How Steve Jobs Can Fix Apple TV (AAPL)

Dan Frommer | December 10, 2007 12:17 PM

apple-tv.jpg

It's no secret that Apple TV -- the company's would-be digital hub for your living room -- isn't selling like hotcakes. Late Friday, Macworld published new Apple TV sales estimates from Forrester Research: the firm guesses Apple has sold 400,000 of the gadgets since it went on sale this spring and may sell another 400,000 during the holiday shopping season. But Apple will likely miss Forrester's projection of selling 1 million Apple TVs this year.

iFlop? Maybe. But it's not too late for Steve Jobs to fix things. Despite plenty of claims to the contrary, the device still doesn't have much serious competition. How can the company make Apple TV a winner?

Step 1: Upgrade the software on current Apple TVs. The device has impressive hardware specs: it can play HD video, connect to the Internet, and has a USB port. But in the present tense, most of these features are useless: the video content on iTunes looks bad on a HDTV, and the USB port doesn't do anything. These quick fixes would all work on current Apple TVs with a software update:

  • Get HD content on iTunes immediately. No one is buying stuff on Blu-Ray or HD-DVD, but we'd happily pay for gorgeous HD rips of Planet Earth that we can watch on our computers and Apple TVs.
  • While you're at it, get a ton more video content on iTunes, or partner with Netflix (NFLX) or someone who can. iTunes' current selection (and grainy YouTube clips) won't cut it.
  • Let people rip their DVDs to their Apple TVs/computers the same way they can rip CDs to play on iPods. Apple TV would be more useful if we could build a decent-sized video library with the media we already own.
  • Open Apple TV to any videos we have on our computers, whether downloaded from iTunes or not.
  • Put a Web browser and an email app on Apple TV, and let us use the USB port for a wireless keyboard/mouse. WebTV was a joke, because the Web was a joke on standard-def TVs. But HD sets are good for lightweight Web browsing, Internet radio consumption, etc.

Step 2: For Version 2.0, re-think the Apple TV as a better DVR/set-top box. Apple needs to add features and keep prices steady. Spending $299 for 40-gig Apple TV doesn't make sense when a Mac mini with many more features is only a few hundred dollars more. Our wish list:

  • DVR software. It doesn't make sense to pay Time Warner Cable (TWC) $8/month to rent their cruddy DVR if Apple could give it to us for free. Figure out how to interface with our cable box, and let us store all our video on Apple TV's hard drive. Then let us transcode our stored content to computer- and iPod-sized files for portable watching. License TiVo's software, or build your own. Just get it done.
  • Better yet, get a CableCard slot and tuner so we don't need a set-top box in the first place. The cable companies will freak out, but they need the competition.
  • Bigger hard drive. Even 160 GB is not enough. Put a 500-gig drive in there, even if it means the Apple TV will get bigger. Don't forget that you could be replacing our DVD player and set-top box, which both take up a lot of room.
  • Ditch the tiny remote. It's not very functional. Give us the Hillcrest 'Loop'.
  • Make this entire package $300. Or better yet, $200.
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28 Comments

Brockway said:
Oh... and one more thing. I hope they please keep the remote as simple as it is. I love it. The average remote is CRAZY. A million buttons when you use about three of them. (At least I do).
Brockway said:
I would buy and Apple TV if it had DVR capabilities. I would like the Apple TV to function as a DVR and also allow me to save the shows I want in a format that would be viewable on other devices - on my iPhone, iPod or any computer or TV in the house.

I recently started using a DVR form Time Warner and I love it. But I know that Apple could do a lot better. I hope they don't give up on the Apple TV, but go on to make it the great device it has the potential to be.
luckk said:
Apple TV just needs to be repurposed. It shouldn't rely on the content from the iTunes Store, it should be able to stan on its own.

I have written an article on how the Apple TV can be repurposed:

http://appletvsource.com/content/view/464/
Southbeach said:
Here is my design idea for AppleTV . LARGER CASE DESIGN WOULD ALLOW A STANDARD size hard drive. 750gb or 1TB DRIVE WOULD BE COOL AND ALLOW FOR some serious HD content.

http://www.alearner.com/wordpress/?page_id=50
WRE said:
Why are they going to miss the Forrester estimates? The average consumer has no idea that this product exists, and thus disappointing sales figures will be inevitable. As we head into the holiday season, where are the slick ads and great music that should accompany this product in a 30 second spot.

