The worst thing that can happen to Apple now is for them to lose their core fan-base. From his excellent article Microsoft’s Long, Slow Decline, John Gruber makes an excellent point on a certain phenomenon of industries with an active fan-base:

Microsoft has lost all but a sliver of this entire market. People who love computers overwhelmingly prefer to use a Mac today. Microsoft’s core problem is that they have lost the hearts of computer enthusiasts. Regular people don’t think about their choice of computer platform in detail and with passion like nerds do because, duh, they are not nerds. But nerds are leading indicators.

This is true in many markets with broad appeal, not just computers. Microsoft is looking ever more so like the digital equivalent of General Motors. Car enthusiasts lost interest in GM’s cars long before regular people did; the same is happening with Windows.

But I fear that just as Apple is about to reclaim its dominance in the computer market, they are going to lose exactly what Microsoft lost several years ago. Apple’s most critical fan-base is its developers that have risked a lot to build the iTunes app store to what it has become, and secure the iPhone as a long-term leader in the smartphone market. The reason why I don’t see Android, Palm, and Windows Mobile taking serious share from Apple anytime soon is the iPod functionality and the abundance of applications in the app store. But if Apple keeps screwing around with its core base, this dominance won’t last forever.

The solution? Overhaul the app store and its approval process by separating the iTunes music store from the iTunes app store.

Why did Apple start out with the app store as a part of the iTunes store? It was the easiest way to get it the iTunes app store online – they just had to build on the iTunes music store infrastructure. iTMS also provided guaranteed great amount of traffic to kickstart the app store and ensure its success. But now we are seeing the downsides of the app store being a part of the iTunes store. The app store has had an incredible start, but it’s long due for an overhaul.

In iPhone OS, Apple does not bundle the app store with the music store. They are separate icons: “App Store” and “iTunes”. The way it should be. The desktop version of iTunes is so bloated, it’s ridiculous. How come an application that is supposed to be a music player is now the hub of all our digital content? Why is iTunes in charge of my photos, my calendars, my contacts, and my applications?

I remember there were rumors a few years ago that Apple was going to rename iTunes to something like “iMedia”. I don’t see this happening. Instead, I envision iTunes becomes the lean music and podcast player that it used to be, and a new application that will be in charge of everything else. iTunes will no longer sync with iPods and iPhones. The new application (I have no idea what it would be called), would be in charge of all syncing of data, and will be the host of the new App Store.

When Apple separates the app store from the iTunes music store, they need to reimplement the approval process. Clean up iTunes Connect. Provide a more scalable approval process that doesn’t piss developers off because they have a faulty app on the market an they can’t get an update out for a week or two, in the meantime suffering from negative reviews that will destroy the application and the developer’s reputation for a long time.

And while Apple’s at it, they can do some other things to help ensure continued success by reorganizing the store to ensure more fair visibility for applications. Probably the biggest issue with the app store now is that the majority of apps are $.99. This means less revenue for developers and Apple. This has all happened because of the way Apple sorts the applications. The solution? Introduce new sections, the a “Top Rated” section. Also, make the “Top Paid” application list not sort by the number of applications sold, but the revenue generated by the number of applications sold. Then applications that are a little bit more that don’t sell quite as many will get a higher position in the Top Apps list. When this happens, developers will no longer be pressured to sell their apps for the dirt-cheap price of $.99. For this reason alone, I believe that Apple is already working on an iTunes store overhaul.

