The key to the Apple TV puzzle

There is an ongoing debate about whether Apple will release a physical television or an enhanced box similar to what we have now. People on both sides of the debate square off every few weeks and rehash the same arguments. Ultimately, we get nowhere, but I think that’s because nobody is asking the right question.

There is no doubt that Apple is interested in the television market. While it is a hobby, they have kept it around for quite a while. That says to me that they see something in the future, we just don’t know what that something is.

Tim Cook has already said that Apple has an intense interest in the market, but while everyone is arguing about what size Apple’s television will be, I can’t help thinking what problem Apple will solve. For me, that is the key question.

Apple has transformed itself into a problem solving company. They did it with the iPhone, iPod and iPad and I think that’s what they will do when they enter the television market in a serious way.

Here’s the thing. Apple will not enter a market unless it feels it can make a significant impact on the current state of the industry. They will want to provide something different than what’s currently available, something that nobody else can do. Apple has the power to do that because they think about how to solve problems first and making money second.

Some have speculated that an Apple product will have Siri integration or maybe television channels as apps. You could argue that both of those ideas have some value.

There are significant problems to overcome in the television industry, but one of them is not what size TV will be released. Having content available for the consumer whenever they want it is a problem we would all like to see solved.

But that’s just one problem — there are many others.

The impact of Apple entering the television market will not be whether they release a physical television or a box — those are only the vehicles1 that will deliver the innovation that Apple will bring to the industry.

  1. Of course, the hardware Apple uses as a delivery method could include innovations of their own. Siri integrated into the hardware is one example. 

  • If they do create a TV – or a new service accessed through a box, which I find more likely – the first thing they should do is answer why it’s better than netflix, or cable or whatever your country has.

    “Having content available for the consumer whenever they want it is a problem we would all like to see solved.” I would amend this to ‘having the content the consumer actually wants’, because that’s the central issue. Netflix has plenty of content. More than you could ever watch. The problem is that it doesn’t have hot shows that people want, as they become available elsewhere. It doesn’t have the right content. If Apple can’t solve that, then what’s the point? Siri or no Siri, apps or no apps, it will just be Apple doing what everyone else has been doing all along.

    • Red

      Apple needs to resolve the lack of content on the existing Apple TV device outside the US. Netflix in the US is great, but in the UK we have 4 different streaming companies, and once one has grabbed content from the content owners, they’ve locked it up – nobody but they can offer it. So you need 4 streaming subscriptions – but Apple TV only shows the 1 icon for Netflix (due to the US influence) and its pretty useless here.

      • clasqm

        At least you HAVE Netflix in your country.

  • The biggest problem with TV is the content and its myriad licensing restrictions that prevent us from watching what we want. Looking at iTunes Movies and TV Shows, Apple seems in no position to fix this problem. The content owners are scared to death about Apple getting as powerful in this space as they got in Music.

  • Ron Miller

    I’ve always been confused by people that say that Apple will be producing an actual TV. TVs are extremely low margin these days (hence the financial problems at companies like Sharp and Sony). Even Samsung doesn’t make much money from their TVs. I didn’t see any way that Apple could bring enough value added to the actual physical screen, and would be best leaving that to the other consumer electronics companies.

    However, I’ve recently been thinking about Apple’s push to “retina”, and there is one way that I can think of Apple being able to create a full fledged TV. Maybe Apple could kickstart the next generation of HDTV and produce a 4K TV. Any other company would have trouble getting things started, but with Apple’s media connections, they could provide a complete 4K ecosystem from the start.

    I still think that Apple is more likely to just build an improved Apple TV “box”, but I would love to see them build a 4K TV / ecosystem! (and the 4K movies would look incredible on the retina iPads, although you would only be able to fit about one of them on a 16GB iPad 🙂

    • clasqm

      … and chew up about a month’s worth of data cap each. No thanks.

  • Good thoughts. There is a different aspect of the Apple TV debate that I’d like to see addressed as well – the concept of apps for the Apple TV.

    I feel pretty confident that Apple will never have an ‘App Store’ for the Apple TV the way we think of it. I could see them releasing an SDK, but it be hugely restricted and the submission process will be totally different – it will be much more ‘partner based’ the way the Xbox has an SDK for media apps, not the way we think of as apps for iOS devices.

