Will Apple’s recent announcements shake up social networking and VOD markets?

EUROPE: Although the unveiling of new devices across the iPod range always attracts high levels of consumer attention, Apple’s venture into the social media space may potentially have the most profound impact on the media market, while a revised and re-positioned version of its Apple TV device could see the firm finally make inroads into the video on-demand market.

Adrian Drozd, principal analyst for Information & Communications Technologies group, Frost & Sullivan, notes: “The introduction of Ping – a music focused social networking service – is a major step for Apple, and one which is likely to provide a stiff challenge to several players across both the social networking and content delivery sectors. With around 160 million active iTunes users, Apple has a large, and captive, audience to which it can push Ping, placing the service in a strong position to quickly become an important social networking player.

"Although Ping may not immediately impact Facebook, due to the differing focus areas of the two companies, other social networking sites will be more directly affected. A prime example would be MySpace, which has seen a stagnation of its user base over recent years, while its focus on music puts it at particular risk from Apple’s new enterprise.”

The fact that Apple will initially promote Ping within the confines of iTunes, however, offers both advantages and disadvantages. On a positive note, while many rivals are reliant on advertising as the core revenue stream, Apple’s business model is based on driving music sales. As a result, the service is likely to be viewed as a trusted provider, alleviating consumer anxieties about the accessibility of valuable personal data by unwanted third parties.

On the other hand, the closed system that Apple has adopted presents several constraints – for example, users will initially be unable to import contacts from other services. Likewise, the use of Ping within iTunes offers potential usability concerns.

The revised Apple TV device is a more subtle development, but one which could nevertheless have a significant impact on the VOD market. Adrian Drozd comments: "While the previous versions of Apple TV were overpriced for mainstream adoption, the new $99 price point takes the device towards the impulse buy segment of the market.

"However, with only around 3 million Apple TVs sold since launch, this has been far from a mass-market product to date. As only a handful of content providers currently support the rental-only video service, success will necessitate a broader range of partners.

"Major content owners will be looking to see a significant upturn in the installed base before committing to a platform which could cannibalize established revenue streams, such as DVD sales and broadcast rights. Similarly, there remains the question of whether consumers are willing to pay for rental content.”

To counter these drawbacks, Apple will need to demonstrate the functional advantages of its product. “With the increasing integration of connectivity into TV sets, further competition will emerge for Apple over the coming years, with CE players occupying a pivotal role in terms of content delivery into the home,” states Adrian Drozd.

“In light of this, one development which should promote greater consumer interest in Apple TV is the capability to stream content from other video-capable devices across the company’s ecosystem. When this functionality becomes available in November, it will unlock a new level of flexibility, enabling consumers to seamlessly switch between portable and more traditional means of video consumption.”

Apple’s product launches always gain mass attention, and its recent announcements are no exception. The company’s move into social networking through Ping will certainly force other competitors in this space to take note, while online video providers and major content owners will watch with interest to see if Apple TV can finally hit the mainstream.