Apple has done a tremendous job marketing the iPod and iPhone devices, but where is a similar push for Apple TV. (Perhaps some of the tech shortcomings have made marketing the device premature, but you will not see a significant uptake until the there is consumer awareness for the product.)
David Dugan said:
@Daniel Eran Dilger

Best. Comment. Ever.
marinelayer said:
Jobs is right to call Apple TV a hobby. The hardware isn't ready for prime time. It's fine for stuff bought on iTunes or ripped DVDs but beyond that you're asking a lot of its hardware.

I recently bought an HDHomeRun, a nifty dual tuner that works with free/unencrypted OTA and cable (QAM). Just streaming a single 1080i or 720p channel takes up to 30-40% of each core on my MBP C2D, I can imagine the little 1 GHz processor in the @TV screaming for mercy. One of those HD streams also saturates my 802.11g router, which is why I've ordered a new Airport Extreme. Then to get an HD feed transcoded, I have to use VisualHub, which as great as it is won't do it real time.

I happily own and use my @TV, but I've run headlong into its limitations. Only the most recent consumer Macs can work reasonably well with HD content in real time or better. I can rip a movie at the highest quality supported by @TV at around 30-40 fps (H.264, 2500 kpbs). That's a 480p source, not HD. Syncing a movie to @TV can be time-consuming too.

The newest CableCard-equipped PCs are up to the task, but I've read harrowing stories about setting those things up (CableCard doesn't mean plug-n-play). Plus they're at least $1K a pop.

Right now the in-box hardware is just starting to come into its own. It'll be helped by 802.11n or if you've planned ahead, Cat-6/Gigabit Ethernet in your home. Beyond that, the delivery systems have to improve. The digital TV switch will help since it can free up a lot of bandwidth, but the cable/telecom companies have to upgrade their infrastructure as well. Broadcasters using H.264 will help too. There are a ton of steps to making HD not only viewable but archive-ready and portable.

Revolution will have to come with time and many changes that aren't in Apple's control. Until then, @TV is a good trial balloon.
Dan Frommer said:
Glenn, great point. Would love the HD video equivalent of Airport Express' music streaming. Probably unlikely via 802.11g but fine via ethernet and doable with future versions of 802.11.
glenn said:
Those people who want a bigger hard drive or built in tuners, don't want the same box I'm looking for. I want a small, quiet device which sits in my TV room. I do not want to hear the hard drive spinning; I do not want to hear the fans cooling the hard drive. If anything, Apple should look at replacing the hard drive with 8GB of Flash storage. I just want a quiet appliance capable of getting its content from my home network.

I have a noisy computer in my laundry room with 2TB of storage and three over the air tuners. It's in my laundry room because its noise gets in the way of watching TV shows and DVDs. In my case, it's an old Linux box, but it could just as well be an iMac with a bunch of noisy external USB drives. Potentially, the noisy computer could be feeding AppleTV like devices in the TV room, my bedroom, the kids bedroom, and the guest room downstairs via Ethernet. Right now, it's just feeding my MacBook via wireless, and a Mac Mini in the downstairs office but I would like to distribute the content to more places.

I do not want to pay for a TV tuner per each AppleTV nor do not want to pay for 500GB hard drives for each; such things add cost and don't give me anything I can't get from my noisy server.
DWalla said:
Definitely needs more space, 1080p output and content, a better remote and for sure... 5.1 or 7.1 optical out. Zero surround sound guarantees I'll never buy one. However, if they had surround sound it it today... I'd be laying down the money right now.
glenn said:
The Mac Mini is twice as expensive as an AppleTV. $300 is a pretty hefty chunk of change to call "not much more expensive".

The question for me is whether the AppleTV can be coaxed into handling the high quality/high bitrate 1080i MPEG2 streams one might record over the air: perhaps 19 Mbps, and displaying them on a 720p, 1080i, or 1080p TV. If the current hardware is capable of doing so, I'd be happy to buy a refurbished AppleTV, install Linux on it, and use it as a MythTV frontend. If it can be made to do this, any extra processing power would be a waste, any less, and it's useless. I just want a small, cheap, quiet box I can put in my TV room, and watch my DVD collection and over the air TV shows with full 5.1 surround sound.

