Apple's Coming Plan To Take Over The TV Business

Last week, we released our newest report about the future of TV and argued in it and the accompanying blog post that the battle for the TV is not really about TV. It’s about the future of the platform giants like Apple, Google, and Microsoft that want to add the TV to their platform ambitions. Surprising to some was our claim that Microsoft was in the lead in the US TV platform battle with its base of millions of Xbox 360 owners generating more online video views on the TV screen than viewers of any other device. Many have challenged this assertion, putting the data about current use aside and asking a good question:

Won’t Apple easily walk away with the TV business once it releases its next big thing, presumably a TV?

Let’s be clear what the company is up against in its long-rumored interest in the TV business. The reason it has failed with the Apple TV so far is not that it hasn’t tried. It’s that the TV business is a tough nut to crack: Content is still controlled by monopolists unlikely to give Apple the keys to their content archives. And simply introducing a new display on which to watch that content as it is currently delivered by existing distributors won’t offer consumers much that’s new. Remember, unlike in the phone business where the iPhone penetrated quickly, the TV upgrade cycle takes seven years. You can't jump in with a new version of the same thing everyone already has – even if it is elegant – and expect millions of people to buy it, especially at price points that Apple will have to maintain in order to keep its margins far away from those of LG and Samsung. Apple's only shot to sell such an expensive device quickly is if it does something very different. And that's what I hope Apple will do.

Here’s me putting on the record what I’ve been telling clients behind closed doors for more than a year: Apple should sell the worlds first non-TV TV. Instead of selling a replacement for the TV you just bought, Apple should convince millions of Apple fans that they need a new screen in their lives. Call it the iHub, a 32-inch screen with touch, gesture, voice, and iPad control that can be hung on the wall wherever the family congregates for planning, talking, or eating in more and more US homes, that room is the dining room or eat-in kitchen. By pushing developers to create apps that serve as the hub of family life complete with shared calendars, photo and video viewers, and FaceTime for chatting with grandma this non-TV TV could take off, ultimately positioning Apple to replace your 60-inch set once it’s ready to retire.

If you think about it, my proposal takes advantage of everything Apple has going for it: Its base of super-engaged customers, its bevy of hungry developers, its ability to open our minds to the possibility of post-PC computing form factors, and its spectacular track record with generating elegant experiences that teach us to do things we didn’t know we needed. In fact, I want this so bad I can almost taste it. That’s why, if what Apple releases later in the year falls short of my admittedly high expectations, I will probably come off as less impressed than others. I’ll be comparing whatever the company eventually sells to a glorious and welcome revolution that only Apple could incite. 

Comments

Surface

I think the TV display is the least important aspect of this. Everything has become very personal, and we can read books or listen to music in a variety of forms. The important thing is who retails the content and where Apple fits. Many people are unhappy of how TV (equivalent to Radio, NOT movies) is brokered, and consumed (where/how).

I assume anything Apple releases addresses this, and if they release panels, it will be a smaller part of the vision.

Finally

Someone's got it right! Bullseye in so many ways, with the most important being the portability of the screen. All others keep focusing on this huge device that will be cemented in your living room. That is so far off. Think of "convergence". iCloud will soon bring us our "desktop", just the way it looks right now with access to all our files; you'll log on from any "screen" no matter where you are at and log in and get your "desktop" just the way you left it. It will also double as a "TV". James hit it out of the park: the non-TV TV.

Disagree

Yes this is exactly what every family needs...ANOTHER device that is in a place where the family gathers so everyone can be mesmerized by the technology and information all of which they could get for 3 other places at home, instead of talking. I am a huge technologist and fan of Forrester but I can't think of any topic I disagree with more than this one.

One word: Battery

Joseph K is right that we don't need yet another device to share calendars on, especially when Airplay solves 90% of these situations.

Another massive hole in your story: battery. This thing either needs to be plugged in or carry such a massive battery that it will be ridiculously heavy and expensive with any tech on a short to medium term horizon.

These restraints do not speak portability to me.

Restraints? What restraints?

Restraints? What restraints? While in Japan a few weeks ago, I saw a 32" TV(?) which was magnetically attached to the wall and could be moved at will. Power was supplied by induction, same as with many charging systems on sale today. "Hook up" to the internet was via WiFi. Mission accomplished! Rumor had it that this plant was working on a project with Apple.

Something is coming . . .

I don't know what's coming, but remember, Steve Jobs was Disney's largest shareholder, Apple has some leverage and I wouldn't be surprised if it were to outdo the PS3, Xbox and the good ol' cable/dvr box. Something is coming and new generations of iPhones, iPods, and maybe even iPad will be the remote.

