Chris Dixon lampoons a few no-name analysts that predicted Apple wouldn’t be able to crack open the cell phone market with the iPhone, and then, in a charming bit of rhetoric, shifts to the world of TV. Dixon suggests that Apple is in a similar position with the TV world: capable of creating a new generation of TV device so wonderful that users will rally into a revolutionary force, and transform the whole market from top to bottom:
Regarding the TV industry, here is what Steve Jobs said last year at AllThingsD:Q: Is it time to throw out the interface for TV? Does television need a new human interface?
Jobs: The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us… ask Google in a few months. The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines innovation in the sector. The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it. But right now, there’s no way to do that….The TV is going to lose until there’s a viable go-to-market strategy. That’s the fundamental problem with the industry. It’s not a problem with the technology, it’s a problem with the go-to-market strategy….I’m sure smarter people than us will figure this out, but that’s why we say Apple TV is a hobby.
So Jobs doesn’t believe an “additional box” is a viable strategy for seriously entering the TV industry. This leaves three places to enter: 1) integrating into set top boxes, 2) integrating into other TVs, or 3) Apple creating its own TV. Regarding #1, the last thing the cable operators want is for internet-delivered programming that bypasses their cable channels to become widespread – they see that as the fast track to become a dumb pipe. Re #2: This just seems very unlike Apple – the most vertically integrated company in tech, and famous for wanting to control every aspect of the product and user experience.
Re #3, let’s imagine Apple develops a TV that is as groundbreaking as the iPhone was. The biggest problem “smart TVs” have today is that they need clunky IR transmitters to control set top boxes because the cable operators won’t willingly interoperate. So a new Apple TV would have to drum up such incredible consumer demand that the operators would feel compelled to support it. This does indeed seem harder in the TV than in the mobile industry. At least in the US you had 4 nationwide mobile operators at the time of the iPhone launch. In TV, consumers normally have at most two real choices for traditional cable programming – cable and satellite – and two real choices for two-way internet – cable and DSL/FIOS.
Perhaps Apple won’t enter the market due to its structure. But that didn’t stop them in mobile phones where the structure was similarly difficult. The mistake analysts made about the iPhone was to assume the current industry structure would be sustained after Apple’s entry. I’d be wary of making the same assumption about the TV industry.
I have been talking about the battle-for-the-living-room for years, and Apple hasn’t made a credible play yet. But iPad, more than iPhone even, points the way to where we might be headed. Yes, iPhone has been more destabilizing to date, fundamentally redefining the market. But I think the impact of iPad on the PC and Media markets will be just as cataclysmic.
Consider this as a transition from dumb to smart TV’s.
The TV is the best example, perhaps, of a new device space for Apple: the impersonal device area. The TV is (generally) not used by a single person, either at a given time or over time. TV’s are a one to many device, and generally relatively immobile. We go to the TV to watch it, and it is (often) a very social experience. And, increasingly, we watch while fooling with our phones, laptops, or tablets, too.
The TV market could be Apple’s foray into the other side of future computing: one-to-many and many-to-many user experience. Today, this is all based on dumb TV’s: they don’t know who is watching them, they don’t know who is managing the stream of bits coming in their inputs, and they don’t know about other devices in the room.
A next generation, smart TV system — as Apple would concoct it — might operate like this:
- A wonderfully designed ‘iTV’ which supports wireless and wired connectivity to an internet pipe in the home. This would be based on some future version of iOS, and the screen would be directly touch sensitive, as well as controllable via mobile devices as well.
- iTunes for TV programming, where Apple acts as the market maker, collecting fees for one-off and subscription arrangements between media companies and individuals.
- App Store for the iTV, with a wide variety of TV-related apps. For example, TV production could include capabilities for social connection. Imagine a NCAA basketball tournament series that directly supports users’ bracket predictions that can be shared with friends, or integrated advertising that could be based on who is actually watching a show.
- Integration with other devices in the room could allow much more than just controlling what’s showing.
- Social applications could be integrated in obvious ways, so we could invite friends or followers to watch shows with us, and comment in real time about what we are seeing. Imagine watching a basketball game ‘with’ Charles Barkley, or a movie with Roger Ebert, or a visit to Davos with Paul Krugman.
So, I am imaging a new operating platform by Apple that treats TV’s as immobile, impersonal devices, and which supports interaction with mobile devices. This is an obvious move for Apple to make. Someone has to catalyze a revolution in the TV world, and Apple is the best bet to do it.
Yes, this blows up the current marketplace for internet connection, cable services, and networks. The people bringing a pipe to your door would be just that: dumb pipe. The cable companies would be cut out, because all content would be streaming through the web to the iTV and other smart TV’s (although we’d probably have a transitional era where specialized apps might be needed to emulate set-top boxes), and an open marketplace for TV shows would exist so users would be able to see nearly any show… for a price.
Don’t get me wrong: the established giants will resist this, but everyone else would be happy.