Interview: Apple's AirPlay is a big, big business

Perhaps you didn't see it, but Apple last week helped create a brand-new $15 billion business when it introduced its new AirPlay music streaming system, which it is licensing to third party developers.

AirPlay will mean anyone with an iPod, iPhone or iPad will be able to send their music to receivers made by Denon, iHome, JBL, Bowers & Wilkens and many more audio equipment manufacturers.

AirPlay is the fruit of yet another Apple partnership -- don't believe the hype -- Apple 'gets' strategic partnerships: consider its current or historical relationships with Synaptics, PortalPlayer, Samsung or its purchase of SoundJam (later iTunes).

Apple's new friend is BridgeCo, a software company with a platform it embeds inside stereo equipment which make it possible to stream music wirelessly beween devices. BridgeCo's system comprises both hardware and software elements, which we'll look at a little later.

I spoke with BridgeCo. CEO, Gene Sheridan and SVP Marketing Jordan Watters this week. "We're very excited to be a partner with Apple in bringing this to market," said Sheridan.

[This story is from Computerworld's Apple Holic blog. Follow on Twitter or subscribe via RSS to make sure you don't miss a beat.]

Enabling the digital home

They told me all about their work with Apple, the evolution of digital audio and the huge opportunity they see in the converged home entertainment space.

"Apple are great to work with," he said. "Smart, aggressive people, when they set their minds to something they move quickly, which is very rare in such a large organization."

The potential is huge: there's 120 million iOS devices out there right now, and that number is growing by 1.5 million a week. If half of these users buy an AirPlay-enabled device across the next year, then what we're seeing is the almost instantaneous appearance of a multi-billion dollar industry.

BridgeCo estimates the valueof this new industry as approximately $15 billion -- broadly in line with recent ABI Research analysis, which declares, "Revenues for networked audio devices will grow from $1.3 billion in 2009 to more than $10.7 billion in 2015."

The back story? Apple and BridgeCo have been working together for years.

Simplicity is complicated

Sheridan explains: "We've been in the business of wireless music streaming technology for ten years, though we started working with pro audio music creation and FireWire."

That work in pro audio quickly moved over to the iPod, he said.

"We've worked with Apple pretty consistently across that time, mostly with regard to iPod docking products because we also implememt the 30-pin connector, so we've known the group at Apple for years.

"We've always been interested in them taking a more consistent focus to opening up the wireless music streaming market, particularly with iTunes access and good interoperability with their iOS devices."

The breakthrough came one year ago, when Apple decided to get into enabling home audio networks. The two companies spent the last year working together to develop AirPlay technology.

There's no secret that the home audio market has been suffering. In choosing to develop AirPlay Apple may kick-start that market.

AirPlay has already been announced as being available on systems from some audio manufacturers, but in future Sherdian believes all audio manufacturers will embrace it.

Beyond Apple

Beyond Apple, the move to field a technology in partnership with BridgeCo means audio manufacturers can use the latter's wide tranche of technologies which also work with digital music solutions beyond Apple.

For music fans, that's great, as it means the home audio system you purchase at your local consumer electronics store will seamlessly stream your music collections, from your Mac or PC or iOS devices.

For iOS users, we get to use Apple's Remote app to stream our iTunes music library to any BridgeCo-powered home audio product over the home network.

What does BridgeCo offer?

Essentially the company's JukeBlox connectivity platform includes components: an optimized network audio processor and WiFi network modules; and software, JukeBlox 2.1.

The extensive software is designed to enable music streaming and networking and is described as "very comprehensive", including support for AirPlay and multiple services and systems.

The beauty of these solutions is that by the Holiday season consumers looking for new audio equipment will have a huge choice of AirPlay ready kit from multiple branded manufacturers.

Because so many solutions will be AirPlay-compatible, consumers will be able to use their choice of system from their choice of manufacturer, a different system in every room, if they so desire. All these systems will happily pump out whatever tuneage you want to throw at them from your iPad, iPhone or iPod touch.

Set-up is automatic, and because BridgeCo solutions also support services such as Pandora and Rhapsody, the future for home audio finally got connected.

BridgeCo-powered audio equipment can also access 12,000 Internet radio stations. That's not all -- the solution offers manufacturers of audio products 80 different software and service choices.

Harmon-Kardon, Denon, Sony, Nokia, Phillips, Pioneer and others already use BridgeCo technology.

"We have the only SDK for streaming music in the industry," says Sheridan. "We're the only independent company with a true SDK which we make available to OEMs and developers so they can customize it."

Audio manufacturers who intend popping AirPlay inside their equipment need to contact Apple to arrange technology licensing. It is being handled in a similar way to the company's previous 'Made For iPod' systems.

Pervasive for the people

BridgeCo think that in the end there will be multiple interoperability standards, which is why it already supports so many. It also works to make these different standards invisible -- a consumer needn't worry about which standard (Universal Plug and Play, (UPnP) and/or AirPlay, for example) is sending the music to their device, all they need to do is hit play.

"We've done a lot of work on this," Sheridan explains. "These things which seem simple are really rather complex."

AirPlay has the potential to kick start the future of the home audio market.

"In terms of sheer numbers, Apple's influence with its iPods, iOS devices and Macs is an extraodinary opportunity," says Sheridan. "With a potential market of 160 million iTunes users and 120 million iOS device users, that is pretty exciting."

Speculate on the stream

On the future of iTunes, Sheridan points out, "We can't comment on what Apple will do," before speculating that, "iTunes is connected to the Internet and can be a portal to whatever the company wants to add to it."

There's real change in the digital music industry, which is migrating from a download "ownership" model and toward a streamed, "access" model he points out.

While Sheridan made no prediction or comment about Apple's rumored move to cloud-based services, but he did look at the evolution of the digital music space, saying:

"The last five to seven years has been dominated by the download model. Even Apple CEO Steve Jobs when talking about the Apple TV has said he sees the market moving away from storage management. What he's really saying is that he sees a move away from a download model toward a streaming model. As your devices become more and more connected that reality of streaming over download can happen."

In future Sheridan sees that move to the celestial jukebox will open up the digital music space, a future of interoperable devices, multiple devices,

"In time some of the things people talked about five or seven years ago will come to life."