Not another Apple TV black box but a real 50" flat-screen TV, "Designed by Apple in California" – and made in China, like most Apple products. Or made In Korea, if the company concludes a new pact with its best "frenemy", Samsung, the new king of TV sets, the new Sony.
Rumours of an Apple TV set have been circulating for at least two years. In a May 2010 blogpost, Peter Yared wrote:
"Stylish, high-end TVs is the last consumer electronics frontier for Apple to dominate, and it will make apps as much of a differentiator on TVs as they were on smartphones."
and:
"The TV is the last frontier in Silicon Valley's relentless drive to computerise every screen. With the price of fully internet-enabling a screen at below $300, everything that people see and touch is being turned into a computer: mobile phones, billboards, price displays, and with the iPad even magazines, books, and newspapers."
More recently, Gene Munster, an oft-quoted analyst at the PiperJaffray investment bank, repeated his prediction of an Apple TV set launch in 2012, with Stewart Alsop adding:
"Apple will do to television manufacturers what it did to phone makers with the iPhone …"
The idea is exciting and so obvious it's got to happen. Imagine a true plug-and-play experience. One set with only two wires: power and the cable TV coax. Turn it on, assert your Apple ID credentials and you're in business. The programme guide looks good and is easy to navigate; pay channels are just a click and a password away. The TV runs apps, from games to FaceTime and Skype, it "just works'' with your other iDevices and also acts as a Wi-Fi base station using the cable provider's internet service.
But when we turn to the small matter Of implementation, we see a few obstacles.
First, the TV incorporates a set-top box, with storage for the DVR function. It's feasible: the CableCARD was invented for that very use. The electronics of a set-top box:
Now squeezed onto a card that's inserted in the back of the TV set:
It's an attractive idea, but the implementation failed to meet expectations. Although critics accuse cable carriers of being technically incompetent and lazy, I think there's a more acceptable explanation: Carriers looked at the CableCARD and saw complicated field service calls in their future. A separate, outboard set-top box is easy to diagnose and fix; a card inside the TV set, not so much. It generates a host of hard-to-understand bugs: Is the card working? Is it kind of working but causing the TV to malfunction? Is the TV working but killing the card?... and so on. More calls, more finger pointing, more expensive field techs…
Apple's product culture, its talent for giving birth to nicely integrated devices could overcome some of these problems, but not the field tech issue. Would this new product force Apple to deploy its own Geek Squad, or do we see ourselves carrying a 50" Apple TV set back to the store when something goes wrong?
Then there's the complexity of supporting multiple cable systems. Large carriers, such as Comcast, are known as multiple system operators, MSOs. They're a patchwork of acquired systems that have never needed to be compatible. This would either restrict the TV set to a small number of carriers, or make the product more complicated and prone to more bugs – and more field tech visits.
And there's Moore's Law. In addition to the CableCard, the wonder set contains a little computer running iOS, and enough storage for apps and content that's not hosted by iCloud. Great …but how long will it last? Not in terms of reliability, that's not a problem -- especially with an SSD replacing the DVR's conventional hard disk – but in terms of being competitive with newer hardware.
Conventional TVs aren't really affected by Moore's Law. As long as the electronics work and the display doesn't fail – and today's sets are exceptionally reliable – there's little pressure to upgrade. Once a family shells out for a nice 1080p set, it's difficult to sell them the new improved model next year.
We're willing to upgrade our laptops, smartphones and tablets every year or two because Moore's Law keeps improving the CPU and other electronics at the rapid rate that made the computer industry's fortunes. An integrated Apple TV set wouldn't benefit from better electronics as naturally as an iPhone does … unless, of course, the tiny iOS computer is implemented as an easily accessible plug-in module. This could also solve – or at least mitigate – the field service problem: Bring the module to the store, we'll diagnose and replace it if needed … or sell you this year's model.
In one device we might have something like: a CableCard inside an Apple TV 3.0, itself inside a TV set.
With regard to carriers, there's no need to disintermediate them, no need for Apple to seduce them into giving up content sales the way Jobs did with AT&T. Carriers ought to welcome an Apple TV set as a way to increase their ARPU, but for this to happen much work remains. Try getting a human on the phone when you want to add a channel to your current Comcast bundle. At home, you're connected through a secure device with a known MAC address, so why can't you simply point to a channel and click-to-add? This and other bone-headed commercial practices – such as refusing to suspend your billing when you're between houses – reveals a depth of customer-hostile culture that an Apple or a Google would find intolerable, but might have trouble changing.
I mention Google because they're in the TV/internet/apps integration game as well. The first Google TV wasn't a success, to say the least. My friends at Logitech lost tens of millions of dollars – and a CEO – with the first iteration. And Sony's Google TV implementation didn't fly either.
But the concept remains valid. And now that Google owns Motorola, a company with known expertise in set-top boxes and CableCards, we can expect a next-generation Google TV and, quite likely, a Samsung TV set with an integrated Google TV running Android apps and competing with the putative Apple TV.
I used to think product size, carriers and the rapid obsolescence of the integrated computer made an Apple TV set an impossible dream. I'm not so sure any more.
JLG@mondaynote.com
PS: To help think about this some more, a great counter-example: the Bose Videowave TV set. I use and like other Bose products but, with this one, what are thinking? $5,000, no cable box integration, a separate console box for the "integrated" set. See the setup and owner's guides for more details.
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