Is Apple TV Ready to Leave the Hobby Stage?

August 3rd, 2012

Although there were some suggestions that Apple planned to introduce a special version of the iOS for a possible future TV set at the WWDC, we all know that didn’t happen. And I didn’t expect it to happen. But where does that move the discussion about Apple delivering a full-blown TV set in our near future.

As you have heard, Apple will hold a special media event on September 12. It hasn’t been confirmed by Apple, but people “in the know,” whom I trust, are clearly in possession of well-sourced information that you can take to the bank. So what are we to expect on that date?

Well, the betting has it that you will see a sixth generation iPhone that many call the iPhone 5. Yes, it is possible Apple will call it “the new iPhone” instead, though that may make less sense for a smartphone. But with Apple, you never know. There could, I suppose, be a “one more thing” launch of an iPad mini, the alleged 7.85-inch Kindle Fire/Nexus 7 killer.

But what about Apple TV? Yes, sales have apparently more than doubled since last year, but not enough for the $99 set top box to leave the hobby stage. Where does it go next?

Well, there was a tiny upgrade this week, with the addition of support for Hulu Plus, a subscription movie/TV streaming service that features content from ABC, CBS, Fox, NBC, Nickelodeon, and other cable and broadcast networks. After a one-week trial period, the service costs $7.99 per month, same as the Netflix streaming service. In passing, Hulu Plus seems to do better with current TV shows, but movie selection, as with Netflix, could be better.

In any case, all this does is take Apple TV closer in third-party content to the Roku 2 set top box, which sells for $79 and also offers 1080p video. Roku, however, doesn’t integrate with Apple’s iTunes, or the AirPlay feature. But Roku offers a wider selection of third-party content, including Amazon Instant Video, Viacom’s Epix movie channel, the online version of several cable news channels, plus other services.

Nothing, however, stops Apple from fleshing out the Apple TV’s offerings over time. The big question, however, is just how far Apple plans to take their “hobby,” and will it lead to a real smart TV set. This is the question that may or may not make sense. Certainly the media wants to continue to help design Apple’s products, but the transition from Apple TV to an Apple “Smart” TV remains a huge question mark.

Although most of you knew this already, it is quite clear from that Apple versus Samsung lawsuit playing out in a California courtroom that Apple doesn’t rely on focus groups to build new products. Apple doesn’t design gear because the media or financial community tells them to. There is certainly a long range plan in place, or under consideration, that will move Apple TV to a new level. What that level might be is, of course, open to speculation.

A smart TV might seem some sort of ideal, and there is that widely quoted statement from the late CEO, Steve Jobs, in his authorized biography, that he’d found the secret to create the best TV interface on the planet. But does Apple need to build a TV to deliver that interface?

Wouldn’t it also be possible for Apple to license Apple TV as the controller for someone else’s TV set, and deliver the same interface? All right, Apple earns most profits from selling hardware, although I can’t see where a $99 Apple TV is delivering loads of cash. Offering Apple TV hardware to OEMs for $25 or $50, each, will mean far more revenue, without forcing Apple to enter into the cut-throat TV business, where profit margins are slim.

Or just keep Apple TV a separate product, but expand the features in different ways, to include more apps. In theory, it is possible for Apple to make deals with the cable and satellite providers to deliver special apps that will load their paid content within Apple’s special user interface. Compare to a TiVO as one possibility of how a system of that sort might work.

Sure, I suppose Apple might consider replacing these services with their own repertoire of TV and movie content, but unlimited streaming to your ISP is probably not possible right now. The cable companies, most of whom have broadband divisions, are already losing your TV business. Most set bandwidth caps. If you are watching 1080p streaming TV content on one or more sets for hours a day, you’ll suck up your bandwidth allotment in days. Right now, most of the ISPs in the U.S. are seeing high percentages of some of their customer’s bandwidth consumption used up by streaming content from Netflix. And I do not think people spend five or six hours a day just watching Netflix.

But perhaps we are looking at the short term. Broadband speeds and bandwidth limits may take years to work themselves out, but it will happen, and Apple plays long ball. Apple TV may not mean so much this year or the next, but some day it might. It’s just that Apple is not telling us their game plan, but I still find it hard to believe that a TV set is in Apple’s future.

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2 Responses to “Is Apple TV Ready to Leave the Hobby Stage?”

  1. paul robinson says:

    Nice column. Only one minor nitpick, worth fixing.

    “Although most of you knew this already, it is quite clear from that Apple versus Samsung lawsuit playing out in a California courtroom that Apple doesn’t rely on focus groups to build new products”

    If you catch the latest development in the trial, it turns out that Apple does gobs of market research and even wanted its findings kept out of the trial. They lost that battle–at least for now.

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