It Wasn't Bigger Than a Breadbox

Apple shares slid 3% Tuesday following Jobs's show and tell, and the underwhelming response was hardly surprising. Products aside (I'll get to those in a minute), running journalists and analysts through the same tired hype cycle keeps everyone's expectations artificially high — always a dangerous game to play. It didn't help that the event reportedly was attended by only a few hundred who received invites. Note to Apple: Taking pains to cultivate an air of exclusivity isn't always the best approach. If the news wasn't enormous, as it clearly wasn't, why not host a webcast? Too pedestrian, I guess.

As for products, a new Mac mini, predictably powered by Intel (INTC) chips, was among Apple's portfolio additions. The mini connects to the television, allowing for on-screen, remote-controlled navigation of music, photos and video. This is exactly the kind of thing that Apple should be yelling about: a brain for the digital living room. This is the company's strong suit, showcasing machines that are intuitively designed and easy to use. Maybe Jobs did that for the folks invited to watch the demonstration. I wouldn't know, and I'm guessing you don't either.

Another new offering, the iPod Hi-Fi, a home stereo system for the iPod, seems to be a natural evolution for the iPod brand. If nothing else, this is a way for Apple to get in on all those sales that Bose et al are sopping up from their iPod-compatible speaker systems. But Apple's offering — amazingly — looks more like a breadbox than anything else. Actually, a breadbox with an iPod sticking out of it. Enough said.

Let's be clear, no company has taken the digital strides that Apple has in, well, anything. No other company has more fingers in digital music, video and photos, or as strong a hold on consumers that Apple has. It has a massive opportunity before it to pipe digital media visually and acoustically through the home. "Apple is the company that could get [the digital living room] right," says Rob Enderle, principal analyst of the Enderle Group, a technology advisory firm based in San Jose, Calif. "If they could step up and own the segment, it would be one more segment that they own and Microsoft (MSFT) doesn't."

But I think Apple frittered away an opportunity on Tuesday. The announcements were baby steps in its product development. Incremental evidence that Jobs & Co. is acting on a plan to digitally connect media for lounge lizards everywhere is good to see, of course. But this is a vision that needs articulation on a wide scale, and Apple failed to do that. Not only that, but I think it missed the design mark with its stereo-cum-breadbox. By a mile.

Of all things, Microsoft could upstage Apple with an announcement of its own this week. Over the weekend, online sites crackled with speculation about a forthcoming product unveiling by the software maker. By late Monday, wire reports confirmed that Microsoft is developing a portable media device with gaming, Internet, music and computing functionality. Chairman and Chief Software Architect Bill Gates has long been a fan of so-called tablet computing, and it seems the company is close to unveiling a new product that's smaller than a laptop, larger than a hand-held and doesn't — despite some speculation — take direct aim at the iPod.

More details are promised for Thursday, according to the marketing web site Origamiproject.com that jumpstarted all the buzz. But the site also intimates that additional information will be released at weekly intervals. One week from Thursday is March, 9, the start of CeBIT, the tech industry's big annual show. My bet is Microsoft will tease a little more this week, but save any major product unveiling for the folks at CeBIT.

Bottom line, though, Microsoft is pushing a new family of "communicator" devices. "We have a new class of product that's trying to be born," says Enderle.

Chances are, this would be a niche, high-end product for first-adopter types that have a laptop, but also gotta have something more compact and portable. While the initial product isn't expected to have mass appeal, Enderle says as it matures, shrinks in size, incorporates more features and gets a leaner price tag, it could displace a number of popular gadgets. "This could be the Swiss army knife of portable devices," he says.

That's a ways off, however. So, what's the immediate benefit to Microsoft? One thing the company is trying to do is generate enthusiasm for the launch of its new operating system, Vista, says Roger Kay, president of Endpoint Technologies Associates, a technology research and consulting firm based in Concord, Mass. After all, showcasing new devices, new services and new software applications to highlight Vista's appeal is better than, say, a print ad with a picture of the software's box. Indeed.

Word-of-mouth buzz before a product launch, devices that create a halo of sales around another product? Seems Microsoft has taken more than one page from Apple's playbook.