    The real story with Apps on the Apple TV is already in our hands – AirPlay Mirroring. With Mirroring, the Apple TV already has apps – WatchESPN, SketchParty TV, Real Racing 2, every app that has been designed to offer a 2-screen experience on iOS via Mirroring is already an Apple TV app. The only problem is A: interface clunkiness in figuring this out in the first place and B: making the average iOS consumer aware that this is even possible.

    I think Apple is trojan-horsing the TV apps play pretty hard. I think they’re letting great developers that ‘get it’ connect with savvy consumers that also ‘get it’ for an elaborate public beta test. When they’re ready, Apple will re-invent the way iOS devices and Apple TVs talk to each other, Mirroring will become an unavoidably obvious feature, and there will be a marketing push. At this point developers will really start to pile on, and it’ll be off to the races.

    This makes sense in so many ways, but first and foremost it makes sense because any sort of interaction you want to make with an Apple TV beyond ‘left right up down select’ needs an iOS device in order to not be frustrating anyway. So why release dedicated Apple TV apps that are either simple to the point of boring, or require iOS device companions anyway? They’re better off extending iOS to the TV than they are trying to just extend the TV by itself in a vacuum. And again, they’re already doing it. They’ve been doing it for months.

    What do you think, Jim?

  • No doubt Apple will have to partner with networks for content. Despite the innovative hardware my guess is this will cause a major disruption to the affiliate network and could be the death of local TV.

    • Space Gorilla

      Or the opposite when it becomes a very low barrier to entry re: local programming. Depends on the model of course, but this could be great for local TV.

      • I hope so. The percentage of local programing on TV has been taking a nose dive since deregulation. It would be wonderful if this innovation would revitalize it.

  • dtj

    The AppleTV (and actual TV) will have an app store because that paves the way to disrupting console gaming, which is in an ugly spot right now, and consequently ripe for disruption. Throw in some additional more traditional computer apps… Think Omnifocus given the same loving touches for a TV experience that it was given for the ipad. And thats just a start.

  • Remember when Steve revealed the iPad? He introduced it by explaining what a tablet would have to be good at. What does an Apple television set have to be good at? Entertainment and information. In the living room and bedroom. What is the living room? It’s a place where one or more people sit on the couch, and expect to be entertained. It’s a place currently burdened with a pile of remotes, set top boxes, cables, receiver, consoles and their controllers. Apple’s job is to free us from this mess and give us a wonderful user experience.

  • Space Gorilla

    Apple is already moving into the TV arena and solving problems, in a very sneaky way. The current Apple TV allows my family to watch or interact with content from our iDevices on our flat screen TV. Airplay is huge. Apple needs to develop this into a more robust solution, but they are already on the path. The problem I need solved is how to take content from my various iDevices (including iMac and iTunes) and consume that content on my TV, simply because that is the largest screen in my house. Games like SketchParty TV are only the beginning.

    • The snag with Airplay right now is it needs to go through your router to get from your iDevice to your Apple TV. There are so many different routers out there with so many different configurations. My Airplay stutters often enough that it’s annoying, and like most people I don’t know the first thing about router optimization.

      If Apple wants to make Airplay a major component of their TV plans, they’ll need to overcome the hurdle of crappy routers.

      Maybe build an airport express into the TV or box they eventually release? Having your internet connection mainlined into the TV system would help out a lot in the download and streamlining department as well.

      • Space Gorilla

        Exactly. That’s what I mean by ‘more robust’. We also have the stutter and lag problem, but it works well enough 80 percent of the time. Games like Real Racing HD need zero stutter, we’ve tried that one with less success. Next up we’re going to try that Draw It Push It game. It looks good.

        • magnateinteractive

          Thanks for mentioning SketchParty TV (I’m the maker of the game). The stutters and lag were one of the most frustrating parts in developing it, because it’s an even bigger wildcard than TV dimensions. Router configurations are really varied, and there’s generally all sorts of interference. Keeping other network traffic to a minimum helps a lot (and is one of the reasons SketchParty only uses one iPad or iPhone).

          • Space Gorilla

            Cool. We love it, works great on our 55 inch LED TV. Nice work!

