Imagining the Next Big Thing: What Replaces the iPod?

Products go through a cycle:  The Walkman was hot, then the Palm Pilot was hot, and now the iPod is incredibly hot. But what will come next? Now, before anyone gets too excited, what comes next could still come from Apple and it could still be an iPod. Recall that the first hot iPod, a comparatively large and clunky device, was replaced by the iPod Nano and Video iPod, which are vastly more svelte and attractive; however, there are only so many people who really want or need a portable MP3 player, and that opportunity may have run its course. The next product will likely be something that does more than just music?and video.

To be truly big, the product will need to address a variety of needs and be incredibly good at meeting the most critical. It will need to look cool and be marketed strongly. It will need to be very easy to use and viral (you see it, you want it). And it will need to be affordable and generally under $500; anything more won?t hit the volumes required for greatness.

The contenders are the home media center/media hub, the next generation smart phone, the rumored Microsoft iPod killer, and something I?ve recently named the communicator. We?ll take each in turn.

Home Media Center/Media Hub

With 40 million iPods sold, the opportunity for this class of device is at least as high. Ideally, this product replaces the receiver, the set top box, the DVD player/VCR, and the home music distribution system. You?ll note I didn?t include the PC; this has been the primary problem with this class and why it has substantially under-performed the opportunity. Vendors have tried to put PCs in the living room for some time; each attempt, while having more success than the last, has generally, eventually, bombed out.

This is one area where I think Apple could step in and steal the market, much like they did with MP3 players. Recall that the MP3 market was largely stalled; it was generating disappointing volumes before Apple entered, because those vendors didn?t understand the power of providing an easy-to-use solution, cool-looking product, and strong marketing campaign. This market is currently in the same condition; with the right offering, Apple could own this space. 

However, there are other contenders; leveraging subsidies Cisco and Scientific Atlanta could move in and eliminate this opportunity with a set box top solution and an aggressive price. On paper, Cisco arguably is the scariest company in the segment; with the right product and the right partnerships, they certainly could pull a massive upset and (with the cable companies) have the strongest connection to digital video content.

Microsoft still has time to get it right, but their dismal showing so far in the MP3 player space doesn?t provide much hope; they seem to be incredibly myopic with regard to this opportunity. Intel is working hard to complete their own offering and Viiv actually shows promise; of course, they are partnered with both Apple and Microsoft, so it could be a blend. However, they are rumored to be working with Sony on an embedded offering and Sony is the one vendor who actually should own this market. Sony just hasn?t been much of a contender of late.

Smartphone

Phones are hot right now, with the Motorola RAZR leading the field. This already is a contender for the kind of excitement enjoyed by the iPod, but it is more of a feature phone and doesn?t yet embrace the broad range that I?m anticipating for the next big thing. Here Microsoft is probably the company to beat in regard to solution, as their Mobile 5 offering (now used on the Palm Treo) could find itself on the right product. However, the best so far is the Motorola Q, and it isn?t getting the level of buzz that the RAZR is currently getting, nor is it really stepping up yet to the full opportunity.

The hardware side will come down to four vendors:  Motorola (who I think has the inside track), Sony/Ericsson, Samsung, and Nokia. Any one of these four vendors could hit with the right phone and, of the shipping phones, the Sony/Ericsson Walkman phone currently is the closest to making the grade?but it doesn?t quite make it. The Apple/Motorola effort was a disaster, suggesting that Apple may be out of the race; however, never sell Apple short. They clearly have an idea of what they would like to bring to market, and with an ESPN-like service, could bring out their own device and pull a surprise upset.

The phone has to be very easy to use for its primary functions; it needs to embrace video, music, games, and communications. It can?t be overly expensive to buy or to use (the carriers seem to want to charge for each song, and that won?t work) and it needs to have upgradeable storage. It probably needs to have a camera, too, given that is becoming a segment requirement.

What really makes and limits this class is that phones need to move through the carriers, but as a channel for a hot product, the carriers to date have sucked big time. If there were ever a group of big companies that didn?t get the opportunity they are missing, this would be it. The only bigger group that?s equally out of touch is the cable companies; unfortunately, both of our first choices are limited by these two groups.

