in order to save energy, this dual personality is required. When docked, the processor could run faster and be refrigerated efficiently using any of the technologies described in the patent. Undocked, with the processor running at lower frequencies, no refrigeration would be required, just like in the case of the iPhone. However, customers are not likely to accept a device that runs their existing Mac applications slower when on the move. That is why such a device would need to behave as a “super-iPhone” with a multi-touch UI and not as a Mac when not connected to the dock. This may seem a weird idea. After all, the reason we buy laptops is to have our computers with us at all time, right? Yes, but most of us do not use our laptop the same way at home or at the office as we do while traveling. At the office I generally create content, outside I display content. That means that I usually need more horsepower at the office than outside. In fact, I would argue that if that such a device allowed me to display presentations, read digital books, browse the Internet, watch videos, listen to my music and update my blog, that would cover most of my needs while on the go. Sure, I would lack the capability to work on my projects with XCode at a Starbucks but that is something most users do not care about. The nice thing about such a design is that it could transform tablet users into Mac users with just the purchase of the dock (which would presumably be optional).

So, can such a device be built today? Sure, if you open a laptop you will see that it does not contain much circuitry. Most of the space is used by the HDD, the optical drive and the keyboard which can be replaced by flash memory, eliminated and substituted by an on-screen equivalent respectively. The question is if such a device would be successful with customers. I am not sure, while early adopters would probably rush to buy such a product, this concept still represents a major paradigm shift and Apple would need to educate the market on how to use such a device, which is both difficult and costly. That is why I do not believe that such a device will be introduced by Steve Jobs on January 15. However, you never know…

There is a lot of buzz in the media industry around Apple plans to offer video rentals in January. I have even seen articles saying that this may mean the end of Blockbuster and even NetFlix. I don’t see why. If Apple only plans to make their current movie catalog available for rent, they will hardly become a threat to anyone. Why? Simply because of the poor video quality they currently offer, which may be enough for an iPod, but certainly not for a big flat-screen TV.

Offering rentals in addition to movie purchases will not change this fact. To be really competitive and win new customers, Apple needs to offer a much larger movie selection but foremost they need to move to HD, and that probably means moving to 720p. So far, not a single rumor has indicated that this will be the case. That means that either that may be the secret Steve Jobs is keeping for MacWorld or that this new effort will not create a major breakthrough in terms of new users moving to iTunes to get their movies.

I know that there are many out there who have still not adopted HD. Nintendo for example is making a killing selling the Wii to customers who do not care about HD and that is fine. However, when you sell a device like the AppleTV which does not advertise support for resolutions less than 480p and favors connecting to a TV through an HDMI connector, that is obviously not the public you are targeting.

Right now Apple offers three devices that could display HD content, the AppleTV, the iPhone and the iPod touch. Add to that all the Macintosh line of computers. However, Apple also offers two other devices, the iPod nano and the iPod classic which do not offer the proper display size ratio to support HD content. That means that moving to HD would leave out many recently released products. That doesn’t make much sense. If Apple chooses to move to HD they will probably have to keep offering regular content for many of their customers. That could explain some of the rumors about variable content pricing. It may turn out that the price will not vary based on the content, but instead based on the resolution of the content. That would be more in line with what Apple is already doing with iTunes plus.

Of course, right now all what I have been saying is purely speculative. However, if Apple wants to compete effectively in the media server arena, they will need to move to HD at some point, even if it is just to match what others are already doing. MacWorld seems to be the perfect occasion to announce such a move and in my opinion this would be a far more important announcement than just movie rentals.

Yesterday Apple finally opened a Mexican on-line store. There is still no iTunes store, but this is a great (unexpected) first step.

The good news is that on-line prices seem to be reasonable. While it still is cheaper to buy in the U.S., the difference is now much smaller. This is good news because it may encourage many customers to shop locally. Until now, Mexico has been a minor market to Apple if you look at the sales numbers. However, that is not really true because wealthy Mexicans (those more likely to buy from Apple) tend to buy their mobile products (those that can be easily smuggled through the customs) in the U.S. and that skews the numbers significantly.

For example, if you were to walk into any Starbucks in Mexico City today you would have a good chance to see Macs outnumber PCs. The same happens with iPhones and iPods which can be found everywhere. Most of these sales never go through Apple Mexico and are therefore accounted as U.S. sales.

