Time For Apple To Get Serious About Apple TV (AAPL)
Why now? Because even though the industry is still nascent, the Internet-connected living room is becoming more of a realistic proposition. And the market is quickly getting more crowded.
Yesterday, LG announced it would begin selling a Blu-ray player in September that can play Netflix (NFLX) streaming movies -- and other digital content -- for "well under" $500. Wednesday, Dell (DELL) showed off a sexy new mini computer, starting at $499, with a built-in HDMI port for hi-def TVs and an optional Blu-ray drive. So on and so forth.
Suddenly, Apple TV has lost most of whatever edge it may have had. It can play iTunes movies, and YouTube videos, and... well, that's about it. Piper Jaffray's Gene Munster estimates Apple has sold 2.6 million Apple TVs since spring 2007, which sounds high to us. But no matter what the number is, Apple TV isn't a mainstream product. So how can Steve Jobs change that?
Open it up, by adding the Web. We realize the company likes controlling as much of the user experience as possible and boxing people in to Apple-supplied media. That's helped make Apple products among the most useful and elegant in the consumer electronics industry. But the Apple TV is too confined. It should be more like Apple's Mac mini, which some serious home theater-types actually do use in their living rooms.
What does this mean? Add a Safari browser with all the plugins you'd need to watch videos from Hulu, MLBTV, NBC, ABC, Fox, etc., listen to audio from Muxtape, Last.fm, Pandora, and other sites that aren't too directly competing.
In theory, this also means that Apple is eventually inviting iTunes competitors like Netflix (NFLX) or Amazon (AMZN) onto its box, since they offer browser-based video services of their own. But better to have to compete for space on your own platform than have a platform no one uses.
Add an optional Blu-ray drive. When Apple last updated the Apple TV in January, the the next-gen disc format war was just ending, which meant it was too late to add a Blu-ray DVD drive. But the DVD format isn't going away for a while -- at least for another 5 years or so. An Apple TV with an optional Blu-ray drive could replace the DVD player in every living room. An Apple TV without one is a compromise -- there just aren't enough movies on iTunes to make digital delivery a feasible, primary option today. Don't forget that TVs have a finite number of hi-def ports, and the cable/satellite box -- which Apple will increasibly compete with -- is taking up one of them.
That's it. For now at least -- let's not get ahead of ourselves. AppleTV doesn't need too many features, and it doesn't need to be a full-fledged PC. It just needs to make our TV-watching experience better, by adding as many video sources as possible, in one nicely designed package. What do you say, Steve?
See Also:
LG's Netflix Box Coming In September For 'Well Under $500', Will Play Blu-ray
A Nice Surprise: Dell's New Mini PC Looks Good
What's Apple's Mystery 'Future Product Transition'?
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I'd buy it.
The only other thing I would add is support for external storage movie playback. For all of us who have existing tools for playing back Video_TS folders (think media gate and other home video players) we would want to integrate our existing libraries...USB drive storage should be fine.
As a bonus, they need full hi end spec support (1080p, DTS, THX list goes on and on) for our expensive home theater projection and sound systems.
Surely someone at AAPL recognizes this already. Have a sub par device for the amateurs out there and a hi end version for the pros. They do it with all their other products why not this one?
Anti-gravity machine,
matter transporter,
all for under $100.
I am sure Dell will make one any day now. LOL
Can Apple TV get better? Sure. But these type articles never look at business, only noise. Its deadline time and I do not have any idea.
Why not make an Apple computer for under $100. Apple has lots of money, right?
DUDE, get real. Apple makes things when the time is right. Look at iPod, iPhone, iTunes. You have to try really hard to argue with such success.
Just a thought.
en
A Blu-ray player is reasonable, too.
And "You have to try really hard to argue with such success" does not work here here. The Apple TV is specifically not a success on the level of those products, and probably won't be in its current form.
This is where EVERYTHING is going. Apple should lead the way, instead of wish they did.
Excellent article.
Apple would have to completely rebuild their OS to support Blu-ray DRM and I don't see Jobs doing that any time soon.
Phlip
I don't think he meant that it's not taken seriously, I think he meant that this is a beta attempt while they figure out how to deliver the best user experience with a relatively low price tag. Including all these costly add-ons prematurely would bump up that price tag along with expectations.
I look for a big splash announcement in the not-too-distant future regarding a new AppleTV - possibly even a single integrated flat panel device (which the iMac pretty much is already). One other big add-on - SlingBox-style interoperability with the iPhone...
No No No
Apple wont do that, and thats not good business sense.
Things are done on apple's terms and right now, there is just to much unknown in this space. The netflix, amazon, sony, etc..not one of which is a break through winner. Yes they might become popular, but it wont shut the space off to future changes. The overall space just doesnt seem right to me. People are trying to rush things. Apple will create a better medium for all of this to take place..that is what apple does...
