Here’s what I learned through trying to set the TimeCapsule up to act as drive space for music and video: The TimeCapsule works well as a wireless router, and works OK for backups, but it sucks to use as general storage.  This is a shame since it was introduced at the same time as the MacBook Air, a machine which is great as your main computer but for the fact that it doesn’t have enough hard drive to manage any but the smallest collection of photos, music and videos.

I’ve struggled with this issue since I first got my Air 18 months ago: where to put all the files that don’t fit on the tiny 80gb drive? It meant I’ve kept only a small music collection. Hell, some iPods come with larger drives, a few are even twice the size.

It seemed simple enough to fix. Apple’s TimeCapsule is a combined 802.11n wireless router and Network-Attached Storage (NAS) device. It is designed to give you a place to backup your computers via the OS X Time Machine software, but it also lets you mount a drive for any other purpose.  I’d bought one at the same time as my Air. But now I’d finally set it up as a shared drive, mounted it on both laptops, pointed iTunes to it (instead of the default local directory), copies all files there and started ripping CDs to it. This was going to rock.

Only it didn’t.

Now I’m walking around the house wearing nothing but a pair of red boxer-briefs, but not in the sexy way the hot blonde girlfriend prefers. See, I’m going back and forth between pieces of equipment, rewiring and reconfiguring. Actually, it’d be more accurate to say I’m not walking around in my underwear in THAT sexy way my girlfriend prefers — geek is also its own turn-on for her.

She asked me to move in with her recently. Thrilled that she likes me so much as to proposition me that way, I was still slow to accept. Aside from wanting to take such a step seriously, I knew what kinds of issues might come up. Issues that involved too many hours in red underwear.

Fixing the music problem was one of those kinds of issues.

Earlier this afternoon, her girlfriend Ann was over for Laura’s help to vacuum-seal a week’s food for Burning Man. While Ann was here, we listened for a while to a Pandora station on the living room stereo. Then we handed her the Sonos controller to pick music from our library. She quickly put together a playlist and started it, but a few songs in, the music stopped abruptly. After the first couple of times it restarted, but then it quit for good.

“What happened to the song?” the girls cried in unison.

“I think I know.” I replied. And it wasn’t pretty. “It’s going to be a while for me to fix it.”

I’d already done a lot of work on the system in the past week. Besides setting up the server and reconfiguring iTunes, we bought a Sonos from Best Buy and got it going (more on that later — it’s a fantastic piece of kit, but provided some of it’s own adventures). We’d also started ripping songs from CDs to the Time Capsule around the clock. Laura (the hot blonde) is a former rave DJ. Her CDs are organized alphabetically by artist. So far, we’re only up to Depeche Mode.

Besides dealing with the music, we’d also cancelled Comcast and upgraded DSL (also deserving of it’s own post). So we subscribed to Mad Men on iTunes and watched an episode over the network during the weekend. Had a few glitches there. Not a good sign.

Well, when the music froze up the most recent time, I noticed that my Macbook Air was in the middle of a Time Machine backup. To the same Time Capsule that was also our Media Server. That wasn’t what was happening earlier in the weekend (I’d disabled the backup feature), but this was the final straw.

My conclusion was that the Time Capsule was just underpowered to serve as a router and a backup device and to serve music and video files at the same time.  I was going to have to pick a machine to be up on the network all the time and put the files there.

Since we both have Macbook Airs, this meant buying a new machine. The Apple TV has too small a hard drive and too little flexibility to serve. So we ran to Best Buy and grabbed a Mac Mini to try out (the cheap model with 1GB RAM).

So far, it’s working like a champ at storing all the audio and video files, playing them on the TV, serving them up to the Sonos and the Airs (which also synchronize our iPhones). We’ve watched more TV episodes and run tests of doing several things simultaneously, never have had another glitch.

I wish Apple would sell a TimeCapsule sufficient to the task of serving all the media files it stores (or a beefier Apple TV). If I’m lucky, maybe they’ll even announce it today. I suppose it’s in their best interest to force us to purchase a third computer, one to hook up to the TV.

Hopefully Apple realizes the demand for a device that does more than backups — if they’re going to use iTunes to sell us media at the same time we switch from desktops to laptops, we need a place to store it.

I felt sure I knew what “and one more thing” would be.

Instead, he ended that keynote without “one more thing.”

Will he announce it in his keynote this time at the Apple WWDC Monday?

The one thing you can’t still do with an Air without a DVD drive somewhere is to install most commercial applications. I need to do that on my Air just like I need to do it on my iPhone.

A perfect “and one more thing” would be to announce that iTunes would support application sales for Mac and Windows.

iTunes struck compromises that revolutionized the business of promoting, distributing and selling music. It wasn’t perfect, but it solved enough of the problems of labels, artists and listeners to build with iPod into a perfect storm. It could do the same for applications.

• iTunes made it easy to find all the music you want in one place.
• Made it easy to buy, even at $.99 price point — owning a song is just a click away.
• With iTunes Digital Rights Management (DRM), you could share, but only so far, and you could authorize and de-authorize computers as needed.

This sounds like what I need with my software applications. A way to get them all from one place, instantly, easy to buy at any pricepoint, and no hassles figuring out what computers I’m allowed to use them on.

Likewise, publishers of smaller applications have difficulties marketing and collecting relatively small payments. Larger applications will have problems distributing their wares if Air starts a trend to more diskless machines. Both have issues of wanting to protect their software against unauthorized copying, and the kind of universal system and compromises in iTunes could work with software.

Can I rent software like I can rent a movie? It may not make sense when a single publisher tries to do it, but if it were supported universally from one interface, perhaps there are applications that I only need for a week at a time.

What about software in the cloud? Many web apps can only monitize themselves through ad-supported models. What if I could pay $.99 and up (one time or monthly) for Software as a Service? I’d use iTunes to find and rate apps, the iTunes payment system to start an account, and to manage my subscriptions.

Would you like to buy and sell software over the air? Would iTunes/App Store make a good model?

UPDATE 12-Jun-08: Apps are the New Singles: Betting on AppStore Revenue.