Can the Apple TV reinvent itself?

I was in the middle of an ICTC (my new acronym for InterContinental Telepresence Conference) when I got an urgent message from Brian Chen at Wired News. Without any announcement, it seems, Apple had cut the price of its 160 GB Apple TV to $229, dropping the smaller model altogether. What did this mean? 

I've been following the Apple TV since its announcement 2.5 years ago. I bought one of the first, and I spent hundreds of dollars on TV shows testing it (I have all the episodes of Battlestar Galactica, seasons 1, 2, 3; and you don't). That said, I haven't used the Apple TV in months, even after I hacked it using Boxee. It's because the Apple TV doesn't make watching top shows easy enough to compete with cable, Hulu, and Netflix. 

Brian wrote a very solid piece in Wired News yesterday, click here to see the article. He managed to get in a lot of the big picture points I raised, which is always hard to do since I go there so quickly and barely pause to breathe. The point is this: The Apple TV is on its way out.

Does that mean that Apple should get out of the TV business? No. Here's my recommendation for how Apple shape the future of TV viewing: The Apple TV 2.0. Imagine a box that has an over-the-air HD antenna, an HD DVR with 320GB of hard drive space, and an ethernet/wireless connection to the Internet. This box is not a TiVo -- TiVo works very hard to make itself compatible with all the cable systems and satellite systems out there. Perversely, this means that when you buy one, you have to also keep subscribing to cable or satellite. The Apple TV 2.0, however, would get the bulk of its programming over-the-air, the old fashioned way (via an HD version of rabbit ears). All of that content is 100% FREE. With some amazing Apple interface that makes it easy to record and access your favorite ABC, CBS, NBC, Fox, and PBS shows, you'd take care of 80% of the content you typically watch. Then you'd use iTunes to get your favorite HBO and Discovery shows. As I suggested in Brian's article, iTunes could offer a monthly subscription service, say $19.99 that provides up to 30 free TV show downloads and 2 HD movie streams. Or more or less, depending on what the users wanted. Best of all (from a consumer point of view), this could actually replace cable. 

Do I think Apple will do this? No. Do I think they should? Yes, absolutely. If they don't, somebody will. You may have followed Sezmi's attempt to offer exactly this type of set top box. So far, it's not in the market, but it -- or something like it -- will be. Apple would be much more successful than Sezmi and has no conflict with cable providers, content owners, or CE makers to cause it to pause. Such a move would shape the market, something Apple loves to do. Note to Apple: If you take my advice and make millions, the mere knowledge that I improved the lives of millions will be sufficient repayment :)

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re: Can the Apple TV reinvent itself?

Apple TV has seemed like a product in search of an identity. It's one of those rare exceptions to prove the rule that Apple normally gets product innovation and development right.I completely agree with your take that there remains a strong TV opportunity for Apple. Perhaps Apple TV exiting stage left is a precursor to a new Apple TV initiative that is so much of a departure from the current guise that it needs to put some clear blue water between them prior to launch?