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Apple Watch: Rumor Analysis
Tuesday, 2004 December 7 - 10:33 pm
There are two big rumors about Apple floating around.

Big Apple Rumor number one: Apple will be introducing a tiny, low-priced flash-memory iPod within the next month. Status: plausible.

There are a couple of reasons why this rumor might be plausible. First, flash-memory music players are much more sought-after than hard-drive music players in Asia. The market dynamic there is different: low cost is important, and biggest is not always best. Second, a flash-based player would help Apple have a complete portfolio of portable music players, covering all the markets without cannibalizing their high-end sales. Third, a low-end device might serve as a way to lock in entry-level buyers, who would build up an iTunes music collection and then need a bigger iPod to store all their music.

However, Apple does not have a history of targeting the low-end market to capture market share, and it does not have a history of making cheap products. You can bet that Apple's hypothetical $99 music player would be sitting next to $49 players on the shelves at Target. The Apple player would be cooler, better looking, and easier to use, but probably not cheaper.

Mac fan/news site TheMacMind.com (difficult to reach right now; it's been slashdotted) even has a picture of the flash iPod based on "reliable sources", but the picture is only an artist's rendition. We'll have to wait and see.

Big Apple Rumor number two: IBM plans to partner with Apple to make IBM-branded Macintoshes. Status: hypothetically possible.

This one is based on speculation from The Register. The article cites several factors that might suggest a possible IBM-Apple alliance. First, IBM has sold its $12 billion PC division to Chinese company Lenovo. This certainly shows that IBM is no longer interested in building Intel-based PCs, and it may be a sign that IBM is looking to clear possible FTC roadblocks against an Apple alliance (or merger, or joint venture). Second, IBM and Apple have complementary strengths: Apple has solid Unix-based client and server operating systems, it makes high-performance computers using IBM's chips, and it has a highly competitive line of enterprise-ready products. IBM has a strong enterprise presence, credibility in the enterprise market (which Apple sorely needs), and a vested interested in the success of PowerPCs. Third, both companies have an interest in battling the Wintel hegemony. Fourth, Apple is oddly missing from IBM's two PowerPC consortia. The Register suggests this might be on purpose.

Now certainly, Steve Jobs would never let a buttoned-down company like IBM call the shots for Apple. So I think an outright buyout is out of the question. But Jobs has no qualms about alliances, as long as he thinks the alliance is to his strategic advantage, and as long as decision-making power stays in his hands. I mean, HP can't possibly be getting much from the hp+iPod deal, except to catch a ride on the iPod's popularity. So perhaps we'll see something along those lines: computers that are entirely Apple-designed, but with IBM faceplates and an IBM sales force to back them.

This seems like a win-win. But it would be a huge deal, and it would be as tough to negotiate as it would be to keep secret. I'm a bit more skeptical about this one.

p.s. To members of the media: if I see one more headline about how IBM is poised to "Take A Bite Out Of Apple", I'm going to scream. That has got to be the most hackneyed headline phrase for Apple news items. ("[Mac OS X 10.3] Panther Ready To Pounce" was also bad at the time, along with related phrases like "Apple Lets The Cat Out Of The Bag".) Do reporters and editors really think they're being clever with this stuff?
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Posted by Ken in: techwatch

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