Apple changes core business from computer to mobile, TV

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Apple Computer dropped "Computer" from its name as it introduced its mobile iPhone, Apple TV and a partnership with AT&T's Cingular Wireless at the Consumer Electronics Show in Las Vegas last week.

The Cupertino, CA, software giant, known for revolutionizing music consumption with the invention of its iPod MP3 player and Apple iTunes, will be able to market itself to Cingular's 58.7 million customers.

"Because this is a true wireless technology with a phone, an Internet browsing device and an iTunes player, more consumers are going to buy it, and that means more revenue and more subscribers," said Mark Siegel, spokesman for Cingular Wireless, Atlanta.

The iPhone combines a mobile phone; a widescreen iPod with touch controls; and an Internet communications device with desktop e-mail, Web browsing, searching and maps. It introduces a new user interface based on a large multi-touch display and new software. IPhone also includes a 2 megapixel camera and a photo management application that can be synced on a PC or Mac.

Also, iPhone debuts Visual Voicemail, a product developed by Apple and Cingular, that lets users go directly to any voice messages without listening to any prior messages, like in e-mail.

IPhone will be available in the United States in June, and it will work in combination with Apple's iTunes, running on either a PC or Mac. It will be sold through Apple's retail and online stores and through Cingular's retail and online stores.

But it is not smooth sailing for the new iPhone, as Cisco Systems sued in U.S. District Court for the Northern District of California, claiming that Apple infringed on its registered iPhone trademark.

Cisco claims to have obtained the iPhone trademark in 2000 after acquiring Infogear, which previously owned the mark and sold iPhone products for several years. Infogear's original filing for the trademark dates to 1996. Linksys, a division of Cisco, has been shipping a line of iPhone products since early 2006. Cisco claims to have entered into negotiations with Apple in good faith, and that Apple repeatedly asked permission to use Cisco's iPhone name without reaching any agreement.

However, the big changes at Apple don't all face choppy waters. Enter Apple TV, the marriage of Internet content with the home entertainment system. Apple TV lets users view iTunes content - movies, TV shows, music, photos and podcasts - from a computer on a widescreen TV. It connects to an entertainment system just like a DVD player but plays digital content from the Internet rather than DVDs. Apple TV is a significant upgrade for users who now connect iBooks to TVs with Apple's AV Connector Cable.

Despite the potential, content is limited. Though Apple TV and iTunes are integrated, iTunes video content currently consists of 250 feature-length movies, 350 TV shows and 5,000 music videos, not in league with the 70,000 titles on Netflix and the uncountable music videos on YouTube.

The TV platform has a 40GB hard drive that can store 50 hours of video, 9,000 songs, 25,000 photos or a combination of each. Apple TV also can auto-sync content wirelessly from one computer or stream content from up to five more computers to the TV.

Though neither Apple nor Cingular would comment on the specifics of the advertising model, the potential to target consumers in a more personal context - be it on the phone or on the desktop-turned TV - is worth considering.

Any cell phone that's easier to use is a good thing for marketers, Forrester Research analyst Christine Overby said, because too few consumers use the mobile Internet. Many people don't even know that phones have a browser, and those who do often don't bother because content is unavailable or hard to find.

"One of the biggest challenges that marketers face right now, particularly with mobile Internet campaigns, is reach," she said. "So the iPhone's intuitive interface will go a long way to solving these problems among the consumers who own it."

But a good phone is not the ticket to a successful mobile campaign. Ms. Overby warned that though more intuitive phones can make mobile a more viable marketing channel, marketers should think carefully about campaigns and provide valuable content.

"Most consumers don't like the idea of ads on their phones," she said. "Partly, this is a perception thing. People often view mobile marketing as being interrupted with irrelevant and intrusive ads when they are walking down the street. Yet when mobile marketing campaigns are done right, we find that people actually like them."

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