Right now I go to all those sites via my mac mini and firefox using favorites bar. Wouldn't say its an optimal configuration, would be much better to have specially designed apps for the controls.
format. It is connected using the digital audio link. The music
actually sounds better (somehow) than it does on the original
CD. I know most people won't believe, and few will bother to try it,
but one of these months it will be a new fad. You heard it here
first. Remember!
Sunny Guy
I checked out the Dell and it's OPTIONS and $2,600 later I had a computer I might consider buying. No wait, I already have a Macmini and a 24" iMac that together cost less then the new Dell.
$500 computers are not usable as digital hubs. A tricked out Macmini works for me.
I can see the need for a Blu-Ray drive as a bridge between now and when full a-la-carte HD happens, but I don't see that being more than a few years.
It's the same reason why there is no SuperDrive in the Macbook Air. Apple sees the writing on the wall -- they know physical media will soon die and the AppleTV is positioned to capitalize on that - already.
You're correct, though, that Apple needs to step things up, and in a hurry. They should treat the Apple TV much like the iPhone, and open it up to third party developers via the App Store. And even though I disagree wholeheartedly with your Safari idea, I do agree that there are programs that Apple can deliver. I'd love to be able to see my days iCal schedule, general news headlines, weather report, and perhaps even an interface for triage to my email (you can't reply, but you can delete or flag). Don't think of the Apple TV as a computer for your television -- think of it as a completely new way of interacting with your data, and you're on the right path.
As far as media, they are on the right track. They need to keep being aggressive with adding television and movies, and even though I understand why 720p isn't offered yet (size, download speed, and probably primarily licensing issues), they need to institute this as soon as possible, both for movie purchases and for television. They also need to keep up a drip-drip-drip approach to knocking down the DRM barriers. This is ultimately in the hands of the license owners, but DRM is a dead letter item, and in the end, this is only costing them sales.
The main thing that Apple are missing in this product is content deals - the iTunes cupboard for video is relatively bare. But that is by design. Having gone through the experience already with music licensing Apple has learned a lot about what to do and what not to do in terms of licensing content. They are going to license content on their own terms with their products. This is going to take some time because of the huge cash cows that are the carriage fees that content producers make from cable and satellite (among myriad other market forces). I would likely cancel my DirecTV subscription if I could access NFL and MLB in HD over the Internet via my Apple TV. But that content is being monetized and delivered best via satellite right now, so its not available to AppleTV. Apple knows that the content market is still not ready for a full court press of Internet-delivered content in the living room. There is no point in being out ahead of the market.
The notion that Apple TV is a failed "hobby" is off-base. That is spin for Wall Street so they don't overestimate the near term impact to the bottom line. Everything is unfolding according to plan. The best thing that Apple can be doing right now to secure its foothold in the "connected living room" is to be gaining marketshare on Macs, iPods, and iPhones. Once you have your media library set up on your Mac, iPhone and iPod, there is no way you are buying a Dell or LG product. Even if its 30% cheaper and matches up featurewise on paper. The iPod wars (which are over) as well as the current iPhone craze have shown that.
However, the fact is that AppleTV is a video device with poor video capabilities. iTunes store pickings are VERY slim. It is spot-on to suggest competing for space on their own hardware platform rather than failing to sell the hardware. Apple really should create an AppleTV-optimized version of Webkit/Safari, and make it easy for video sites like Hulu to create AppleTV-specific web apps to navigate via remote control.
As a touch owner, I can tell you that there is a tiny subset of apps that are phone dependent; the majority of games, media, social networking, utilities at most take advantage of Wi-fi so the distinction would be the size of the screen (which presumably Apple deals with between output of iPods/iPhones and Apple TV) and the separation of the controller from the screen, which Apple is already starting to muck with vis-a-vis the Remote app.
On some level, this is a trojan horse into the XBox, Wii, PS3 console segment, and consistent with Apple's strategy to leverage innovations in one environment/form factor to another.
Thoughts?
Mark
Because that won't happen for 3-5 years. By then, Apple will have a zillion competitors. Blu-ray would make Apple TV more competitive in the next 5 years.
I personally don't understand the appliance approach that Apple is taking except to buy themselves some time before entering the HDTV business themselves. It's a no-brainer. It's simply an iMac with a 32 or 42 inch display - duh!
This is coming when the time is right. Apple's little TV appliance is a filler and way to experiment with the software part of the equation. Apple's iMac-like HDTV would have iChat which would be a natural in the family room.
The dispute over appliance features is moot.
I'll agree that the Apple TV isn't a phenomenon but it's a good product that Mac-centric consumers are slowly adopting. Blu-ray? 1080p? There just aren't enough people who care about these yet. Most HDTV owners don't even watch in HD!!
I personally don't understand the appliance approach that Apple is taking except to buy themselves some time before entering the HDTV business themselves. It's a no-brainer. It's simply an iMac with a 32 or 42 inch display - duh!