Of course, my installing MythTV on an AppleTV doesn't further Apple's agenda, but really they are in a tough spot when it comes to content. The studios don't want them to sell downloaded movies at a compellingly low price, and there's no way they can promote ripping DVD collections. They could try getting into the rental business, but there is a lot of competition in that market. It's hard to rent a $3 for a "near DVD quality" stereo movie, when you can buy a used DVD with a high bitrate and a DTS surround track for $6.33 at BlockBuster.

Also, being just another cable box, or over the air DVR doesn't go to Apple's strength of end to end content integration. They would not be able to guarantee a quality experience.

I have a feeling the writer's strike is opening up a window for alternative, non-network/big studio, content distribution, but I'm not sure how one would take advantage of it.
Daniel Eran Dilger said:
I agree that HD content from iTunes would be great; the problem is bandwidth. It's already a bit much for many US consumers to download existing iTunes content at "near-DVD" rates; that's approximately 100 MB /15 minutes, or almost half a gig for an hour long show.

Competitors like Vudo offer HD content for a similar style of direct downloads box, but require uses have at least 2 Mbit Internet service, which excludes anyone on DSL. The content also costs a lot more.

As for content variety, Apple is lining up new content as fast as it can. It's the studios that are balking, because of fears they can sell their expiring content elsewhere or somehow monetize it with ads.


As far as "letting users rip DVDs," Apple does nothing to limit users from doing this using Handbrake. However, Apple can't directly provide the tools because it is limited by DVD licensing legalese.

Apple TV: Using DVDs and other Video Sources

Additionally, ripping DVDs is not the same as ripping a CD; DVDs are already compressed with MPEG-2, but to really be portable enough, they need to be transcoded into H.264. That makes an 8 GB movie closer to 1 GB, but literally takes hours.

Have you actually used an Apple TV? It can play "any video you have on your computer," either directly or by converting it within iTunes, just like an iPod. It's not just a movie watcher box, but also works with home movies, video captured with a DVR such as EyeTV, and other sources.

And you're wrong about quality. Purchased iTunes video looks better on HDTV than most digital cable programming. It's not Blu-ray, but it also doesn't cost $400-600 for the player and $40 a movie. From 10 feet away, you will not see much of a difference between Apple TV movies and HD content. And again, for TV content, iTunes is typically better than digital HD cable, plus there's no ads and no $50-100 monthly fee.

Why Low Def is the New HD

A lot of ignorant reviewers have plugged in the Apple TV and described the pixels from 6" away from the screen and dismissed it as poor quality. That's because they are morons who have no practical experience in technology or what consumers want, and can only parrot press releases and cite specification numbers.

As for "Apple TV 2.0," it's hard to see why it would make sense for Apple to copy existing products that don't sell well rather than keeping the Apple TV as what it was intended to do. Part of the reason why decent products like the TiVo aren't selling is that "cable boxes rent devices out for $8 a month."

Your expectation that Apple could somehow muscle in on the cable providers and compete with a $99 a year product is absurd, especially if you expect Apple to add Firewire DV input, CableCard DRM, and/or DVR tuners.

The Apple TV is already being offered for barely more than its hardware actually costs. It sure is easy to demand that Apple deliver hundreds of dollars of hardware that does everything and costs nothing, but that really isn't analysis.

You also omit that a lot of the Apple TV's value comes from its ability to view photos, music and any video on the computer without any wires or confusing configuration. If the Apple TV has actually achieved what Forrester guesstimated, it is a wild success.

Tivo is losing tens of millions of dollars a quarter trying to sell boxes, and only has 1.7 million subscribers, adding only 136,000 over the last year. If Apple sold anywhere close to 800,000 Apple TVs, it would be an outstanding success. It would be good if it sold a half million. Apple itself hasn't announced any plans to sell a certain amount.

