Tuesday, 30 December 2008

Apple TV, Take 3: turning a hobby into a business

Last year's update to Apple TV may not have been an aesthetic improvement (certainly not from a user interface perspective), but it did go some way to addressing functional shortcomings with the original product. Nonetheless, it didn't deliver the cut-through that Apple was clearly hoping for in 2008, and continual references to it as a "hobby" indicate an ambivalence on the company's part, presumably due to disappointing sales.

So what is going wrong, and what should Apple do about it? On one level, it appears that this is a area in which Apple is well positioned to clean up. With the world's most "popular" DRM system, most successful digital music and video store, and expertise in both software and hardware design, who could be better positioned to define this emerging space? But there are lingering problems with Apple's offering which probably account for the product's ongoing inertia:
  • People don't want too many boxes under their TV, and Apple TV is just another box
  • There's functional crossover with boxes they already have (e.g. Cable On Demand, XBox 360 Netflix)
  • Apple TV doesn't have presence in (the right) stores when people are choosing PVRs
  • Apple is not a recognised brand in this space
  • Cable/Satellite services offer free boxes, or deals on boxes
  • TV products must accommodate regional variation, Apple's marketing is global
  • The Apple-esque styling of Apple TV is an acquired taste (tiny remote, anonymous box)
There is one obvious solution to all of the above problems, but it would somewhat go against the grain for Apple: license the platform to 3rd party developers. This would allow everything from the Nintendo Wii to the latest DVD recorders from Toshiba and Samsung, to integrate with iTunes, delivering both the reach and the range that is essential to create a mass-market for a product that Apple seems to struggle to achieve alone.

It would be difficult medicine for Apple to swallow. Every bit as sour as the humble pie that Microsoft guzzled when they moved in the diametrically opposite direction, by abandoning their "Plays for Sure" licensing strategy for music players in favour of the vertically integrated Zune.

Occasional MacPredictions correspondent Doug Best anticipates something similar. In a recent e-mail he says "Apple is investigating the possibility of releasing the Apple TV OS as a separate box purchase. In other words, take an old iMac or Mini that's just laying around, install the Apple TV OS on it, and boom, you have an Apple TV. Sell it for $79 and it probably has more profit margin than the Apple TV itself. And then those users are buying iTunes content."

Perhaps the product that Doug is alluding to is in fact Snow Leopard, where the Front Row product may finally be merged with Apple TV. In which case, upgrading to Snow Leopard would effectively enable you to convert an old Mac Mini into an Apple TV - especially if it includes an option in System Preference to boot straight into Apple TV mode.

Not sure whether Doug's ideas are based on a source, of if it's just informed speculation, but it's not such a large step on from selling the OS retail, to selling it wholesale (albeit, a gigantic cultural leap for Apple, who are currently pursuing Psystar in court for distributing OS X on non-Apple-branded hardware).

PS: This is MacPrediction's 100th post :)


  1. I agree 100%. I am disappointed I can't view my Netflix Instant Watch on my Apple TV. All Apple has to do is make a deal with Netflix and then they'd get a lot more customers.

    Just give the AppleTV an App Store like the iPhone!