I have had the chance of updating my iPhone to 2.1, and here are a few things I’ve noticed:

• My current iPhone is a replacement. I noticed once I got the replacement that the screen seemed washed out compared to my old iPhone 3G and my original iPhone. A thread on Apple’s Support Discussions forum had multiple people experiencing this exact same issue with their iPhones. However, upon updating to iPhone 2.1, I noticed the colors are much more vibrant and rich.
• The number of bars on my iPhone have increased dramatically. On Apple’s iPhone 2.1 Software Update page, they include “Improved accuracy of the 3G signal strength display” in a list of improvements. I find this somewhat controversial, as it leads one to believe Apple significantly boosted the reception, when in actuality just boosted the number of bars for all db levels.
• iPhone backups that used to take literally two hours now only take two minutes.
• I installed two apps and both installed within minutes. The delay that used to exist at the end of installing is now gone.
• Overall, the interface seems more nimble and responsive. I have yet to see any significant interface delays that once existed with 2.0.
• The new “3G” and “EDGE” icons are much nicer and easier to distinguish.
• Apple has updated the iPod application to feature the new Genius feature. For all the songs I have tested, Genius has worked really well. The songs it recommends are unique and compatible. Podcasts and songs now display more information.

Update: I’ve done some more real-life testing and now want to add a few more notes:

• Around town, I seem to have five bars nearly everywhere I go. I find it interesting Apple did not “improve accuracy of the 3G signal strength display” in iPhone 2.0, instead waiting for this release. I have a feeling this might cause some controversy.
• Interface animations are much smoother now, especially with rotating the screen and rearranging icons on the springboard.
• My iPhone 3G speaker seems even louder.

Let’s start small with the Shuffle.

New pastel colors. Still $79 and same memory capacities. Yep, that’s pretty much it. Let’s move on.

The New Nano

One of the biggest announcements at the Keynote was the new video-playing, “stubby” Nano. Now that the Nano has video, all iPods with a screen have video. The Nano is still offered only in 4GB and 8GB models. I have 4 hours of video in my library and thats 3Gb. So for me, the 4GB would not be able to handle my video and music library. Now let’s say I upgrade to the 8GB. This leaves me about 4GB of music. But why would i do that. For $50 more I could buy myself an 80GB Classic with a .5 inch bigger screen. I don’t understand why Apple added video to the Nano. They now have mixed all of their iPod customers into one type. Now your only buying screen size and capacity.

For me, the Nano is definitely not the iPod for me. For people who really plan on watching video, they need to consider the iPod Classic or iPod Touch. I think Apple just added video functionality for casual occasional videos – maybe video podcasts or music videos. However, I do think the Nano is still great for running, especially with the Nike+ iPod kit.

By the way, the new Nanos have games too, but I don’t look forward to playing games on such a tiny screen. If I want to game, I’ll buy a PSP or DS. However, it will be interesting what homebrew cooks up for the iPhone and iPod Touch for games. So far, we’ve got NES, “Lights Out”, Yahtzee!, Blackjack, Minesweeper, and more.

One of the bigger announcements was that the new iPod Nano now comes with a new user-interface (and possibly a brand new OS) that allows for Cover Flow and some more eye candy.

So the Nano. 4GB, only silver for $149. 8GB, silver, blue, green, black, and red for $199. Thinner, wider, and now with video.

iPod Classic

Honestly nothing revolutionary here. The biggest surprise was probably the name change. No longer can you buy simply an “iPod”. A big surprise for others is probably the amazing memory capacity available.

The new iPod Classics are now all metal. The front plastic from the 5G iPod has been replaced to the same metal Apple is using with the Nano. Apple has curiously kept the back the same metal as the 5G iPod. I believe this will raise appeal. Now the outside won’t scratch (at least it wont be as easy to) and the memory capacity is amazing for people with serious video and/or audio libraries.

The new iPod also comes bundled with the new OS Apple has written for the Nano. The iPod Classics are available in 80GB and 160GB models. They are $250 and $350 respectively. Silver has replaced white, and will probably now make the black model even more popular.

iPod Touch

The iPod Touch was probably the most exciting announcement. Well, you know the iPhone. Take away the phone and you’ve got the iPod Touch. It’s an iPod with a 3.5 in touch screen. It has Safari with Wifi, the whole thing. It also has YouTube, MobileCalendar, MobileAddressBook. However, Apple did not include a Mail application or the stock, weather, or Google Maps applications. MobileOSX includes Cover flow with the accelerometer.

