Forrester Responds, Questions Press Credibility

Josh Bernoff, the author of the Forrester Research report which Orlowski bandied about as a reason to call iTunes sales 'collapsing' has responded. He writes:

A UK outfit called The Register and Bloomberg decided to dive in and highlight one finding of the report -- that iTunes sales had dropped in the first six months of this year. We got treated to wonderful headlines about iTunes sales "collapsing" and "dropping" and "plummeting" and so on. Now for the record, iTunes sales are not collapsing. Our credit card transaction data shows a real drop between the January post-holiday peak and the rest of the year, but with the number of transactions we counted it's simply not possible to draw this conclusion . . . as we pointed out in the report. But that point was just too subtle to get into these articles.

Bernoff continues, citing the drop in Apple's stock after the announcement:

Now, you can't unring the bell. But I will try to focus you on the truth here, which is this: iTunes sales are leveling off, the Journal did an article about it last Friday with data from Soundscan. Apple is not in trouble -- it makes its money mostly from iPods, and iTunes is just a way to make that experience better. It's the music industry that has to worry, since the $1 billion a year or so from iTunes, globally, doesn't nearly make up for even the drop in CD sales in the US, which are now down $2.5 billion from where they were.

What do we learn for this incident. First, Orlowski can't be trusted to read analysts reports. Second, neither can many others in the media who didn't understand that the Forrester Research show that though there was a drop in transactions this doesn't mean the iTS is going to poof away.

Somehow I have a feeling Orlowski spent more time thinking about synonyms for falling sales than actually reading the report.

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Macalope, Funny and Accurate

The Macalope, one of the most incisive and funny Mac blogs out there, has its own take on the results of the Forrester analysis (surely on its way to a brouhaha with Slashdot involved).

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Schaddenfreude

C|Net was initially very positive about the Zune's wireless feature, and yet I think this article captures perfectly why the feature is effectively meaningless as a feature for the Zune; the iPod is, of course, a different story. The author wanders the San Francisco streets, going from coffee shop to BART cars hunting for a fellow Zune-user. (a 'Zunie' perhaps?). He finally finds some sucess:

This time, I did not see the familiar rejection notice. Was I dreaming? Nearby: "I am a Lengend." There was another Zune. "I should send them a song," I thought. But what? I quickly settled on R.E.M's "Begin the Begin." "Lost connection," my Zune reported.

The author finds his Zunemate, but I think the point has been made, with Microsoft's target goal of 1 Million Zunes by June 2007, the Zune lacks the population density. The iPod, however, has the numbers to make this an interesting feature, but for the Zune you lose two hours of battery life for a feature that's all about filling out a features list rather than actually adding something fun to your daily life.

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Register's Orlowski Reads Forrester Research, Flips Out

Originally reported by the shrill Andrew Orlowski at the Register, Forrester Research's analysis of nearly 2 million credit and debit card transactions from April 2004 to June 2006 found several interesting things:

• 3% of online households made an iTunes purchase in the past year.


• Apple's iTunes proves that $0.99 micropayments for digital music can lead to substantial revenue.


• Buyers spent an average of $35 at iTunes over the past year.


• With half of all transactions costing $3 or less, though, transaction fees threaten to make iTunes unprofitable.


• Since the introduction of the iTunes Music Store, Apple has been steadily selling just 20 iTunes tracks for each iPod sold, suggesting that even at $0.99, most consumers still aren't sold on the value of digital music.


• Monthly iTunes Revenue Increased Steadily In 2004 And 2005.


• More Than 3% Of Online Households Bought iTunes In The Past Year.
• 
  
• Most Households Bought iTunes On Three Or Fewer Occasions.


• Apple Sells 20 iTunes Per iPod Shipped.

Now, Orlowski uses this research as a reason to proclaim that "iTunes sales are collapsing" and then moves on to blame DRM for the loss, ending his article with his pet idea that a "blanket license" may be the salve for the music industry.
However, I disagree.
Forrester tracked only credit and debit card transactions, leaving out the available PayPal accounts and gift cards. How much this changes their figures I don't know, but it seems important to include these to account for more accurate sales numbers. Furthermore, while Orlowski sees a 'collapse' as sales dropped after the holiday season, I see a seasonal variation and therefore little cause for his alarm. While most people aren't using the iTS to fill their iPods, they're still buying the little devices in huge numbers and therefore Apple's plan to use the iTS as a loss-leader to sell iPods is still working.

The most interesting question is what would happen without DRM? With eMusic the second-place winner in the digital download market, there does seem to be a market for unteathered music, even in comparison to Apple's 'velvet lock.' The failure of PlaysForSure shows that the hardware, more than the stores, makes the real difference and Apple understands this market far better than anyone else.

