I love the week before Macworld almost as much as I love the keynote itself. Anything is possible. What will Apple CEO Steve Jobs announce? A new really thin laptop? New iPhones? A revamped Apple TV? New iPods?

As it turns out, he announced all of those and more.

In the days since the keynote, Apple's stock has taken a beating. I think it's because Wall Street doesn't understand that Apple is changing the way we think about new products the same way that they changed our idea of what a computer could do, what a music player should feel like, and what a phone could be. Now you can have a new iPhone with a software update.

For many, this keynote was all about the new laptop and what it was missing. But again, Apple has often blazed the path to the future by choosing what to leave out. They led the way in discarding the floppy drive and modem from their laptops and the keyboard from a smart phone. What goes away is often as important as what stays.

You can feel the embodiment of this "less is more" message at this year's Apple booth. It is not packed with rows of tables filled with a wide variety of machines. In years past it was tough to walk through the Apple area. This year there were a few highly focused areas. Up front you can come touch the new laptops. In the middle there is the traditional demonstration stage. But Apple has pared down their displays on either side of the booth. It feels uncluttered like the new laptops themselves.

Looking back

There are times that Jobs has to explicitly remind investors of what Apple has shipped. Jobs began the keynote by looking back at 2007, repeatedly referring to it as "an extraordinary year for Apple." He mentioned, almost in passing, that Apple had shipped a new iMac, new iPods, and introduced the iPhone. He added, "on top of that Leopard and all of the great software we shipped."

The mention went by so fast that you almost didn't have time to take it all in. Apple launched the iPhone in June and has since sold more than four million units. Apple revamped the iPod line so that all but the iPod shuffle include video. Just when you think you know what an iPod looks like, Apple introduces the iPod touch and at the other end of the spectrum, the nano is now wide enough to host video as well. Jobs didn't even mention minor refreshes to the laptop nor the new Apple TV and Airport base stations introduced at last year's Macworld keynote.

Leopard was delayed, but in the three months since the latest version of Mac OS X was released, Jobs reports that Apple has delivered more than five million copies and represents one fifth of the Mac install base. Of course, it's easy to forget that Apple released a second operating system last year. The OS X that runs on the iPhone is a significant effort and in the first three months that the iPhone shipped it represented nearly twenty percent of US smart phone sales. Other software releases included iLife, iWork with the new Numbers application, and new versions of Final Cut and Logic.

CEOs may be prone to hyperbole and perhaps you wouldn't use the word "extraordinary", but it seems that the analysts are off in the balcony looking for clever ways to dismiss all of these new products the way Statler and Waldorf heckled the rest of the Muppets.

Jobs transitioned from his look back to his first device announcement: a backup appliance called Time Capsule. It is essentially an airport base station with a large server-grade hard drive. The idea is that all of your Leopard boxes can use Time Machine to back up wirelessly to Time Capsule. It's the next step in making automatic backups "set it and forget it." There is a 500 GB version for $299 and a 1 TB version for $499 scheduled to ship in February. Hopefully by then 10.5.2 will have been released and the promised ability to back up to your own disk connected to your existing Airport base station will be enabled.

Macbook Air sign
MacBook Air sign captured at Macworld Expo 2008 in San Francisco. Photo by Derrick Story.

The new iPhones are here

There were rumors of new iPhones to be announced at Macworld. There were leaks of the 3G phones in the works. Pundits who discounted an announcement of those phones at Macworld were still predicting that we'd see a bump in the storage capacity. We got none of that.

Take the iPhone out of your pocket and sync it to your computer. There's your new iPhone.

The new iPhone doesn't have GPS but, at least here in San Francisco, it has a very accurate locator. Go to the new version of the Maps application and click on the round icon in the bottom left corner and the map shows you where it thinks you are right now. It uses a combination of Google's triangulation off of cell towers and using GPS information from WiFi locations mapped by Skyhook Wireless.

The new iPhone doesn't have third party apps yet. Those are coming soon enough. Jobs reminded the audience that developers would be getting the iPhone Software Development Kit at the end of February. In the meantime, you can start to customize your iPhone. Just as the videos of the leaked update show, you can customize your home page by clicking and holding any of the icons. They all shake and you can drag the icons around the screen or even to one of eight other screens. You can also drag icons to or from the dock at the bottom.

None of that would matter or make sense if there weren't additional icons available in this new release. You can now bookmark pages in Safari and generate an icon that you can put alongside the applications on the home screen. In other words, you now have a customizable desktop for your iPhone.

So it's not exactly a new iPhone but it's a great message to send out to existing customers. Apple is treating their phones the same way they treat their computers. You can install Leopard on that computer you bought that ran Tiger and it feels like a whole new machine. The software updates for the phone are enhancing your phone in natural ways. But in the case of the computer operating system, Apple is often willing to draw the line in what existing hardware they will support. Not all future updates should be expected to work on your existing phone. Also, as with Mac OS X, minor releases are free but major releases will cost you money.

The twenty dollar upgrade

That brings us to the new iPod touch. Even though it looks a lot like the iPhone, until now it has been positioned as a high end iPod. Starting now, it will become an iPhone without the phone. They've added Mail, Maps with Wifi location, Stocks, Notes, and Weather. You'll also be able to customize the home screen. In other words, the device you bought has been dramatically changed. You bought an iPod and for $20 you can turn it into a real Internet device.

"Twenty Dollars? Apple is going to charge twenty dollars? Apple should just give it to us for free."

