The net effect of the conjecture about pushing higher throughput, and the merchandise redesign, point to Apple's next annus mirabilis.
The iPod was a music player that became an ecosystem. Hardware was what could be sold around Apple's brilliant, focused design. The dock connector, and Pixo's OS, gave peripheral makers a broad canvas to work from, and sales volume took care of the rest. The limitations of the software meant iPod Games were a hobby.
The iPhone began life as smartphone but will become a platform. Hardware ecosystem compatibility largely intact, as it shares (all but the FireWire charging pin of) the iPod line, it is software that will drive the iPhone (and iPod Touch) to palm-space dominance. Become the Windows, the lingua franca, of the new personal computing device space, and hardware becomes less deterministic of purchase choice.
People fell for the Mac-only iPod 1.0 because Mac users had few options, and are self-nominating aesthetes of personal technology. FireWire, compact design, and a cutting-edge hard disk gave that market what it wanted. Once the 3G iPod with Dock Connector arrived for all computing platforms, Apple was picked as a dying breed, the "vertical integrator" in an infant market about to be stampeded by a rush of horizontal device makers coalescing around a platform. As with the Macintosh and the WinTel PC, hardware would necessarily emerge that met any and every market demand, and do so most efficiently.
But music players are not PCs. They are very simple devices, and early volume sales drove Apple into the catbird seat when purchasing components. Apple also had hardware design prowess among the best (Sony?) in the category. The market demands everyone was trying to meet were better matched by the iPod maker at lower cost. A software platform cannot dissolve the hold of a vertical integrator in even commodity technology segments without price or feature superiority.
(Aside: The content of the personal music/media player industry simultaneously collapsed in price and mushroomed in availability, guaranteeing that all platforms, inferior or superior, could not leverage themselves with exclusive "walled garden" material. The role of the iTunes Music Store in cementing iPod dominance is overstated. While a non-iPod-compatible dominant form of content in tandem with the end of "piracy" could drive Apple out, the iTMS did not keep Apple dominant.)
The iPhone is Apple's combination of the Mac, WinTel and iPod strategies. Apple offered the iPhone 1.0 as a "new paradigm" cellular/smartphone. iPhone OS X was a leap beyond Symbian and other "environments" as large as the Mac was from DOS. The hardware was also a generational advance, featuring few buttons, minimal branding, and matte tones where the opposite had been the norm. Like the early iPod, the Lisa, the Mac 128k, and many other Apple first stabs, the iPhone sold moderately, and was a useful educational experience for Apple.
The iPhone 3G/OS 2.0 marked a strategy shift. To expand the iPhone beyond the Mac-alike initial market of Apple and smartphone early-adopters, Apple repeated the maneuvers of the once-triumphant PC cloners, as well as its own past work with the iPod.
To match the inevitable cloners, Apple dropped iPhone pricing to commodity levels by sharing components with the iPod line, and negotiating a carrier subsidy from AT&T. "Smartphone" segment profit margins thus came under pressure, where they had been relatively fat before. High-end vertical phone/software integrations like the Treo and BlackBerry no longer merited high-end prices. Cloning an iPhone would not yield a lower price, if it were possible. Horizontal integrators, with hardware designed to run Microsoft or "Symbian" software, also faced price pressure, and the difficulty of matching the polish of an integrated solution from any of the vertical players.
The iPhone market position at this juncture is "the best smartphone in the largest selling price category for such phones, with the most capable and varied software." The redesign of Apple's retail stores represent a move to shift the iPhone/iPod Touch from a best in class device into a definitional consumer electronics reference platform, something far more valuable. This is the Wintel portion of Apple's hybrid strategy.
The Apple Stores mean first-party product offerings can be sold at retail in lockstep with corporate strategy, surrounded by unilaterally controlled third party offerings. Contrast this with a typical retail/manufacturer arrangement, in which one works to produce its best attempt at what will sell, and the other tries to create a venue that sells most efficiently.