          • The common complaint in your reviews is that there are not enough words to draw. Unless I misunderstand, that seems like an easy problem to solve, and yet there’s been no update. (Just so you know, that’s the one thing that kept me from buying it right away.)

          • magnateinteractive

            Sharon – thanks for letting me know. The current version of the game has a word bank of near 900 hand-picked words. From my testing, people seem to be coming to the conclusion that there aren’t enough words because words are repeating from game to game (not in a single game). An update to fix that is on the way (by tracking which words have been played across games and reducing cycle frequency), along with some other great enhancements. Again, thanks! If you follow @sketchparty on Twitter, I’ll let you know there when an update is out.

      • magnateinteractive

        If it’s a box, I’ve often thought a combination of Time Capsule, AirPort Extreme, and Apple TV would be fantastic. Kind of seems like it’d be a step back to 1st generation Apple TV form factor, though.

        • I can see Apple TV and AirPort creating some sort of bond, but I think Time Capsule is really a separate concern.

          • magnateinteractive

            Certainly – my rationale, though, is that some (or all) of that storage would be allocated to larger buffer cache for media and storage for apps. So it wouldn’t so much act as a Time Capsule per se, but would have something like an SSD (larger than current onboard capacity).

          • Space Gorilla

            I would LOVE to be able to digitize my DVDs and store them on some sort of media drive hooked into the Apple TV. I’m not sold on the idea of streaming them via iTunes on my iMac, I’m worried about stutter. I can stand a bit with how I currently use the Apple TV, but movies have to have zero stutter.

  • Onno Siemens

    A few years from now, Apple no longer sells an iMac, Mac Pro or Mac Mini. The desktop has gone modular. You’ll still have your iPhone, iPad and Macbook mostly as we know them now (integrated Siri and Airplay, all screens usable in all configurations, of course).

    You buy a central management pod (Mac Mini format) and add a screen. The central pod can be extended with more pods for extra Storage (Time Machine, evolved) and/or networking (Airport Express, evolved), or even performance (“gaming pod” with extra CPU and vidcard?)

    Screen options: Desktop is the MacDesk, a screen running iOS with “magic” interface (Thunderbolt?) towards your central pod running Mac OS. Best of both worlds. TV is the MacTV, a bigger screen running iOS geared more fully towards media consumption and the central home management.

    Just look for the way to get screens in front of people wherever they look. iPhone, iPad, Macbook, Macdesk, MacTV. All centered around your own pods. My pods. iPod? Hm. Obviously, the naming needs work.

  • mordy

    The problem that needs solving is that Set top boxes … all set top boxes are HORRIBLE, both in terms of UX and speed and navigation (remote control) … everything…it’s just plain horrendous.

    What I see is identical that set top boxes are like cell phones where until the iPhone came out. Cell phones, even good ones had this exact problem.

    Like with the iphone, apple will likely pair their service with AT&T again (or maybe verizon if they learnt their lesson). Apple will likely take a monthly cut again.

    They will integrate the EPG and the on demand content from the cable provider. The key will be that it will be simple as anything. There will be amazing UX, the control will make sense and the interface will be extremely fast.

    In this way it will be exactly the same formula as iphone.

    Over time apple will add siri and additional paytv operators and some form of appstore, just like the iphone.

    • You apparently have never used a TiVo. I have lots of things that I wish it would do that it doesn’t, but for what it does, it does it pretty darn well. (I’m probably understating that, since I do gripe on a well known Tivo discussion board.)

      • mordy

        Ok, now imagine if apple did that apple style?

        The provider would definitely get some sales from that? It would be win-win-win (apple, cable provider, customer) I think it would work better than any other arrangement.

        We will see.

  • Apple needs to provide channel or data aggregation, that’s what’s really missing. When you want to watch show A, it may be on a cable channel and/or it may be available from a web site. I don’t want to have to search web for it, I just want to watch it. So Apple should just show you the episodes of show A are available and let you either queue it for recording or stream it to you on demand. Ditto with movies. Make the machine do the work and let me indicate that show A is a favorite and to let me know when a new episode is available.

