Sunday, February 4, 2007
iPod Impact of Apple Revenue
In its first quarter results of 2007, Apple reported record revenue of US$7.1 billion — its highest quarterly revenue in the company's history and record net quarterly profit of $1.0 billion. Most of this revenue is attributed to iPod sales. According to Apple's Financial Report nearly 48% of Apple's revenue is generated from iPod Business Division. This is a 2% drop from 2006 Q1 revenue breakdown, largely due to 79% increase in sales of Apple portables and 29% increase in Other Music Related Products and Services. The chart on the right shows the breakdown for 2007 Q1.
iPod is a brand of portable media players that is designed and marketed by Apple and was launched on October 23, 2001. Since October 2004, iPod sales have dominated the market for digital music players in the United States. Devices in the iPod range are primarily digital music players, designed around a central click wheel — although the iPod shuffle has buttons only. The full-sized model stores media on an internal hard drive, while the smaller iPod nano and iPod shuffle use flash memory. Like many digital audio players, iPods can also serve as external data storage devices.
In addition to playing music, iPods with display screens can display calendars, contact information, and text files, and play a limited range of video games. Models introduced in 2004 include the ability to display photos and the fifth-generation iPod, introduced in 2005, can additionally play video files. In January 2007, Apple announced the iPhone, combining the features of a video-capable iPod with integrated mobile phone and mobile internet capabilities.
Apple's iTunes software is used for transferring music (as well as photos, videos, games, contacts and calendars, for models that support those features) to the iPod. As a free jukebox application, iTunes stores a comprehensive library of music on the user's computer and can play, burn, and rip music from a CD. It can also sync photos and videos.
Apple focused its development on the iPod's unique user interface and its ease of use, rather than on technical capability. The iPod is currently the world's best-selling range of digital audio players and its worldwide mainstream adoption makes it one of the most popular consumer brands. Some of Apple's design choices and proprietary actions have, however, led to criticism and legal battles.
The iPod came from Apple's digital hub strategy, as the company began creating software for the growing market of digital devices being purchased by consumers. While digital cameras, camcorders and organizers had well-established mainstream markets, the company found digital music players lacking in user interface design and decided to develop its own.
The name was proposed by Vinnie Chieco, a freelance copywriter, who (with others) was called by Apple to figure out how to introduce the new player to the public. As soon as Chieco saw a prototype for the player he thought of the movie 2001: A Space Odyssey and the phrase: "Open the pod bay door, Hal!", which refers to the white EVA Pods of the Discovery One spaceship. At that time "iPod" was a name that Apple registered for Internet kiosks, but never put to use.
Apple's hardware engineering chief Jon Rubinstein assembled a team of engineers to design it, including Tony Fadell, Stan Ng and Jonathan Ive. Additionally, Sparkfactor Design has designed some of the iPod hardware from 2002-2004.  They developed the product in less than a year and it was unveiled on October 23, 2001. CEO Steve Jobs announced it as a Mac-compatible product with a 5 GB hard drive that put "1000 songs in your pocket."
Uncharacteristically, Apple did not develop the iPod's software entirely in-house. Instead, Apple began with PortalPlayer's reference platform which was based on 2 ARM cores. The platform used rudimentary software running on a commercial microkernel embedded operating system. PortalPlayer had previously been working on an IBM-branded MP3 player with Bluetooth headphones. Apple contracted another company, Pixo, to help design and implement the user interface, under the direct supervision of Steve Jobs.
Once established, Apple continued to refine the software's look and feel. Starting with the iPod mini, the Chicago font (once used on early Macintosh computers) was replaced with Espy Sans, which was originally used in eWorld and Copland. Later iPods switched fonts again to Podium Sans — a font similar to Apple's corporate font Myriad. The iPods with color displays then adopted some Mac OS X themes like Aqua progress bars, as well as brushed metal in the lock interface.
The iPods with color displays use high quality anti-aliased graphics and text, with sliding animations. These iPods have five buttons and the newer generations have the buttons integrated into the click wheel — an innovation which gives an uncluttered, minimalistic interface. The buttons are:
* Menu — to traverse backwards through the menus, and toggle the backlight on older iPods when held
* Center — to select a menu item
* Play / Pause — this doubles as an off switch when held
* Fast Forward (When held)/ Skip Forward
* Fast Reverse (When held)/ Skip Backwards
The operations such as scrolling through menu items and controlling the volume are performed by using the click wheel in a rotational manner. These iPods also have a Hold switch at the top, which prevents accidental button presses. Newer iPods automatically pause playback when the headphones are unplugged from the headphone jack, but playback does not resume when the headphones are re-inserted. However, in newer iPods (excluding iPod shuffles), when the headphones are re-inserted into the headphone jack when the iPod is asleep, the iPod will automatically wake up to the last screen viewed before going to sleep. An iPod that has crashed or frozen can be reset by switching 'Hold' on then off, then holding Menu and Center (Menu and Play on the 3G iPod) for 6 seconds.