The first iteration pushed Apple's hardware/software integration panache, with iMovie or Final Cut on kitted-out demo Pro machines, or colorful iHardware for kids and adults alike to experience in the flesh. Unremarked, but an obvious goal was to offer a haven for the "round pegs in the square holes." Long-time Mac users otherwise unable to browse software and hardware peripherals (i.e. POS material pushing 5 PDAs, 5 digital cameras, shelves of software and books, etc.) with any consistency in a Windows-dominated consumer electronics world had their new home. These customers happened to be wealthier than average, most in professions, where an expensive computer, either emphasizing digital media or print document workflow, was advantageous.
Apple even streamed Jobs' keynotes into "theaters" at the back of many stores. Cambridgeside Apple Store did not advertise, but provided seating for thirty or so people each time I went. I arrived an hour early and had a chair, but the store was eventually standing-room only and packed with cheering Mac zealots. (These broadcasts were predated by the satellite downlinks and pizza parties offered with even less promotion by Apple corporate offices.) The move of the event from an obscure corporate setting to mall retail mirrors Apple's corporate strategic shift in that time.
Store 2.0 heralded the addition of the iPod as a major product category. The "rollout night" for the 4-button 3G iPod, featuring then-unusual entryway placard announcements, is a useful milestone. The shift of Apple Retail from Mac torchbearer to consumer electronics platform showroom was partway finished.
Post-1.0 stores have iMacs, PowerBooks, and iBooks running on capacious tables. Each is a vertical solution to the question of how best to accommodate consumer usage of computers. The past division of retail by machine function (music, movies, games) was almost entirely replaced.
OS X, now the default operating system on all Macs, was sold unobtrusively. Marketing highlighted "UNIX foundations", with plenty of plumbing for complex functions, regular updates, and good security, all made "lickable" and easy to use by Apple's inherent design savvy.
Depending on the user's needs, the PowerBook, iMac, or iBook might be appropriate, but all were Macs. The PowerMac became a halo product of sorts, demonstrating the high-end media software and peripherals a Mac could theoretically handle, but in a fairly small section. Costly, then unusual and impressive 23in, then 30in, then two of the latter flat panels, sold in tiny numbers, cemented PowerMac cachet and Mac functional credibility.
Hardware and design differentiated Apple products in all classes of product, but none more so than the iMac, MacBook and MBPro, and iPod, and those products dominated the floor.
Mac computer accessories and software, already made easier to shop for by a burgeoning internet, were minimized to allow the iPod ecosystem habitat in its optimal environment. The iPod was positioned as a music player with a minimalist feature set. Color, photo browsing, contacts, on-the-go playlists, and other requested features were added, but Apple carefully kept Mac functions (i.e. word processing, even of a short note) out. Notably, even the music sold by Apple required computer-based iTunes software as an intermediary between content and iPod.
Accessories like boomboxes, Mac input devices, printers and scanners, software, and laptop cases were all given less prominent space than primary Mac or iPod hardware, and iTunes promotional material. Thus, Apple Store 2.0 made the Mac and iPod a platform for digital media sales and the personal application of consumer-patterned computing features. The iPhone, introduced midway into the era of Store 2.0, was positioned as a media consumption device tied to the Mac for such operations, like an iPod, but also a participant in the most common communications functions, like email, web browsing, telephony, and SMS messaging.
The rumored Apple Store 3 is Apple's move to make the iPod/Mac divide inconsequential, replaced by a focus on OS X (as application vector) as the Apple differentiator. The iPhone tables that focus on applications are meant to do what the 2.0 "Mac table" did. Push technical details and rigid usage to the background, and present the product as a platform supporting user whims and desires. The iPod Touch and Mac will be presented as a unified environment divided by form factor. Where iPod hardware was a category-defending ecosystem, software will be the flora and fauna that lures new phone and palm-space hardware buyers as well as converts to the Mac. Apple wants "OS X users" computing on all its form factors so as to cement OS X as the de facto standard, the Windows, of today. The network is not the computer, as Sun wished, but rather the "back office" server and managed computers. The userland operating system "is the computer" for most, and Apple's stores are moving to reflect the strategic aim of seamless OS X across end user devices.
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