Soooo what you're saying

Soooo what you're saying basically is that "Apple's Coming Plan To Take Over The TV Business" is to release a 32-inch iPad that can be mounted on a wall?

The Apple TV is not a failure. Apple are just testing the waters with that device — much like the title of this post.

Good work.

"Soooo what you're saying

"Soooo what you're saying basically is that [Apple plans] to release a 32-inch iPad that can be mounted on a wall?"

Yeah. Kinda like before, when they released "a giant iPod Touch," that was equally mocked as such.

Giant iPod Touch is exactly what it was

Tease if you like, but note that iPod Touch sales started falling as soon as the iPad arrived. Not a coincidence.

The I Channel

It's the ultimate in audience fragmentation. Oprah wasted hundreds of $millions (mostly OPM) getting eyeballs on OWN. People don't want Oprah's channel, they want their own channel...playlists of content picked out for them by iTunes Genius based on their viewing patterns. Any content provider that doesn't play ball with Apple/Disney (somehow Disney will be given a piece of the business) just lost a few million eyeballs...or in this case probably the sales kit will foolishly call them iBalls. 700 channels of content is useless to me if 600 of them are Lifetime East, Lifetime Central, Lifetime Movie, Lifetime Sitcom, etc. But give me a channel that starts off with Graham Norton then segues into Fareed Zakaria GPS, followed by the latest ep of Community, then Sons of Anarchy (interrupted by live coverage from NASA TV), then a fresh newscast from NHK World, and so forth, and I'm probably more likely to watch the ad pods personally selected for me by some googly interest-matching algorithm. Oh and the ads know we are watching them and we can indicate whether they interest us or not. From interactive ads why not Bradburian interactive dramas (dust off those laserdiscs).

Somewhere in there thrown in the BBC version of Being Human, that's cool.

Ratings? Apple knows exactly what shows each person watched since the TVs are equipped with iSight.

What we end up with is not all that much different than the Matrix, is it?

I would say you're pretty

I would say you're pretty much spot on. We will definitely eventually have this. How soon depends on whether the content monopolists are willing to work with/hand over their crown jewels to Apple.

"I’ll be comparing whatever

"I’ll be comparing whatever the company eventually sells to a glorious and welcome revolution that only Apple could incite. "

In other words, not reality. Because, God forbid, your customers, clients and employer ask you for that. Much easier to make up a future and then expect others to live up to it.

How to make this actually work.

This is what I'm gathering.
Apple has two problems to solve.
1. Content value proposition
The golden formula for this is to have networks (or even shows) sell apps directly to the consumer. That way I get everything the Science Channel and The Food Network has to offer but don't ever have to think about The History Channel or the CW. This makes good sense to networks too. My guess is this is what is taking the most time.
2. Technology value proposition
As you pointed out the will be a hub. Yes, kind of.
I think it will run another version of iOS like the current apple tv however fully featured like the iPad. However, not touch controlled!!! Gesture controlled. No remote control. Imagine control like this from Leap Motion.

http://www.youtube.com/watch?v=_d6KuiuteIA&feature=player_embedded

This is where is will get really cool:
If the new TV has an iSight camera it can do facial recognition. If it knows where your eyes are and knows where your fingers are it can make it look as if you are 'touching' the device no matter where you are in the room. 'The simplest interface you can imagine' already exists, it's called iOS. No remote, no mouse, no iPhone remote control app, just your hands from the comfort of your couch.

Additional innovations with the new apple TV.
-FaceTime from your living room
-New API for spacial gesturing based games, support for current iOS games.
-Siri "Siri, when is the next episode of House going to be on?" "This Wednesday at 7pm." "Great, record it for me."
-Hopefully some sweet wireless speakers.

Eventually.
-Wireless microphones around your house, so you can talk to Siri any time.
-API for household devices. Notification: Your laundry is done! Makes you coffee, books your ticket the ISS etc.

Microsoft Already Cracked TV

1. Apple isn't going to offer a TV. That story has been thoroughly debunked. The FoxConn CEO was misunderstood and misquoted.

2. If Apple does anything, it's going to provide an appliance like AppleTV. I don't see Apple providing a wall-mounted TV.

3. Furthermore, you don't want to stand around in front of the TV touching the screen; if anything, it will be a gesture-oriented appliance.

4. Apple is going to have a tough time prying loose the content from cable providers. They know that Apple will cause their content to crash in value through iTunes, so they're not going to fall for that trap.