Tell me Jobs doesn't want to just say "Shut up. Just shut up." But of course RSJ can't.

I was once backstage after a Wynton Marsalis concert and he asked one of the women I was with what she thought of the show. She looked at him and said, "you could have played longer."

He nodded thoughtfully and said, "yeah, I could have."

That's what it felt like this week in San Francisco. So many people running around saying "Apple could have just given us the upgrade."

Yeah, they probably could have. But listening to people holding a five dollar cup of coffee in one hand complain about spending twenty dollars to upgrade their iPod touch confuses me a bit.

Home entertainment

Steve Jobs tends to understand that people have different relationships with things that may seem very similar. So the screen in your living room and the screen on your computer may be technologically very similar but they are used very differently. People sit a foot or two from their monitor and ten feet or more away from their television.

In his keynote he argued that your relationship with movies and music is different. He thinks that for the most part people don't want to rent their music. They want to own it. But for movies, except for a few favorite titles or for enthusiasts, many people are happy just watching a movie once or twice. They are happy renting movies.

As expected, Jobs announced that you can now rent movies on iTunes. He rolled out the list of studios with classic Jobs theatre. He showed a list of five studios that had signed up to provide rentals. Paused and said "and these six too" and the slide flipped down to show the six major studios signed on as well. It's perhaps a little odd that the studios would be agreeing to rentals at a time when they're telling striking writers that there's no money on the table to divvy up.

The rental rules aren't viewer friendly. There is a 30-24 rule. You have thirty days from the time you rent a title to view it. But once you begin viewing a title you have only twenty-four hours to complete it. The most frequently cited use case that flies in the face of this rule is that you start watching a movie one night and either fall asleep or something comes up and want to finish it the next night. By the time you're ready to view it the 24 hours have expired. The hope is that 24 will become 27 or 36 or 48. You can move the movie from one device to another to complete the viewing. But a longer period would be nice. 20th Century Fox Chairman and CEO Jim Gianopulos also added news of a quieter announcement. His company is going to start shipping a digital version of their movies so that you can watch the movies you purchase on DVD on your Mac, iPod, or iPhone.

Meanwhile, Apple has updated Apple TV. You can now rent movies (regular or HD) directly from your television set without using your computer. The movies are $2.99 for library titles and $3.99 for new ones. You pay a dollar more for HD versions. You can browse Flickr as well as pictures and movies on .Mac. You can still view and listen to the media streamed from your computer, but Apple TV now works as a standalone device as well. The new Apple TV features are included in a new upgrade and the price for new Apple TVs has dropped to $229.

Macbook Air
MacBook Air photographed at Macworld 08 Expo in San Francisco. Photo by Derrick Story.

The envelope please...

I don't know who first made the leap from Apple's banner that "There's something in the Air" to this laptop. Yes, we all now know that MacBook Air is Apple's new thin laptop. And, having touched it, it is really thin. When Jobs opened up the inter-office envelope and out slipped the new laptop he created an image that has already been spoofed and won't soon be forgotten. The envelope is aimed at people who look at the 8.94 x 12.8 inch footprint and say that that is too big to be easily ported. You see the envelope and nod "oh, ok, I carry around papers that size every day."

Analysts and investors may have missed this but last week Apple revised their top of the line desktop machine to include the latest chips from Intel. The eight core machine was the subject of a single slide at the very end of the keynote. But Intel also made a chip 60% smaller to work with the new Mac laptop.

Decreasing the size of the chip was one step in making the device smaller. Another was removing the optical drive and most of the ports. This may look like a laptop, but it almost has as much in common with the iPhone and iPod touch as it does with the other Mac laptops. There is a sealed case with a single battery inside. It tapers at one end to .016". At the thick end the MacBook Air is .76". This seems important so that Jobs could point out that the thick end of the Air is thinner than the thin end of the Sony.

There are a lot of "could haves" here. Apple could have shipped the computer with more memory, more power, more ports, ... but this feels like the right computer for a lot of people. The current convention is that the Air is a good second machine. I think for many people it could be their only machine. Jobs mentioned at the top of the keynote that Microsoft Office is now native on Intel with Office Mac 2008. For people who spend most of their time in Office, in email, on the web, and consuming media, this is an attractive machine. Couldn't they do that for a whole lot less money? Sure. But many of them won't want to - particularly after they touched the Air.

Unfortunately, this is not the computer for me. I spend too much of my time importing, editing, and exporting audio. When I spend my day in text, this machine would meet my needs. $1799 is an attractive price if I were in sales or a full time writer or editor or an executive or if I had someone else paying for it.

I think that that's a good thing. Apple has made it easier to identify which machine is for me. If it shared all of the MacBook features I would just be making a decision based on look and feel. Apple has built out the product line without returning to the early 90's confusion about which Mac is for which person. There are even features in the Air that the other Macs don't have. Multitouch works on the Air's new trackpad. Also, because the Air doesn't have an optical drive, it includes special software that allows you to install applications from other computer's optical drives - even from a Windows machine.

And so...

Jobs summed up the first two weeks of 2008. He pointed to the newly released 8 processor Mac Pro, Time Capsule, Software upgrades for iPhone and iPod touch, iTunes movie rentals, "reinvented Apple TV", movie rentals, and MacBook Air. Couple that with all of the announcements from 2007 and it's been quite a year since he last stood on this stage and gave us the annual state of the Mac.

I understand how disappointing all of this must be for investors. The flying iPod and the self-charging MacBook weren't released this year. There's always next year.