Microsoft iPod Killer

This may not even be a real product. But rumors persist that Microsoft has gotten upset at Apple?s continued success and is planning to bring out an iPod killer. As with most vapor products, this thing is imagined to be the next best thing to sex, with an edgy Xbox 360 design and broad capability for music, movies, and games. In addition, it has broad access to subscription music, movie, and game services. For a monthly fee, you get it all and it all goes with you.

Sounds damn cool; the only problem is that it may not actually exist, and it would put Microsoft in competition with a number of its critical partners. Recall that Intel tried something like this in the early days of the MP3 player; while they had one of the best, it had a much more positive impact on AMD?s fortunes, as partners suddenly started treating Intel as a competitor and shifted their business to AMD in what became a long slide. 

Still, Microsoft is not Intel, and they do have a game system in the Xbox 360 that needs a compelling hand-held counterpart. The Gameboy is a hot product, as is the PSP, but both substantially under-perform the kind of opportunity represented by the iPod. The Gameboy is just games (and games for relatively young children at that), and the PSP, while it does embrace music and video and targets an older audience, doesn?t do media well.

The Xbox 360, while it trails significantly behind the iPod?s numbers, remains in high demand everywhere but Japan?suggesting that they are capable of successfully launching a product in this class. This one isn?t gated (any more than the iPod) by cellular carriers or cable companies, giving it more potential (if it exists, that is).

The Communicator

A new class of device recently came to my attention. Bear with me here:  It didn?t really have a name, so I?m naming it after the Star Trek Communicator (largely because few watched the other Gene Roddenberry show, Earth:  Final Conflict, which had a closer match to what I?m talking about, a Global). So I?m a tech geek; sue me.

Anyway, much like every other device I am talking about, this is a hybrid device?but this is a hybrid on steroids. This combines the capabilities of the RIM Blackberry/Palm Treo, the Video iPod, and the Laptop Computer. Be aware that all of these products are already very rich in terms of capabilities, so you see what could be a segment killer offering if it?s done right.

The end product would likely be something that you couldn?t live without, (even though I imagine you might want to at some point). This product is in the process of being born and is currently represented by three offerings, either on the market or to appear shortly.

The first offering is the OQO, which was designed by the team that created the Titanium Notebook. It currently was updated to use the Tablet PC edition of Windows XP and a real digitizer. It has an Apple feel to it and is the only laptop (that I know of) where you can put in a belt pouch without wondering where your pants went. For Wide Area wireless, it connects to a cell phone with Bluetooth, allowing you to leave it behind and take the cell phone alone. I use it with a small Microsoft Smart phone, which seems to provide the best mix of options.

Oqo
Image Courtesy of Oqo

The second product is the DualCor which is more advanced, but not yet shipping. It is a little bigger than a Sony PSP and lacks a keyboard. It also has two modes, one with full Windows XP and one with Windows Mobile 5, providing an interesting and unique choice between long battery life (eight hours) and full Windows performance (three hours). Finally, it has a built-in cell phone, giving it an integrated communications function. In stand-by cell phone mode, it likely would set records for battery life.

Dualcor
Image Courtesy of Dualcor

The final product is one of the hottest offerings in Europe right now:  The Flybook. This is supposedly the hot thing for movie stars, royalty, and the very, very rich. While it starts around $2000, there was a $10,000 version co-branded with a designer clothing line, which sold out. This product is the largest but also the least compromised, with a 10-in. wide-angle screen and a built-in cell phone. Highly customizable, it soon will be co-branded with some of the most common brands in the industry.

FlyBook
Image Courtesy of FlyBook

None of these products by itself can reach iPod status. The OQO is the most elegant and Apple-like, the DualCor the most portable and communications-oriented, and the Flybook the must useful and personal. To take the iPod crown, the device must embrace all of these things; while the DualCor probably comes closest, both OQO and Flybook are due for major revisions, and I expect we?ll see some amazing things.

Overall, I don?t really expect this to be the next big thing, but what comes afterward might be. Still, as we saw with the iPod, our imaginations are the limitation here; anything is possible. Of all of these offerings, only the Communicator has the potential to really blow the lid off the segment and set volume sales records of legendary proportions. It is only a question of who steps up and gets it right first. Take a look at a Philips Prototype e-Reader  for what?s coming. The concept of a true Global may be closer than we think.

Global
Global

Philips e-Reader
Image Courtesy of Philips

Click here to watch a video of the Philips e-Reader in Action!

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