Apple TV

In Walter Isaacson's biography of Steve Jobs, Steve said 'I finally cracked it.’ http://www.businessinsider.com/apple-television-steve-jobs-2011-10 When we heard that, everyone wondered what the answer was. I think I have figured out part of it. Now that I've thought of it, it seems obvious to me that Apple is going to do this.

1. How is Apple going to make money from the Apple TV? They are going to partner with cable companies and take a piece of the cable company's pie, the monthly revenue from you.

Evidence: http://www.theglobeandmail.com/globe-investor/rogers-bce-vying-for-a-bite-of-apples-itv/article2328772/

Why on earth would Apple need a Cable TV partner? monthly revenue, bandwidth and content. First the money part. How does Apple make money off of the iPhone? It is only partly from the $200 they charge you for the device. The real money is in the $450 subsidy from the carrier and an ongoing piece of your monthly bill. That is what the partner is going to provide - a way to make the cost of the box to the end consumer really low.

Go out to Rogers.com and they will show you a box that they will give you for free called Nextbox made by Cisco that gives you an HD cable tuner and Tivo/DVR/PVR.

Go out to Dishnetwork.com and they will show you all kinds of technology that they will give you for cheap, if only you will sign up for a two year commitment to programming. That sounds a lot like the deal that the cell phone carriers are pushing, doesn't it?

All the cable providers are doing this now. Except their technology execution is mediocre. The only company that was able to deliver a box that you didn't mind using was Tivo. They failed because they didn't deliver content too. Apple will fix that. For the first companies that partner with Apple, this will be a fantastic way to get more subscribers relative to their competitors (example AT&T). Later it will be really bad for you if you don't have Apple as a partner (example T-mobile).

2. Delivery: Also from the same article, “They’re looking for a partner. They’re looking for someone with wireless and broadband capabilities.” I think Apple wants to not get in trouble with the people that own the "pipes" like NetFlix has. If you buddy up with them, deliver value to them so they think they are getting a piece of the pie, then they will not only be happy with you about how much of their pipes you are using, but they will be happy with you as you take their money. So part of this is that the delivery of the content can be over wireless or the high speed internet that the partner provides.

3. Content. Apple has seen the problems that Netflix and redbox have had with the content owners and they want none of it. The content owners seem to want to abuse the customers. Netflix and redbox are trying to fix this by going around the current providers of content: the cable TV and satellite operators. The content owners just abuse the crap out of Netflix and redbox for simply trying to make the customers happy.

Apple is going to fix this by partnering with the content providers. You will sign up for your cable service and get the content from the cable provider. But Apple will implement a level of redirection so that you don't have to use the classic "what's on TV" paradigm.

4. Packaging of the content.

My kids don't understand commercials very well. The younger ones yell when a commercial comes on because they think mom/dad has changed the channel on them. They also don't understand that a show "isn't on right now." Tivo has taught them that you can sit down any time you want and call up an episode of your favorite show.

What if you used iCloud as your storage? Take one part live TV streaming (the Oscars, the Superbowl, etc) and add an iCloud cache of everything broadcast on your cable provider in the last three months. Add a Quicktime playback interface, which shouldn't be confused with time shifting. This is just playing back content, just like playing a DVD. Importantly this works around Tivo's intellectual property. Add decent search, suggestions, etc. Use Siri for voice activated searching. Have you ever tried to type in the name of a show/search term using a TV remote? It sucks. Add some Apple interface magic, and you're golden.

Imagine asking Siri: watch the news from CNN, play Sesame Street, play the Super Bowl, watch House from two weeks ago, etc. Using the natural language processing, it just figures out the episode you want to watch, even though you didn't really describe it that well.

Because you are going to use iCloud for storage, there will be almost unlimited access to old content. You don't really need to worry about the size of the hard drive in the box that Apple is delivering. It just isn't important.

5. How Apple might screw this up: requiring everyone to buy a new TV to get the service.

I just replaced my TV this last fall. The last time I bought a TV before that was maybe 6 years ago. The reason I replaced my TV was not to do an upgrade, it was because the old TV died. I don't replace my TV every two years.

If they do this right they will release an upgraded Apple TV box that does most of everything that the flat panel Apple TV does too.


Would I dump DishNetwork, who I have used for over 12 years because I like their DVR, and sign up with Comcast to get this new product from Apple? Absolutely. Without hesitation.