The iPod shuffle does not use a click wheel and instead has five buttons positioned differently to the larger models. It has a Play / Pause button in the center, surrounded by four buttons: Volume Up / Down and Skip Forward / Backwards. This button arrangement is shared by the Apple Remote (which ships with all Apple computers with Front Row and the Universal Dock).
The iPod can play MP3, AAC/M4A, Protected AAC, AIFF, WAV, Audible audiobook, and Apple Lossless audio file formats. The iPod photo introduced the ability to display JPEG, BMP, GIF, TIFF, and PNG graphic file formats. The fifth generation iPod (which has a 320x240 pixel display) can also play MPEG-4 (H.264/MPEG-4 AVC), and QuickTime video formats, with restrictions on video dimensions, encoding techniques and data-rates.
Unlike most other media players, Apple does not support Microsoft's WMA audio format — but a converter for non-DRM WMA files is provided with the Windows version of iTunes. MIDI files cannot be played, but can be converted to audio files using the "Advanced" menu on iTunes. Alternative open-source audio formats such as Ogg Vorbis and FLAC are not supported.
Each time an iPod connects to its host computer, iTunes will synchronize entire music libraries or music playlists and the user can choose for automatic or manual synchronization. Song ratings can be set on the iPod and synchronized later to the iTunes library, however, only one host computer is allowed.
iTunes and iTunes Store
The iTunes Store (formerly iTunes Music Store) is an online media store run by Apple and accessed via iTunes. It was introduced on 29 April 2003 and it sells individual songs, with typical prices being US$0.99, EU€0.99, or GB£0.79 per song. iPods are the only portable music players that can play the purchased music. The store became the market leader soon after its launch and Apple announced the sale of videos through the store on 12 October 2005. Full-length movies became available on 12 September 2006.
Purchased audio files use the AAC format with added encryption. The encryption is based on Apple's FairPlay digital rights management (DRM) system. Up to five authorized computers and an unlimited number of iPods can play the files. Music files without DRM can be created by burning the files onto an audio CD, then re-compressing to a different lossy format, although this results in reduced quality. The DRM encryption on Apple's AAC audio files can also be removed using third-party applications.
iPods cannot play music files from competing music stores -- such as Napster or MSN Music -- that use rival DRM technologies like Microsoft's protected WMA or RealNetworks' Helix DRM. RealNetworks claims that Apple is creating problems for itself, by using FairPlay to lock users into using the iTunes Store. Steve Jobs stated that Apple makes little profit from song sales, but Apple uses the store to promote iPod sales.
iPods can, of course, play DRM-less music files in supported file formats from other competing music stores - such as eMusic.
All iPods can function as mass storage devices to store data files. This function is controlled by the "Enable disk use" check box in iTunes.  (Originally, when iPods had only FireWire connections this function was labelled "Enable Fire Wire disk use".)
If the iPod is formatted on a Mac OS X computer it uses the HFS Plus file system format. If it is formatted on Windows, the FAT32 format is used because Windows cannot access HFS Plus filesystems. With the advent of the Windows-compatible iPod, the iPod's default file system switched from HFS Plus to FAT32, although it can be reformatted to either filesystem (excluding the iPod shuffle which is strictly FAT32). A FAT32 file system can accommodate only files smaller than 4 gigabytes.
An iPod formatted as HFS Plus is able to serve as a boot disk for a Mac computer, allowing one to have a portable operating system.
Unlike most other MP3 players (including PlaysForSure devices), simply copying files to the drive will not allow the iPod to properly access them (although some third-party iPod software allows this). Instead, the user must use iTunes or a compatible third-party software to load audio, videos and photos in a way that makes them playable and viewable.
iTunes cannot transfer songs or videos from device to computer (although iTunes 7 allows it for music purchased online). The media files are stored on the iPod in a hidden folder, together with a proprietary database file. The hidden content can be accessed on the host operating system however, by enabling hidden files to be shown. The audio can then be recovered manually by dragging the files or folders onto the iTunes Library or by using third-party software.