The iPod Touch models are both a bit thinner than the iPhone. The iPod Touch does not have a microphone – which will make it hard for hackers to possibly turn the Touch into a VOiP iPhone. There is an 8GB and a 16GB version. Only $299 and $399 respectively.

iPhone

The iPhone’s price has been reduced to $399. It’s now only available in 8GB version. IMO Good move Apple. Anyone with a budget to buy the iPhone would buy the 8GB version for only $100 more. But now with only an 8GB model available and the price drop Apple has told us a lot. Plus anyone who bought their phone before this price drop gets a $100 rebate. The new smaller price difference between the iPhone and iPods will probably make potential iPod buyers consider an iPhone. Apple’s recent aggressiveness will really pay off with one of the best fourth quarters ever.

What else could there possibly be?

Actually, a lot. The biggest “side-announcement” was probably the new Wi-Fi iTunes music store. You can browse a full iTunes music store and download them straight to your iPod touch or iPhone. This is what people have been asking for since the first video iPods were released. I can see this significantly boosting iTunes music sales. Apple has setup a great convenience for people to buy that song they are listening to on the radio on impulse with just a few “taps”. Now Apple has caught the impulse buyer too. I think this will boost the iTunes Store to the next level in music sales.

What else could Apple do to please us? What about the iPhone owners who were extremely upset after the price drop? Steve Jobs personally acknowledged the dissatisfaction from early iPhone adopters and has written a short open letter to all iPhone customers. In the letter, Steve clarifies why they dropped the price and then apologizes that Apple hasn’t really taken care of its most loyal customers and announced a soon-to-be-available $100 in-store rebate. Isn’t Steve the best?

Apple is also taking advantage of the potential with custom ringtones? In iTunes 7.4, it is now (actually will soon be) possible. Once you buy a song in the iTunes Store you pick a 30 second section and apply fade-ins and/or fade-outs. It does cost $0.99 though. But $1.98 for a song and ringtone is cheaper than just a normal ringtone from your normal provider. Hackers have successfully circumvented this process by simply renaming m4a music file with an “.m4r” extension and then syncing their iPhones. It’s a relatively simple process, however it seems to have already been patched by Apple with iTunes 7.4.1. But software applications such as iToner ($15) and the free iPhone application “SendSong” are able to make ringtones without having to pay the extra 99 cents every time.

So, after reconnecting to iTunes, I am pleased to find this message inside iTunes.

Could this possibly mean a firmware update is on the way?

The Apple TV is a great example of the typical first generation Apple product. At first it seems to lack features that make it worth the high price Apple is asking for. Just like the iPod and many other Apple products, the Apple TV will probably follow in iPod’s footsteps and eventually become that “must-have” device that every home will have. It will just take about three to four generations to catch on. In my opinion the Apple TV is going to have to meet these requirements to start flying off the shelves:

1. HD content.
2. Much cheaper price. Nothing above $199.
3. Rental movie downloads.
4. An iTunes store for the Apple TV possible.

5. Apple, give up .Mac or make it free

I know many proud .Mac subscribers may disagree, but I just do not understand how the services Apple offers in its .Mac subscription is close to being worth $99. It offers sub-par bandwidth and memory restrictions and packaged with a lot of bloatware that can be substituted for free alternatives. Apple’s already shown its lack in .Mac when it announced its compatibility with Yahoo mail’s mail-push functions and saying they will offer free email addresses and these special push functions to all iPhone customers. Give it up Apple, .Mac is a failure. The only way you are going to start getting subscribers it to either make the price worth the features or better yet, make it free!

4. Updates for iWork and iLife

We’ve all been waiting since January for an update to our iLife and iWork suites of applications, and for the first time since iWork ‘04 Apple didn’t release the new suites at Macworld. We’ve speculated the past four months and made rumors of when the new suites will be announced, but still no details on the suites have been released by Apple. Many are anticipating the new iWeb 2.0 release that hopefully will have FTP/SFTP features and new, richer, cleaner templates. Others are waiting for an update to Garageband and the other old iApps.

