Apple’s mystery product: H.264 hardware to enable 1080p HD content for iTunes Store?

“On Monday, July 21st Apple Chief Financial Officer Peter Oppenheimer dropped a bomb on those listening to Apple’s quarterly conference call on earnings for Wall Street analysts. He said that gross margins for the coming quarter, and possibly beyond, would be lower for three reasons: 1) a back-to-school special; 2) a one-time charge related to a contract manufacturer, and; 3) ‘a future product transition that I can’t discuss with you today,'” Robert X. Cringely writes for PBS.

Cringely continues, “Here’s what I THINK Apple is about to do. I reported more than a year ago and repeated in this year’s predictions that Apple would be adding H.264 hardware support to its entire line of computers. The chip they are adding comes from NTT in Japan and was developed in cooperation with Japanese broadcaster NHK. The chips began sampling a year ago and should now be available in volume, though Apple may be paying as much as $50 each for early production.”

“The NTT chip is not just an H.264 decoder, it encodes, too, which is what makes it so special. The last I heard NHK was claiming the chip could compress a 1080p video and audio stream into four megabits per second, down from the 20 megabits normally required. If we assume Apple will apply the same kind of wink-wink, nudge-nudge transcoding to 1080p that they’ve already applied to 720p in the Apple TV, then it is within reason to expect they’ll claim to distribute 1080p over iTunes in two megabits per second,” Cringely writes.

“This is all about taking command of the 1080p video market. Apple’s strategy with iTunes will continue to evolve, but for the moment having a unique real-time 1080p capability will suck a lot of early adopters back into the Apple stores and give Apple’s emerging content competitors like Netflix something new to worry about,” Cringely writes. “Though it is doubtful that many will use it, you can be sure Apple will trumpet the ability to support 720p video in iChat.”

Much more in the full article here.

MacDailyNews Note: “We are working to develop new products that contain technologies that our competition will not be able to match.” – Apple CFO Peter Oppenheimer, July 21, 2008

[Thanks to MacDailyNews Reader “Mtnmnn” for the heads up.]


  1. And the crystal ball says, or is it the Magic 8 Ball? I wish these analysts would quit speculating and building up anticipation in the market with no foundation. Apple innovates – it will likely be pretty cool; whatever it is. As long as it doesn’t flop like MobileMe. Apple, like Coke – can survive one bad product; not two.

  2. @Let the Speculation Continue

    Do we know that MobileMe has flopped? Have people left the service in droves? Is it losing money?

    No question the rollout has been very poor and many people have been inconvenienced but the thing is hardly Windows Vista. I think the Coke analogy is much more appropriate when looking at Vista than MobileMe. Let’s wait ad see how MobileMe is performing six months after launch.

  3. MEH

    iPhone doesn’t do it for me.

    Screen is too damm small, storage space is terrible, AT&T;/NSA/hackers combined with a insecure iPhone equals NO PRIVACY. Not to mention that EFI on Intel Mac’s represents a serious invasion of privacy and security, but at least one can control it by controlling when they hook up to the internet.

    Corporate Intelligence is BIG BUISNESS!!!

    Imagine if you had your huge client and price list stolen?

    How about automatic encryption for the iPhone like it is on OS X?




  4. I don’t think this is what Oppenheimer meant. When he says “…that our competition will not be able to match…”, I tend to take his word for that. Since any company can purchase these codec chips then anyone could build the same thing.

    I think it has something to do with Apple’s recent purchase of PA Semi. A custom chip designed by Apple is exactly the kind of thing that competitors will not be able to match, at any cost. I’m thinking along the lines of system support chips that would greatly boost the speed of any Apple computer, or even a turbocharged iPhone/iPod that would further distance Apple from the rest of the pack in that area.

    Go ahead, iCal me. ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

  5. Speaking of Coke, some of these flavors are a little strange.

    Coca-Cola variations:

    New Coke (renamed Coke II)
    Diet Coke (also known as Coca-Cola Light)
    Diet Coke Plus
    Coca-Cola C2
    Coca-Cola Zero
    Coca-Cola Cherry Zero
    Coca-Cola Cherry
    Diet Coke Cherry
    Coca-Cola with Lemon
    Diet Coke with Lemon
    Coca-Cola Vanilla Zero
    Coca-Cola Vanilla
    Diet Coca-Cola Vanilla
    Coca-Cola with Lime
    Diet Coke with Lime
    Coca-Cola Raspberry
    Diet Coke Raspberry
    Coca-Cola Black Cherry Vanilla
    Diet Coke Cherry Vanilla
    Coca-Cola Blāk
    Diet Coca-Cola with Citrus (Lemon and Lime)
    Coca-Cola with Orange (Out June 2007 in the UK)[68]
    TaB (original Diet Coke, still available in some countries)
    Passover Coca-Cola – a Kosher for Passover Coke made with pure cane sugar instead of corn syrup.

    It doesn’t seem fair that they make a version for Jews and not the Catholics. How about Coke Ripple?

    In time they will come out with Coke Erect.
    This variation will be laced with female pheromones and Viagra.

  6. Interesting theory, but since Cringely is usually full of crap, the probability of it happening is probably in the sub 10% range.

    I put my money on the one thing Apple can do quickly across their whole Mac lineup that will negatively impact their margins immediately, that is, lower prices.

  7. @ Raving MacHead,

    The new iPhone firmware has support for secure remote erase in case of theft.

    Also, with all that EFI talk you sound like that other dude who posted about that stuff constantly a while back.

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