Jimmy Santiago Baca

I stumbled across one of Jimmy Santiago Baca's poems during my freshman year of college. I'm not sure if the poem came to me because of an English teacher, a certain textbook, or just happenstance, but it surprised me, it engaged me. Suddenly, I began to understand poetry, the use of words and rythym and the juxtapositions that make up modern poetry. It impressed me, this simple poem.
The poem was Green Chile, and it's sensual description of Baca's grandmother making green chile con carne is just incredible.

From the poem:

A well-dressed gentleman at the door
my grandmother takes sensuously in her hand,
rubbing its firm glossed sides,
caressing the oily rubbery serpent,
with mouth -watering fulfillment,
fondling its curves with gentle fingers.
Its bearing magnificent and taut
as flanks of a tiger in mid-leap,
she thrusts her blade into
and cuts it open, with lust
on her hot mouth, sweating over the stove,
bandanna round her forehead,
mysterious passion on her face
as she serves me green chile con carne
between soft warm leaves of corn tortillas,
with beans and rice–her sacrifice
to her little prince.

Tonight, I had an opportunity to hear Mr. Baca read his poems at the last reading of the University of Arizona's Poetry Center, and he continues to be a fantastic poet and writer, grounded in the dark reality of modern life and yet able to describe the ineffable as well.

The Poetry Center is a fantastic place for anyone interested in literature and poetry. Their collection is impressive and their project to record poets for future students is a worthy task. I've had the opportunity to volunteer and helped the center build a small video-editing system.

For Christmas morning, How to Contact iTunes Customer Service

Slate's Tim Noah has, yet again, discovered the customer service number for iTunes. It's not the easiest thing to do, but if you might reach an actual person, if you follow his instructions:

1. Telephone the following number: 800-275-2273. This is the Apple Care Service and Support Line.
2. When you hear the recorded greeting, enter 70. The recording will very likely reject that entry at first. If so, try again.
3. When you're prompted to say the product that you need tech support for, say "iTunes."
4. When you're prompted to say what type of computer you're using, say "a Windows machine" or "Macintosh."
5. When you're prompted to say whether you're calling on behalf of a school, answer "yes" or "no."
6. This will get you a live person. Please note: You will need to state the serial number of your iPod before you can proceed.

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If you're feeling less than patient, you can also go here and hunt for the answer on your own.

The Nike+ iPod "Security Flaw" and Journalists

KING5 News: UW Researchers Describe Nike+iPod Issues

Journalists, especially local television newscasters, seem to take great relish in scaring their viewers. Combine this with a superficial understanding of technology and we get this story from Seattle's KING5 news.

How to Make Much Over a Technological Nothing:

Step 1: Make sure to include a widely-popular consumer good.
Step 2: Use words like 'electronically' that way viewers immediately think something special is happening.
Step 3: Add in plucky-sounding underdogs, like UW grad students.
Step 2: Use hyperbole like 'innocent users' and 'nightmare scenarios.' Oh, and 'disturbing.'
Step 3: Show a demonstration which oversimplifies the actual problems with the scenario. For instance, to really track someone you'd need a network of devices strung out every 60-feet. If you just wanted to know if your target was home, you could use dozens of other methods to do the same thing, including casing their house. And, note if the stalker is standing there holding a laptop, couldn't he just stalk the person from about 60-feet away?
Step 4: Ignore the reality and problem of RFID devices, including RFID-enabled credit cards, for this goofy story.
Step 5: End with something like 'we contacted the company, but haven't received a response' to ensure that the story sounds secretive and vagely malevolent.

The Secret Ingredient

The Zune is the most recent example of what other companies, and even some reviewers, don't understand about the iPod and its unrivaled success. It's not just the pretty hardware or cool commercials, it's that Apple, more than anyone else, understands that complexity for the sake of complexity is a terrible thing for consumers.
When you buy a product you don't want a manual as thick as a copy of Gone With the Wind, or a system so complex it requires an engineering degree and a particular ear for acronyms to make it work. What consumers want is a device that does what it's designed to do with a minimum of fuss.
Apple understands this. They may not always be successful in making this a reality, but with the iPod they've made a sincere attempt to make a great technology.

C|Net has an article penned by their executive editor of commentary about this very issue. Titled "Why It's Hard Not to be a Grinch," the article describes the author's frustration with a SanDisk Sansa m240:

I won't bore you with the details of the software hell I suffered, but there were any number of minor technical questions the company leaves customers to figure out on their own. Lincoln's Gettysburg Address is longer than the tiny booklet of "technical documentation" that came with the unit. Three pages of instruction–-in big type-–in three different languages just didn't do it. So my frustration grew as the afternoon lengthened into the late evening and still I was left trying to understand the particular mindset of the genius who designed the music player's interface.

The iPod just works, and that's why is currently the king of the Mp3-player market. The sooner SanDisk, Microsoft, and others figure this out, the more meaning all those extras like WiFi-sharing will have.

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