Many iWork users are waiting for a spreadsheet application to compete with Microsoft’s Excel program. Looking at some of the screenshots of Office 2008 for Mac and playing with Office 2007 for Windows, I feel Apple really needs to improve the interface and friendliness of iWork to really make it work. I’m a big fan of the iWork suite but the current “Inspector” interface simply doesn’t compare to the ribbon interface in the new Office suites from Microsoft. We’ll see how Apple can implement the Inspector interface in the next iteration of the iWork applications and hopefully make it a little easier to use without involving dialogue boxes and extra windows, etc.

3. iPod Update to at least iPhone specs

The current iPod is really an embarrassing video player compared to both the Zune and Apple’s new iPhone. It wouldn’t take much to turn the current iPhone product and sub in a hard drive (or a lot of flash memory) for all of the phone innards and make a killer music, video, media, internet-browsing device. Hopefully this new iPod will at least match its competitors and include a built-in Airport wireless adapter to browse websites (just like the iPhone), download media from the iTunes store, sync with your Mac or PC, connect to an Apple TV, etc. Maybe these features sound a little idealistic, but it surely is possible and would be very well received. Knowing Apple, a November release date sounds likely; however knowing Apple, you can never bee too sure.

2. Interface Updates to Mac OS X – Illuminous

It was a hot topic discussed on Appleology a while back, but its still a very important topic since we haven’t had any updates since. In my opinion, user interface and user experience is pretty much 75% of what is great about using a Mac. but I’m ready for Apple to impress me again like they did with Aqua. I want a really rich user-interface that has more feeling and depth. And it all comes back to the idea of Illuminous and a new generation of user interfaces for the Mac. Apple’s going darker, sleeker, shinier with every product they release. The iPhone, Apple TV, iTunes 7; they all have that same interface that we nicknamed “Illuminous”. Now it’s Mac OS X’s turn for a change. Leopard’s resolution independence features along with the progress Apple’s made developing Multi-Touch interfaces with the iPhone and integrate that technology with OS X and run with it. The result could change the way users operate with their computers forever. And if Apple can’t get this far by June, hopefully they will at least match Vista’s impressive GUI.

1. Lower Prices on All Consumer-Level Macs

Price has to be the biggest complaint from potential switchers whenever I try to persuade someone to consider buying a Mac. They don’t care if Macs last longer or consider the bundled software, when they are thinking about buying a computer all they only care about the price of the computer. If Apple really wanted to maximize their market share, they would have lowered their prices on all of their Macs by now. When it comes to most of the consumers today, all they want to hear is price and Apples simply can’t compete with notebooks starting at $1099.

The floodgates of Apple’s R&D departments flew upon us today and shocked us all. The buzz and publicity the keynote has attracted has made both geeks and consumers froth with excitement and made the Intel transition sound unimportant.

Evolving into a consumer electronics company

Today Steve Jobs introduced the new corporate name for Apple Computer; “Apple”. Onstage Steve concluded that Apple is no longer just a computer company with the assortment of non-computer products that they sell.

Steve also made it clear once onstage that the keynote was not going to be centered around Macs and Mac OS X. That meant the rumors concerning iLife/iWork ‘07, additional Leopard previews, octo-core Mac Pros, Intel Core 2 Mac Minis, etc. did not come true. Alex Lindsay of MacBreak made an interesting point that

1. Apple did not have enough time to release all products expected to be released in an (already extended) two-hour keynote.
2. Apple wanted to make clear that the iPhone was the big announcement and not for it to be clouded by additional product announcements concerning Mac and Mac OS X. (Such as the ROKR and iPod Nano Keynote).

And as Apple is spreading its focus across the consumer electronics industry, it now has new competetives it never had before, such as Palm and RIM. Apple’s strong foundation with a large user-base and a strong will for innovation, they should have no problem.