Given all that, it's clear that Microsoft has already cracked all of these areas with its Xbox platform. Why are we having this conversation?

Microsoft's Xbox is for what

Microsoft's Xbox is for what target audience? Children. More specifically boys who don't watch tv... they play games. Enough said. Explain to me how a female 25-54 is going to watch tv through an Xbox. Please. I'm listening.

Your facts are out of date

Gaming may have looked like that years ago, but not for some time now. Xbox is used by millions of women (and adult males) to watch video every day. Xbox just announced that a majority of Xbox live time is spent on non-gaming experiences now.

Future Apple is an apple-TV inside your Samsung / LG

My subject says it all.
Apple will strike deals with already huge TV manufacturers. Insert the Apple-TV in their TVs and get rev share on content. Much like iTunes today.
Maybe even rev share with TV manufacturers?

Good money, easy money. APple won't have to handle huge TV sets, but still make money selling movies, series and games for the huge screens.

My two cents.

Apple takes a new spin on TV

We currently have a Mac Mini with a 22” monitor in our kitchen. My wife has an account with Food Network where she keeps all her recipes. This computer has become indispensible to her in the kitchen. We have a HD Web Cam on it and often do our Face Time and Skype from our kitchen.
We both have iPads and iPhones and I also have a roving MacBook Pro around the house. We never eat without music from iTunes served by air tunes or Pandora served by Air Foil. We have an Apple TV in our media room and whole house music driven by multiple Airport Extreme units. Our Wi-Fi network is served with a Time Capsule. Damn, I should own more Apple stock.
Our home would be perfect for the non-television Apple television you just described. We would probably buy two; one for the kitchen/dining room area and one for the workout room/home office. I hope you are right.

Mac-Tv

Apple TV is a tiny entertainment powerhouse that plays the content you love from iTunes, Netflix, YouTube, and your favorite sports leagues on your widescreen TV. In up to 1080p HD. Just plug it in and discover a whole world of movies, TV shows, photos, music, and more. You’re gonna need a better couch.

Yours Seppo

Ps. Better You imagine

I couldn't agree more. A TV

I couldn't agree more. A TV that operates like an iPad, but adds control of all of your home's systems would be life changing.
I am currently in the residential automation business, and 'automation' as we know it today is a limp-noodle at best. If a company with the R&D power of Apple would turn it's attention toward home automation, it would finally stick.
Just read today that Apple Stores are going to be selling Nest Thermostats. Are the partnerships already beginning for what you suggested?
Exciting stuff

Apple Doesn't enter existing markets with trivial upgrades

“You can't jump in with a new version of the same thing everyone already has – even if it is elegant – and expect millions of people to buy it…”

And nobody knows that better than Apple. When they went into the computer, music player, phone and (heh) netbook markets, they offered something quite unlike what was there before.

So I agree completely: Apple will NOT succeed if they just bring a snazzier screen. The hardware has to be excellent, but they will succeed or fail based on other technologies.

And those, methinks, are the ability to choose what you want. Currently, Americans spend something like $69/month on cable TV in order to watch a similar number of hours of TV. If they could make similar-priced arrangements to offer essentially any current show in an easier format, maybe even on-demand, they'd have a winner.

Also important: the ability to NOT watch what you don't. I SWAG that a median-income American pays about $5/hour of content today—in time lost watching unwanted ads; ads that treat as zombies only good for buying junk food, shiny cars and useless, even dangerous medical treatments.

So there seems to be about $6/hour in all to split between Apple and TV producers; it can't cost more than a few pennies to deliver the content over almost any link besides cellular.

Apple's line to the producers would have to be, “YouTube has you in their crosshairs the same way that Napster aimed at the music labels. You can watch your business go out from under you due to copying, or you can turn it into a premium, ad-free experience with iTV. We'll help you price your shows, including teaser previews, so you get twice as much per show as you get from the ad agencies.”

The producers would worry about advertisers being very unhappy about losing their eyeballs. But the truth is that they both know the business is moving that way already: ads on TV don't generate much revenue — a one-minute prime-time ad is about 2.5¢ if I grok the numbers right — and because advertisers have BETTER ways of reaching customers on the internet, they are certain to cut back further on TV, which will result in a spiral of lower quality, driving viewers to YouTube anyway, where Google will control access in a way that all the profits go to Mountain View.

This is a bit far-reaching to actually come true this way. But eventually, TV *WILL* be disrupted this way — *IS*BEING*DISRUPTED* this way — and maybe it's close enough to the cusp that it's right for Apple to jump in.