This is coming when the time is right. Apple's little TV appliance is a filler and way to experiment with the software part of the equation. Apple's iMac-like HDTV would have iChat which would be a natural in the family room.
The dispute over appliance features is moot.
And to js, not everyone has an HDTV yet and that's the point. Plus, like most families, there's more than one TV in the home.
Most got it wrong with the iPod and iPhone with bogus arguments. Apple TV will be just that, a TV. There's no shroud of mystery to this market like some think. Nothing stops Apple from hitting the market with an appliance and anctual TV just like Apple has a shuffle and iPod touch. There's a lot of room in this field.
I'lll happen, count on it.
Apple and Sony are competitors. Apple wants your pocket for music (they got it). Sony wanted it (they didn't get it). Apple and Sony both want to own your living room, but frankly Sony already has a big leg up there via PS3.
Apple thinks the future of music is downloading (it is). Apple thinks the future of movies is downloading (it is). Physical Media is ohmygawdlikesolastmillienium.
By the way, Sony is hedging it's bets with downloading first on PS3 and other products.
I look at this from a couple of sources:
Happy with my Apple TV, already. We use it in the family essentially as an IPTV source - watching a dozen programs a week on the living room HDTV and almost half the programs are up to 16x9, now, and/or HD quality. The rest are SD and I still watch a minimum amount of that format on TV, as well. For a few more weeks.
Both of the satellite TV networks are beginning to offer download-on-demand 1080p content. They're using a mix of Web and satellite sourcing. I can feed that content into my 1080p HDTV from receivers offered by both providers. Why not Apple?
Yes, I would pop for a shiny new Apple TV if it offered me that access and HD quality via the whole Web - not just the limitations of iTunes.
HD size isn't any killer because I store whatever I download via the web on my iMac HD or on a standalone - just moving the evening's content up to the Apple TV via 80211.n - so, if there's some sneaky switch already lurking inside my existing AppleTV that will enable 1080p quality, I'm ready.
But, Apple has to drop the other shoe or I'll just go ahead and buy a $99 wireless ethernet adaptor for my HD-DVR and store an evening's Web-derived content that way.
In short -- the end game is not about Physical Media -- the end game is digital distribution over the Internet.
And today -- that is possible.
You can rent and buy movies from Apple TV streamed/downloaded directly across the Internet at 720p.
So why bother with BlueRay?
If Apple supports blue-ray -- that will only slow down the adoption of digital distribution not accelerate it.
But as much s I use it, I don't consider it a killer device. From my perspective it needs to open up to other media vendors like Netflix, Amazon, the networks, etc. I can easily see and iPhone type model of an SDK and app or applet store working.
Also, I imagine that a universal remote that could be a more robust version of the Remote app for the iPhone that would allow on-TV navigation and text input (a remote 'track pad'/soft keyboard) can really open things up to increased functionality and ease-of-use.
It's a marvelous addition to the product line but probably one of the more misunderstood items Apple has ever introduced.
It's not going to go backwards with the addition of yesterday's blue-ray player or DVR, nor should it.
It's a device that works seamlessly with iTunes once you mate it with your computer. Or it can function on its own.
We use it to view video podcasts, including the wonderful recorded lectures at various universities. Where else can you get this content?
Someone will bring a digital camera over and I just take their card and plug it into my iMac and before we all get to the living room in from of my 52" Aquos, the photos are ready for viewing. And of course, they look spectacular!
And I spend some quality time on Youtube and other sites downloading videos I like and storing them in my iTunes library. Most of them are funny and/or unusual and these are a blast to show at parties!
We also rent movies at a whim. The selection is getting better all the time. Instant gratification here. And the picture looks fantastic either in SD or HD.
All the naysayers either don't have an ATV or don't understand how enjoyable and amazing it is to have something that extends your iTunes library (which is really a media library) to your big screen TV in your living room.
When I show people how an ATV actually functions within our living room, with that cute remote, people are invariably blown away and want one. It's that cool.
My only criticism is the iTunes/iPod interfaces have been perfected.. why not replicate that as much as appropriate for ATV? The remote would be far more functional with an iPod scroll wheel. In fact, the remote should look and function exactly like a hollowed out iPod!
The ATV interface is nice, but it does need to be more responsive and of course, it needs organization. Kinda like iTunes! In fact, that's the paradigm that Apple should transfer over. Or at least add folders for organization.
You won't understand an ATV until you buy one and use it.
Consumers expect their TVs (most don't get the difference between receiver and monitor) to last 5-10 years.
They're not going to tie themselves to a monitor/computer combination that locks them in for the life of their monitor.
And more to the point, no one but the geekiest geek wants a 'computer' in their living room.
In an unrelated thread about why Linux is failing in the consumer market, a great analogy appeared that applies here...
Asking consumers to use a computer for their home entertainment system is like handing them an axe, pointing them at a chicken and saying "there's your dinner."
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