While this new on-line store may actually have a negative impact on both local dealers (used to low unit sales and high margins) as well as the physical Apple Store sales in the U.S. it may give Apple Mexico a chance to grow significantly beyond their current small local market (desktops used by graphic designers and universities). If this turns out to be true, we may finally get better local support, which is badly needed.

I am somewhat disappointed that Apple hasn’t announced some kind of upgrade to the Apple TV so far. Sure, the device works as advertised and I am extremely pleased with mine, but the fact that the device has not been updated to support the new iPhoto events made me expect a product refresh for the holidays.

Right now, the Apple TV is still a good value proposition for those who store large amounts of pictures in iTunes and buy TV episodes through the iTunes store. However, since TV shows are only available in the U.S. and in the U.K. (although there doesn’t seem to be a large selection available there) that severely limits the potential of the device.

It seems that Apple is working with the movie studios to offer online movie rentals. That could prove to be a smart move as it it obvious that nobody wants to go to Blockbuster to pick a movie and deal with late fees. Such an initiative could provide a much needed boost to the Apple TV sales. I am not sure that it will be enough, though as competitors are moving fast too.

For example, DivX recently announced that Sony had licensed their technology for the PS3. That means that PS3 customers will be able to use a single device to play games and view both blu-ray high-res movies as well as DivX content downloaded from the Internet (not that I would ever do that…). That is a great value proposition. You can now get a PS3 for US$499 and that includes 15 Blu-ray movies if you buy the device from Wal-Mart. Even if you price each movie at US$15, that puts the cost of the device at US$275, that is US$24 cheaper than the Apple TV.

From what I have been reading, I am not the only one doing the math and many are seeing the value that the PS3 delivers. It seems that Apple needs to do something quickly if they want to move more Apple TVs during the holidays and extend their current lead in the digital download market to the living room. However, time is running out, only three days to black Friday, and if Apple doesn’t release any updates to the device by then, we can be quite sure that there will be no updates until next year. That could be a big mistake.

Back in January, when few details where known about the new device, I stated that the AppleTV was really a stripped down Mac Mini. Now that the product is available and that some clever hackers have been able to boot a complete version of OSX on the device, it is clear that I was right.

A couple of months ago I was wondering what kind of OS an Apple cellular phone would use. At the time, I thought that using OS X was unrealistic. The reason I believed that is because there have been traditionally large differences between operating systems for embedded systems and full fledged computer. This may not be evident for the general public who may think that Linux or Windows Mobile have some close relationship with their desktop counterpart, but it is a fact.

The fact that the Apple TV runs a scaled down version of Mac OS X shows that Apple is moving down the same path. However, the effort seems far from complete, based on the fact that a fully functional computer is still required in order to stream video from a computer to a TV. That is why the Apple TV is relatively expensive when compared to similar (not identical) products from the competition. The foundation Apple is working on was designed for desktop computers, not embedded systems and it shows. The only experience Apple has with embedded devices is the iPod and they were not responsible for most of the design decisions, relying instead on third party suppliers like PortalPlayer (now owned by nvidia).

Developing a true embedded OS takes time. Microsoft has spent years working on Windows Mobile and we know how bad that system was in earlier versions, when it was known as Pocket PC. Linux is just emerging now as a true contender in this market. From my point of view, based on the analysis of the AppleTV hardware and software, Apple does not have at this time a true, mature, embedded OS. This is probably the reason why the iPhone will not support, at least initially third party applications.

The important question however is, does it matter? A couple of years ago I would have answered with a resounding YES. Today I am not so sure anymore. New technologies mean that embedded devices are getting more powerful by the minute, offering capabilities and performance much closer to what desktop computers can deliver. Origami devices (ultra mobile PCs) are a clear example of this trend, small devices running a full desktop OS. This means that having a true embedded OS is no longer the same strategic advantage it used to be. Apple may have to struggle quite a bit to overcome the limitations of OS X as an embedded operating system for some time but ultimately creating a complete software foundation over a complete OS may turn out to be a good decision for the future. Maybe this is another demonstration of ““I skate to where the puck is going to be, not where it has been.”.

As most probably already know, some countries in Europe (Norway, France and the Netherlands among others) are putting pressure on Apple to force it to open the Fairplay DRM system. They argue that digital tunes should be playable on any digital music player, much in the same way that vinyl records could be played on any turntable.

