First off, a hat tip to the Apple Finance Board, which if you don’t know already, is home to the best Apple analysts, people whose forecasts routinely beat Wall Street “professional” analysts. A thread on that forum inspired me to think about this topic over the past few days.
The original topic, simply put, is what’s next for Apple? What’s the next product category for Apple that can generate >$10bn revenue a year (like the iPad will easily do this year)? Many people would suggest TVs as a potential category. The living room is at the heart of the digital convergence, and many vendors from different product categories are vying for control of the “smart living room” – TV manufacturers (Sony’s Google TV, Vizio’s Internet TV etc.), cable operators (their set top boxes), game console makers, Internet streaming device vendors (Roku, Boxee, Apple TV), and the niche HTPC makers etc.
Google made big waves last year with Google TV, however their high-profile efforts quickly hit a wall. Of all the current offerings, I think Microsoft is best positioned with its Xbox 360 + Kinect. The Xbox360 already supports many of the features that Google TV boosts, such as Netflix, Facebook and Twitter (the latter two not necessarily that useful, but Netflix is a killer app), and furthermore it has an entrenched install base. The value-add of another box, which offers some overlapping features, is not strong; and from a user experience perspective, adds more complexity for the consumer – another device to hook up to the TV, more cables to sort out etc.
Under such competitive dynamics, it is arguable that to make a big play in the living room, the TV itself is the most strategically valuable product to launch. The TV is the center piece of the living room and the only piece that cannot be displaced (VHS recorders came and left, DVD players came and will leave soon etc.). It is usually the first remote you reach for and the first device you turn on (although in the US it has been hijacked by the cable set top box). The TV offers a strategic point of control on the whole living room – to access your console, your DVD player or your cable, you need the TV remote. Launching a successful smart TV gains you control of the entire living room, and make all other devices your servant.
Strategy-talk aside, what should the features / benefits be for this “real” Apple TV?
- At the minimum, it should be an iOS-powered device and supports apps. This gives the product great extensibility in terms of function, and killer apps such as Netflix / Youtube should be available (or even preloaded) at launch.
- In terms of hardware,
- Built in DVD / Bluray drive, opening on the side (just like the iMac)
- If feasible, built in cable tuner so consumers can throw away their set top boxes – this is both about strategic control and simplifying the user experience (getting rid of the cable remote)
- Large storage to record programs / store apps, photos etc.
- Wi-fi connectivity
- lots of USB / HDMI slots for connectivity to other devices
- Optional components could be card readers etc. (similar to iMacs)
- And obviously a large shiny LCD…
- In terms of UI,
- It should support great customization in terms of managing screen real estate. Users should be able to have multiple apps and channels open in a wide range of display setups
- It can have some simple remote, but users should be able to control it via whatever iOS or Mac device (similar to how you can control you comcast cable using the iPad)
- In terms of fancy / advanced features,
- TV streaming to other iOS / Mac devices – iOS / Mac devices can open a “TV” app and use the device just like a regular TV screen
- Interaction among iOS/Mac devices – you can send whatever app you’re displaying on your iPad onto the TV, and vice versa. This leads to interesting use cases like taking whatever channel / show you’re watching on the TV onto your iPad, and carrying your iPad into the kitchen or other rooms and keep watching
- Gaming, which may be where the real value add is (disrupt the console business)
- TV also functions as a capable iOS gaming device (have to evaluate the costs associated)
- Again, interesting interaction use cases with other iOS devices – use your iPhone / iPod Touch / iPad as the controller; when playing multiplayer games, say Scrabble, the TV serves as the common display while each player sees player specific info (in this case, their letters) on their smaller iOS screen
Obviously I have not evaluated feasibility (would it be prohibitively expensive? How much software development is needed?), but I’d say the above features are not too far-fetched. The really big question, or missing piece, is if and how this TV disrupts the current content value chain (that’s where Google TV stumbled). Figuring out the content piece is the key to unlocking value; the product I listed here is not disruptive in this regard.
I would love to hear any thoughts and feedback.