Next from Apple

As many have pointed out lately, Apple TV is a strange product. Some have called it the most disappointing product others the second worst gadget of the year 2007. It looks great, works great (not broken), but what is it really for? I get a fairly strong feeling that what it’s for has yet to materialize - in the sense that it’s something that was supposed to arrive, and that might be here soon. If everything goes according to plan…

There isn’t much bad you can say about Apple’s performance these days, and it’s probably nice as a journalist to be able to pick at something. And obviously the Apple TV isn’t of much use as it stands today. But we have to assume, based on Apple’s recent track record, that they didn’t intend to leave the Apple TV as it is.

So what is going on here?

Apple had great success with iTunes+iPod, and they managed to become the de facto store for music downloads. They did it again with TV shows, and it’s no secret that Apple had ambitions to do the same for movies. And if they would succeed, they would need a cheap hub product for the home that could store the movies that you buy.

I don’t think it’s very difficult to see that this is what was going on. Talks with studios were (and are still) ongoing and at Apple they didn’t know when the deals would happen, so they decided to just go for it, even if the future was uncertain. The only downside was that it would be an obsolete product if the movie deals didn’t happen.

But there were plenty of good reasons to release Apple TV early.

• They would be early to market with their DVR/Tivo style box. The marketplace was already crowded with DVRs and services that let you download movies when the Apple TV emerged, and it wasn’t going to get less so.
• They would get a chance to test it in real use. Apple loves to do this, must be one of their best practices. But why no DVD? By not including a DVD burner they kept the price of the box down, and customers were not going to assume the movie studios would suddenly let their movies get ripped & burned. They could always include the burner in the next gen version and give early adopters a good reason to upgrade, if they got the licence from the studios to let people burn the titles to DVD, like they did with music. (You can burn songs you buy on iTunes to CD, even if they loose the DRM (copyprotection) in the process.) People would like to make backups of their movies anyways, so DVD rights would be great to have.
• And finally, Apple TV would show that Apple meant business. A fine line to walk, I suppose, because this is also the danger. We have already seen the big studios express their fears that Apple would become too strong and dominate digital entertainment distribution. As you might have noticed, many big movie studios make a big part of their living, not by making movies, but by distributing movies others make. That’s why there are so many company names figured in the opening titles of movies today: “20th century Fox” - “A Spyglass production” - “Section Eight presents” - and so on. It’s basically a list of who brought the movie to you, in reverse order.

So what’s next for Apple TV?

They should and will add a dvd burner, a tv tuner and direct access to iTunes.

Apple already makes gorgeous digital displays and if you were to connect one of those to an Apple TV, you would have a great tv set. Sound can already be transfered wirelessly to your hifi-system with Airport Express, and they should of course make that 5.1 channel sound. I believe it’s only stereo now, but I might be wrong.

Apple doesn’t make speakers, but they might. Remember the iPod Hifi Speaker they started making quite recently and then dropped? Was it a test? In the past they talked a lot at Apple about how Sony was great, and I think they want to become the new Sony. A different and modern version, of course.

Much of what used to be dedicated hardware can now be done on a computer with the right software, even pro stuff. You might need to add a special card or add-on, but that’s easy. Everything becomes connected, and Apple is strongly pursuing what they call the digital hub strategy. Microsoft talk about digital lifestyle, whatever that is, but Apple keeps it focused on their business by referring to the mac as the center piece of hardware.

If you were to rethink the hardware around the tv experience completely, that’s where Apple is headed. Apple TV is just the little start.

A couple of side thoughts:

• Apple might skip the DVD burner (and they might not get rights from the movie companies to burn movies to disk anyway). Instead they could convince their users to use Time machine to backup all movies to a huge drive. All would of course be done seamlessly, automatically and in the background. So nothing to worry about.
• Higher resolution is on it’s way. The public wants HD, and that’s what they’ll get, sooner or later.
• And one more thing… DVDs come with a lot of extras, the movies you now download from iTunes don’t. Apple needs to come up with a package format for movies. A format that can contain subtitles, language and commentary tracks, as well as extra clips, making ofs, etc. I think they already have it ready. No more DVDs folks.

I believe Apples strategy is pretty wholesome: Hardware, Software, Content distribution. The only thing they don’t do is content. They aim to enable people as much as possible, and by making people strong and able to do cool stuff, they hope the people’s choice will be to use Apple software on Apple hardware, distributing content through Apple’s network and with their formats.

Alright, that’s my take on Apple TV. Back soon with some more thoughts on what is to come on the Apple horizon. Stay tuned.