There are some flaws with that reasoning. After all, I do not recall similar threats to Sony when they released Betamax (and more recently the ATRAC audio compression algorithm) or Nintendo who offers downloadable games that only work on their console. However, I think that everyone agrees with the fact that if Fairplay protected tunes could be played on any device, that would be better for consumers. After all, that would offer everyone the freedom to choose a player fron a different brand once the time comes to upgrade to newer gear. However, even though I am all for more freedom, I do not want this (small) improvement to result in higher prices. Why am I concerned?

Today, Apple can afford to leverage its large iPod installed base to put some serious pressure on the majors in order to keep the price of digital downloads relatively low. Therefore, because Apple makes money on the players, not the music, legal music downloaders have actually benefitted from Apple’s near monopoly. If Apple is forced to allow digital music interoperability, the leverage is lost and the majors will be able to set higher prices, much like what they have done with ring tones (in conjunction with network operators), and regain control of the online music distribution business.

So, who stands to win if EU regulators manage to force Apple to open up Fairplay? In the short term this could seem to be good news for SanDisk, LG or Philips (a Dutch company), among many others. However, there isn’t much money to be made in a totally commoditized market. The real winners would be the music labels, specially the majors (think RIIA), who would regain full control of the market. Where does that leave consumers? We have to choose between Steve Jobs (a benevolent dictator) and the freedom to choose a music player while living under the grip of the music tyrants.

For now, I sincerely prefer the Steve Jobs option. Why? Because right now Apple makes the best music players and because once you start buying a lot of digital music, like I do, the price of each song becomes more important than the price of the player. Of course, things could change in the future and therefore such a measure could become necessary. However, I would really appreciate if EU regulators tried to break the music oligopoly before suing Apple. Otherwise there is a clear danger that the remedy could be worse than the problem they are trying to fix. As a Dutch citizen I would like to see my government reconsider its decision.

As a developer I recently received an e-mail from the ADC (Apple Developer Connection) in which Apple offers to those developers with Select and Premier memberships to buy the new Apple TV using their hardware discounts. I do not want to read too much into this announcement, since it may just be a perk for loyal Apple developers.

However, it is weird that Apple offers a product that apparently cannot be extended in any way (software wise) to developers. It could also be that this offer is mainly directed to hardware developers who may want to offer accessories but I sincerely hope that there will be opportunities for software developers. After all, there is a strong demand for additional Codec support (Divx, Flash video, etc.) and there is potential for casual games like the ones that are currently available for the iPod.

It is unlikely that Apple will totally open access to the Apple TV APIs. In order to maintain control over the user experience, if they decide to open the product to third parties, Cupertino is likely to work with a very small group of developers, much in the same way it has done with the iPod (and will do with the iPhone). I sincerely hope that the ADC mail sent to developers means that at least some of them will be invited to offer additional software that will help improve what already looks like a great product.

When Apple first announced the iTV, back in September, we all assumed that it was just another CE device, much like ElGato’s eyeHome or more recent devices from Linksys. It turns out that this is not true and that the Apple TV is much closer to a traditional computer than previously thought.

According to AppleInsider, the device sports an under-clocked 1.0GHz Pentium-M processor, a 40GB Hard drive, 256MB of memory as well as an nVidia G72M video board with 64MB of video RAM. While the specs aren’t really impressive compared to current laptop offerings, this is as close as you get today if you want to develop a computer that sells for under US$300, doesn’t require a fan [correction: actually the device sports a small fan, however it does not seem to produce a loud noise] and fits in a very small form factor.

This design offers many advantages for Apple. Since it is based on an Intel Architecture, the code developed for iTunes and Front Row can be easily reused. Additionally, in the future, as prices for more recent components continue to drop, the Apple TV can be easily upgraded to support better technologies such as 1080p output and Blue-Ray high-definition DVD playback.

It is clear to me that the Apple TV is basically a low-end Macintosh computer that lacks some features in order to keep the price down and eliminate the need for a noisy fan, an important feature for a device designed to be used in the living room, something that Microsoft, Sony and Nintendo seem to be unable to understand.

We may never see Mac OS X (or any other OS) boot on an Apple TV, although I wouldn’t dismiss the idea. After all, hackers have been able to install linux on a WRT54G router and even on the iPod, so why not do the same with this much more powerful device. However, what really struck me was that at a time when Apple has just dropped the word Computer from its name it may have just released the cheapest Macintosh ever.