More Mac-related product announcements soon?

Even though Steve said he wasn’t going to talk much about the Mac platform today, chances are the traditional announcements won’t go forgotten and they will introduced a few weeks from now after the buzz over the iPhone and AppleTV settle. However, it appeared as if the demo Mac was running a newer version of Keynote with new text effects, including spark and the ‘pass-through’ effects, and new graph gradient textures.

The iPhone is the iPod Killer

Whoever thought the iPod killer would be a product made by the company who made the iPod? Steve made it clear the Zune sure wasn’t going to be the iPod killer, as some thought when they heard of the Zune. But today’s iPhone announcement ended up embarrassing Microsoft and its Zune player and just shows how Microsoft is always a copier and never an innovator.

The Consumer Electronics Show and Macworld Conference & Expo coincided today. However, even with CES’ large popularity and publicity, most of the news from today’s CES news coverage was overshadowed with the revolutionary announcements in San Francisco today at Macworld.

I talked to people here who have seen the Apple phone and they were practically frothing with excitement. But even if it were more reasonably priced, it will be primarily attractive to early adopters and those who either have to replace their existing phone or whose cellular contract is up.

An iPhone without a phone?

The downside to the mobile phone market is becoming compliant with each independent wireless provider and saturating each wireless provider’s market share. While I wasn’t surprised at all, I was disappointed that Apple chose not to partner with Verizon and Sprint to captivate more potential buyers who are already in contracts with other wireless carriers. Even if Apple gains serious market share in Cingular’s product line, it will still not make a major impact in the overall market because of the large percentage of consumers in the United States who are customers of other wireless providers, such as Verizon and Sprint.

Besides, an iPhone without the phone would be successful by itself, with built-in Wi-Fi, Bluetooth, Multi-Touch widescreen, and OS X-based. It would be very disappointing if Apple were not to eventually develop a similar product just as an iPod. People who are loyal customers to other wireless carriers and who don’t really need a phone won’t buy an iPhone, so a large market would be left untapped.

A stronger foothold in the movie industry

With addition to each of the exciting product releases, Apple has made partnership with Paramount pictures to provide over a hundred movies available on iTunes, growing the content available on the iTunes Movie store dramatically and becoming a leader in the downloadable movie industry. Paramount pictures is the second major studio to partner with Apple to sell downloadable versions of their movies. Paramount is a big studio to partner with, and it will sure trigger many more partnerships with other major movie studios.

The AppleTV will revolutionize the way many get their movie content, instead of paying subscription-based services or renting movies at their local Blockbuster, they instead just decide what they want on the couch and buy it through the iTunes store.

Partnership with Apple Corps.?

Steve seemed to really push the Beatles today, playing ‘Sgt. Pepper’s Lonely Hearts Club Band’ and a few other Beatles hits during the keynote. I doubt he would be promoting music that they do not currently sell on the iTunes store during the Macworld keynote, so chances of a new Apple Corps. partnership would be very likely considering the facts.

Also, the shedding of the term ‘Computer’ from Apple’s corporate name is symbolic not only of their new strides in consumer electronic innovations, but also the end to their disputes with Apple Corps. While we may not ever understand the complete details of what went on after their last settlement, but it looks as if their bruised relationship is beginning to heal.

This pretty illuminating graphic screams that they are ready to kick some ass in 2007 and onward. Apple has not looked this good since 1984 with a solid beautiful operating system, a great product line of desktop and laptop computers, a great foothold in the consumer electronic and music industry, and an-ever brighter future.