The 'disappointing' projected estimates vs sales guesstimates have come from the same critic of iTunes, who has been wrong on Apple repeatedly: Forrester's James McQuivey Announces the Death of iTunes, Again

macguitarman said:
Could not have said it any better,

Do all of the above,

Apple TV is good, but waning, it's like a beta, it has that unfinished feel to it.

- Needs DVR, like yesterday
- a huge 500 GB HD
- The typical intuitive Apple GUI for recording shows
- dual digital tuners, an absolute must
- Gigabit e wired, and 802.11 n standard
- 800 Firewire for s & giggles

A true central media box, with the Apple GUI and ease of use: a media server, a transcoder, a DVR, that is what we want, it would sell like hot cakes.
Chris said:
And please add visualizations. It is unbelievable that a media player would not have this.
MRC said:
I love my AppleTV as well!

And I agree with a previous comment that many people haven't heard about AppleTV. (A lot of people think it is an actual TV made by Apple.)

Apple needs to introduce movie/video rentals to the iTunes store. At first I thought that renting digital videos would be a bad idea. But I would rather rent a video for a few days than buy something that I would only watch once or twice.
CK said:
Oh yeah....the quality from iTunes purchased video is not that bad. it's not HD. But it is 640 X 480p and is very close to DVD quality. It's MUCH better than Stad Def Video On Demand on HDTVs, which people rent all the time. And for parents with young kids Apple TV is a god send. No more scratched DVDs. I've downloaded or ripped all my sons videos on to a hard drive and now he can watch them on the Apple TV.

That said, I would love it if Apple made HD downloads available.
CK said:
You CAN rip DVDs and show them on the Apple TV. You can use the software Handbrake using the Apple TV preset. And you can watch any quicktime movies on your computer if they are formatted in H. 264 and in iTunes. Basically just needs to be standard resolution and use H.264 as codec.

Also I don't think cable companies would really care if Apple TV built in a cable card slot. You still have to rent the cable card for almost as much as a box. And they don't have to give tech support for the Apple TV. They might even prefer it. But I don't imagine that Apple would EVER work with cable companies. This would be great though.
Ted T. said:
A lot of excellent, but impractical suggestions:

Putting tons of HD on iTunes: I'm sure that Apple would love nothing better, but most studios won't even let it have SD material, much less HD. They know very well that HD on iTunes would kill HD-DVD & Blu-ray dead(er) than they already are, and thus there is no way they are going to let Apple have HD anytime soon.

Ripping DVDs in iTunes? Not until Congress repeals the DMCA -- in other words never.

A $200 version with a built in cable card and 500GB HD? In some alternative fantasy world, maybe.

Personally I can only dream of a Mac Mini (at any price) with all those features.
Dan Frommer said:
Lewis, you point out the real problem. The Mac mini is not much more expensive than the Apple TV, and is infinitely more useful. (See: Fred Wilson.) Why? Not necessarily its hardware, but the software Apple has installed on it. It wouldn't take much more for the $300 Apple TV to be *nearly* as useful as a Mac mini.
Tom said:
Also a huge fan of AppleTV and everyone I show it to loves it and thinks it's slick.

My only pet-peeve is the inability to shuffle music videos i.e. play one after another.

Other than that, I'm gung-ho. YouTube is awesome and you can't beat watching American Idol and Britains Got Talent rejects for hours on end.

Other than that, I use it every day for at least a few hours.
lewis rothkopf said:
My fear is that those to whom the AppleTV is targeted are not buying them for themselves.

My mom is the perfect demo... she has my old iMac, wants to consume iTunes video but not on the little screen. So I hooked her up with an AppleTV and she loves it ... because it works like her cable box (more or less.)

That said, she never would have made such a purchase had I not informed her about it and set it up.

We, on the other hand, have a Mac Mini (at the higher price point) doing similar duties in the entertainment center.
DigMo! said:
I really love my Apple TV as I have an elgato TV device and they work really well together. A better range of video content in the UK would also help massively.

I think Apple have been busy with the iphone, putting leopard back and neglecting last Jan's big announcement of the Apple TV. I think as things settle Apple will update the device (hopefully).


Bjorn Tipling said:
I think ripping MPAA member DVD's circumvents encryption put on them and is illegal. That's probably why we haven't seen this yet. You could 'rip' your own home DVD's.

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