  • stsk

    One idea no one seems to be exploring is Apple buying Motorola’s set-top-box business, which is now for sale. Apple could probably buy it for the change in its pockets, and it would give them an immediate presence in the living rooms of most cable customers. From there, Apple would be the camel with its nose in the tent of the cable operators – the perfect place from which to disrupt the model. It would be atypical for Apple, but that’s what they said about Apple buying chip expertise, too.

  • gglockner

    The problem to solve is that people want to watch the content they want, when and where they want.

    Apple has this problem solved for movies with AppleTV, but people also want to watch news, sports and regular TV programming. News and sports are problematic. But even if you only focus on regular TV programming, we’re back to a licensing problem: TV programs on DVD/Blu-Ray/iTunes are sold, but unlike movies, people tend to watch TV programs only once. And the content producers do not offer most TV programs for rental, apart from broadcast and record via DVR. And I don’t see Apple in the DVR market, since there’s little money to be made there, thanks to the subsidized DVRs from the cable and satellite providers.

    P.S. Apple made a mistake by not branding the AppleTV as the “tvPod”. “tvPod” makes sense – it’s like an iPod for your TV. Most people don’t understand what an AppleTV is or why they would want one.

    • People tend to watch TV shows once? Never heard of reruns I guess.

      • gglockner

        Point taken, though I suspect that people who have on-demand capabilities (AppleTV, DVR, etc.) watch far fewer reruns than those who just watch what is broadcast.

  • I think Apple has much more in mind than simply unifying content delivery to a TV screen. Otherwise it could accomplish that with the current AppleTV. There is something basic, a fundamental problem with the current TV entertainment system that goes to its core, that we are so used to overlooking and accommodating that it is not being discussed as a problem.

    I think Apple has the solution to this problem, but faces two obstacles: 1) getting all content providers, distributors, advertisers, etc. on board; and 2) protecting its innovation so that the solution, once released, can’t be copied like Google and Samsung, etc. have done with the iPhone. Apple would rather take extra time to protect its invention than get mired in court battles like it is now with the iPhone/iPad lawsuits.

  • The significant differentiator for the new iTV will not be the product in the living room. It will be the service running in the data center.

  • dtj

    Buffering and retention of content locally isn’t really a technical or economic problem. What is the retail cost of a crap 4GB usb key and how would that translate to storage on a small device. 4GB keeps hours of content at decent quality. DVRing mode rather than streaming would help provide a decent experience in an uncertain bandwidth terrain.

  • Mayson

    Here’s a few numbers: there was an article a few days ago saying it would cost Google about $150B to build out their Google Fiber netword throughout the US. Google has about $50B in the bank. Apple has over $100B. if the two did it together, combining their strengths, they could take over the US TV market, and the US broadband market, and then spin off the joint venture in the first trillion dollar IPO. Worth thinking about, although it’s highly unlikely to happen.

  • We’re only now seeing the beginnings of Apple’s true disruption of the mobile phone business (at least in the States), as consumer demand for the iPhone gives Apple more and more power to reduce the power of carriers over the choices consumers can make for buying connectivity for the device. That didn’t happen right away in 2007, and it’ll take more time to more fully remove those roadblocks that carriers have been allowed to put in everyone else’s way.

    If Apple is aiming to do something similar for television, the roadblocks are the cable companies and their insanely incestuous relationship with tv networks. It’ll take a lot more leverage to break their hold upon how consumers pay for entertainment and information. It’ll take something far more convenient and sensible than anyone has now, and it’ll need to provide an undeniable revenue stream for content providers, no matter what their professed loyalties are.

  • stefn

    Apple might make a TV but it will be a computer in sheep’s clothing. Apple makes computers and only computers because that’s what it loves. Computers. That’s Apple’s lust and heart’s blood and mission in life. It also knows people have learned rightfully to hate computers. So it disguises computers as shiny gizmos such as phones and walkmans and maybe TVs.

    Maybe. Apple’s learned it is not enough to disguise the computer or even to make it smart and sassy: Apple knows it also needs a firehose of highly appealing content. Content that’s relatively cheap and relatively exclusive. No buck a tune, no iPod. No buck an app, no iPhone. And no buck a show, no iPhlix.

    Just to say: I own an Apple TV. It’s an iMac. Got rid of my TV. Got rid of my cable sub. Works great. Looks great.