From an analytical point of view, Apple’s obviously got some fantastic products yet to be released to call the iPod and all of its Macintoshes “just the beginning”. Personally, I am on the edge of my seat to see how Apple is going to make 2007 the beginning of a new era for Apple. 2006 was a great year for Apple to lay a solid foundation for Apple to build on with Leopard, the iTV, HD content on iTunes, and new iPods (widescreen). But as always this time of the year, we just got to wait and see because nothing is for sure until Steve announces Macworld’s infamous “One more thing…”

Digg.com creator Kevin Rose apparently spilled some inside information on the latest Diggnation podcast about the upcoming iPhone. He wouldn’t give out too many details, but he did reveal a few specific specs, including: an official announcement at Macworld, a very small design, 4 GB and 8 GB flash memory models, a slide-out keyboard, a wide touch-screen, compatibility with all major carriers, and a revolutionary user interface. He wouldn’t discuss any more information about the iPhone on the show to protect his source, but he claims he has seen the phone (however not operating) and is positive the source is 100 percent reliable.

Other rumors include iChat video-conferencing on the phone, and tight integration with OS X 10.5 Leopard. The phone is also rumored to use an intuitive, mobile-version of Front Row for the phone’s interface interface. And according to Apple Insider, Apple has made deals with all major cellphone carriers in the United States, with the exception of T-Mobile.

Last week, Motorola released the linux-based ROKR E6 in China and is speculated to release the same phone in the United States soon and start ending their short relationship with Apple computer next month.

It was only a month ago when Motorola introduced the RAZR V3r, which dropped support for iTunes syncing and FairPlay-encoded music playing. The new ROKR E6 has replaced iTunes-only synchronizing with compatibility with basic MP3, WMA, RealPlayer audio, and etc. The release of the RAZR V3r was ultimately the beginning of the end for iTunes-integrated Motorola phones.

It wasn’t a secret that the Motorola/iTunes phones were horrible in their UI, price, and compatibility. The relationship between Apple and Motorola seems to be ending as more and more Motorola phones are dropping their support for iTunes integration and rumors of a 100 percent Apple phone are heating up. Even Apple’s investors are listening to the phone and iTV rumors as Apple’s stock has hit an all-time high.

Where would Apple be now if they had stuck with the PowerPC architecture? Would we have seen a PowerBook G5 or an sexier iBook? Would there still be a growing demand for Macs as the iPod halo starts to glow and Apple markets their products? Apple’s bold move to move over to the Intel camp was risky, but it would have been one of Apple’s biggest mistakes to have continued to produce more PowerPC machines.

I’m starting to realize the same growing trend in Macs as I’ve noticed in iPods. Macs are being used at homes, businesses, at school, on the road, and in public. Macs, especially the Macbook, are starting to get a ‘cool’ factor just like the iPod. I know many PC users expecting to buy a Mac and many parents planning to buy a Mac for their child. Even my cable guy pointed out this phenomenon when he asked me about my MacBook Pro, ‘It seems like I’ve seen more Apples the past six months than ever.’

It won’t be long until more PC users switch when they start to see more and more Macs around. It will just take some time before the majority of consumers realize you can run Microsoft Office on Macs, you can play video games on your Mac, and you can run any Windows program on your Mac.

Don’t forget MacWorld 2007 is around the corner and new products are bound to be released, including the infamous iTV (code-name, official name not released). The release of a new ultra-portable Macintosh is one of many rumors for the great event, and such a product could be the missing link between an iPod and Macs. A revolutionary product like an ultra-portable Mac could start a new progressive growth in Apple’s market share.

When attempting to connect to the Store, the connection times out when the message “Accessing iTunes Store” appears. Sometimes iTunes will display its cache and display a Store as it appeared last time you successfully connected. But once you click on a broken link or image, iTunes will recognize it can’t connect and display an error message (similar to image above).

Apple has yet to release a statement and come out with an appropriate excuse (or an appropriate error message) on what’s causing the problem. Many angry iTunes users make the point that Apple should at least have an error message explaining to the user that the Store is currently down and to try again later. As this has caused major confusion and inconvenience for all of us, some in the middle of purchasing a song were also effected and they were not able to finish their downloads. Hopefully Apple is close to correcting the issue and refund incomplete purchases made during the downtime.

I’m curious, can you connect to the iTunes Store? If so, maybe you can help us determine why some cannot connect to the iTunes Store.