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Tomorrow’s event will be a big day for Apple (s aapl), and a big day for those of us who make our living following the company’s every move and picking up the bread crumbs it drops along the way. At the very least, it seems certain that they will unveil some kind of game-changing tablet-type device, be it a MacBook Slate or a large-format iPod touch, or something altogether new.
The format the new hardware takes will actually be only the superficial impact of tomorrow’s announcement, though. What will really amaze, and what will matter far more for the future of Apple and the personal electronics industry, will be the content deals that are announced alongside the launch of the new device. If the deals go anywhere near as predicted, Steve Jobs could be crowned the new king of all media.
Alright, so maybe I’m overstating things a bit, but not by much. The story of how Apple’s iTunes affected the music industry, and gave the company an amazing degree of control in setting policy and pricing splits for digital music distribution is well known. It is widely accepted that record companies begrudgingly acquiesce to Apple’s demands, although occasionally they demand a concession, like the iTunes price policy change that accompanied the move to DRM-free music files.
Even now, Apple is reportedly trying to use the same strong-arm tactics on providers of television video content who hawk their wares in the iTunes store. MacRumors reports that the Mac-maker is urging TV networks to lower the per-episode price of content from $1.99 to $1, as part of its selling strategy for the tablet.
If the tablet proves to be even half the multimedia wunderkind it is being hailed as, other media providers can expect the same kind of pressure brought to bear. The book, magazine and newspaper industry in particular stands the least chance of resisting Apple’s power grab, since at this point it’s already looking for a life raft to save it from a daunting future steeped in decline. Some rumors are now circulating that the tablet will ship with a built-in Barnes & Noble bookstore, but whatever the outcome, you can bet Apple will have significant support from magazine and newspaper providers looking for a lucrative alternative to print.
Where Apple has the advantage, even if it is seen as an unsavory source of salvation by those wary of what its done for the music industry, is that it isn’t the Internet. People almost invariably like things that are free, and the Internet makes free easy. The only thing people like more than free is easy, and Apple’s distribution method makes things very easy, especially if the iTunes store is married to an extremely light and thin portable device with a decent size screen and a range of connectivity options.
Selling through Apple also takes a lot of the backshop issues out of the hands of providers. They no longer have to worry about setting up advertising, controlling access, preventing piracy and security exploits, etc. And the revenue picture becomes much more clear, with a per unit price that stockholders and stakeholders alike can easily understand. Taking the long view, siding with Apple makes sense, even if the upfront price is quite steep in terms of power dynamics.
So will Steve Jobs inherit a kingdom tomorrow? Not quite yet, I think. More like he’ll take control of quite a few lucrative fiefdoms, but it’ll take a little longer to unite the entire media nation and declare himself monarch. Make no mistake, though, this is what the tablet will accomplish in the long run. It’s the inherited legacy of the iPod and iPhone, in fact, and this is simply the next building block. Fancy gadgets are lovely, but what draws customers to those shiny screens is the content that they’re displaying; control the content, and you control consumer spending.