The larger models have limited PDA-like functionality and can display text files. Contacts and schedules can also be viewed and synchronized with the host computer. Some built-in games are available, including Brick, Parachute, Solitaire and Music Quiz. Brick (a clone of Breakout) was originally invented by Apple co-founder Steve Wozniak in the 1970s. A firmware update released in September 2006 brought several new features to 5th generation iPods including adjustable screen brightness, gapless playback, and downloadable games (available for purchase from the iTunes Store).
An open-source firmware called Rockbox allows the first generation iPod nano, mini, and all display-capable iPods after the third generation (excluding the 80Gb 5.5th generation) to play Ogg Vorbis, FLAC, Musepack, WavPack, Shorten, and MIDI files, but not FairPlay-encrypted files. Rockbox also offers gapless playback and a more sophisticated equalizer but is in a testing stage as of September 2006. Open-source alternatives to iTunes include gtkpod, Yamipod and MediaChest.
The iPodLinux project has an ARM version of the Linux kernel alongside an interface called "Podzilla" that runs on all iPods, although only the first, second and third generations are officially supported by the developers. The iPod shuffle is not supported and the fifth generation iPod is likewise unsupported, though iPodLinux can be successfully installed.
Chipsets and electronics
* iPod 1G, 2G, 3G — Two ARM 7TDMI-derived CPUs running at 90 MHz.
* iPod 4G, 5G, iPod mini, iPod nano 1G — Variable-speed ARM 7TDMI CPUs, running at a peak of 80 MHz to save battery life.
* iPod nano 2G — Samsung System-On-Chip, based around an ARM processor.
* iPod shuffle — SigmaTel STMP3550 chip that handles both the music decoding and the audio circuitry.
* All iPods except the shuffle — Various audio codecs manufactured by Wolfson Microelectronics.
* iPod 1G—5G — 1.8 inch hard drives (ATA, 4200 rpm with proprietary connectors) made by Toshiba
* iPod mini — 1 inch Microdrives manufactured by Hitachi and Seagate
* iPod nano — Flash memory from Samsung, Toshiba and others.
* iPod shuffle — Flash memory
The iPod's operating system is stored on its dedicated storage medium. An additional NOR flash ROM chip (either 1 MB or 512 KB) contains a bootloader program that tells the device to load its OS from the storage medium. Each iPod also has 32 MB of RAM, although the 60 and 80 GB fifth generation have 64 MB. A portion of the RAM is used to hold the iPod OS loaded from firmware, but the majority of it serves to cache songs from the storage medium. For example, an iPod could spin its hard disk up once and copy about 30 MB of upcoming songs into RAM, thus saving power by not requiring the drive to spin up for each song.
The first and second generation iPods used internal lithium polymer batteries. Later generations and models used lithium-ion batteries, while the nano and shuffle continue to use lithium polymer. The touch-wheels were initially provided by Synaptics but are now produced in house by Apple.
Originally, a FireWire connection to the host computer was used to update songs or recharge the battery. The battery could also be charged with a power adapter that was included with the first 4 generations.
The third generation began including a dock connector, allowing for FireWire or USB connectivity. This provided better compatibility with PCs, as most of them did not have FireWire ports at the time. However, the device could not be charged over USB, so the FireWire cables were nonetheless needed to connect to the AC adapter. The dock connector also brought opportunities to exchange data, sound and power with an iPod, which ultimately created a large market of accessories, manufactured by third parties such as Belkin and Griffin. The 2nd generation iPod shuffle uses a single 3.5 mm jack which acts as both a headphone jack and a data port for the dock.
The iPod mini and the fourth generation iPod allowed recharging via USB and eventually Apple began shipping iPods with USB cables instead of FireWire, although the latter was available separately. As of the 5th generation iPod, Apple discontinued using FireWire for data transfer and made a full transition to USB 2.0, due to its widespread adoption. FireWire was then used for recharging only.
iPods have won several awards ranging from engineering excellence, to most innovative audio product, to 4th best computer product of 2006. iPods often receive favorable reviews; scoring on looks, clean design and ease of use. PCWorld says that iPods have "altered the landscape for portable audio players".
Several industries are tailoring their products to work better with both the iPod and the AAC audio format. Examples include CD copy-protection schemes, and mobile phones from Sony Ericsson and Nokia that play AAC files rather than WMA. Microsoft's Zune device also supports AAC and it has adopted a similar closed DRM model used by iPods and the iTunes Store, despite Microsoft previously marketing the benefits of choice with their PlaysForSure model. Podcasting and download charts have also seen mainstream success.