After a Tough Summer, Apple Enters Its Comfort Zone

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Apple's biggest product strengths--iPods and iTunes--figure to be on the agenda when Apple executives take the stage in San Francisco Tuesday for a music-themed press event. But after a tumultuous summer, the iPhone and a series of public-relations setbacks will likely be on the minds of anyone attending or watching the presentation--not to mention the company hosting it.

Apple's summer has been one of highs and lows. The company launched the iPhone 3G in the U.S. and 20 other countries on July 11, selling 1 million phones during that opening weekend. Since then, the iPhone 3G has arrived in nearly two dozen other countries, expanding Apple's reach around the globe. At the same time, the 3G rollout on July 11 was marred by activation woes, the launch of the rebranded MobileMe service has been fraught with problems, and Apple's App Store--while a financial windfall for Apple and developers alike--has also been a source of huge frustration for software makers.

Tuesday's press event marks Apple's first major product announcement since June 9. Still, analysts who track Apple don't expect what's happened over the summer to have much of an impact on the appeal of whatever is unveiled this week.

"I don't think [Apple] has really been damaged that much" this summer, said Michael Gartenberg, vice president of market research firm Jupitermedia and editor of the MobileDevicesToday blog. "We haven't seen iTunes downloads slow down or Mac sales slow down."

Indeed, iTunes passed retail giant Wal-Mart earlier this year to become the top music retailer in the U.S. And for its fiscal third quarter ending in June, Apple sold the most Macs in its history--the fourth time in five quarters the company had set a sales record.

Still, Apple isn't known for resting on its laurels. Much of the company's recent successes can be attributed to pushing out new products or significantly enhancing existing ones. And that's why events such as the one taking place Tuesday garner such attention--people want to see what Apple has in store next.

Apple has all but confirmed that this week's press event at the Yerba Buena Center for the Arts will involve some sort of music product. The invitation sent out to reporters last week featured a silhouetted dancer--a staple of Apple's iPod and iTunes TV ads--and the words "Let's Rock" splashed across an iPod-like interface.

New iPods or a revamped version of iTunes would not be out-of-character for Apple in the fall. The company has hosted press-only events in September since 2005, usually to introduce new iPods in advance of the holiday shopping season. Past September events have also seen Apple add movie rentals to the iTunes Store and preview the set-top box that would become the Apple TV.

Whatever's on the agenda will remain a closely guarded secret until Apple executives take the stage at 10 a.m. PT. Tuesday. (Macworld will have live coverage of the event, beginning then.) But the way the world views Tuesday's event can't help but be influenced by this summer's Apple-related hoopla.

Apple "needs to recapture some of the excitement," said Ross Rubin, director of analysis at market-research firm NPD Group. "The iPhone has stolen a lot of thunder from the standalone devices and competitors are integrating wireless music services."

Gartenberg, however, isn't so sure that the iPhone will force Apple to pull something revolutionary out of its hat, especially given the iPod's dominance in the music-player market. "I don't think there is any more pressure to come up with new products now then there was before," he said. "The pressure is on because in consumer mobile technologies, [Apple is] seen as the market leader."

Besides which, the iPhone and iPod are two very different segments of Apple's product line. "You're looking at two businesses in different stages of maturity," Rubin said. The iPod has been around for nearly seven years and has already established itself as the leading portable music player. The iPhone is only beginning to get a foothold in the mobile phone market. And unlike the iPod, where Apple retains a good deal control over the finished product and user experience, the iPhone involves service providers and an emerging networking standard.

And both analysts noted that concerns over the iPhone issues have been overblown in some cases. "We've seen millions of people buying the iPhone and they've had no problems," Gartenberg said. "The vast majority of consumers that buy the iPhone aren't posting in forums, so its easy to get a [skewed] view--problems get magnified out of the proportion on the Internet. Most mainstream consumers are delighted with the service they are getting from Apple."

This story, "After a Tough Summer, Apple Enters Its Comfort Zone" was originally published by Macworld.

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