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The Future of Apple TV

It has been a little over a week since launching my first book, “Take Control of Apple TV,” and the response has been tremendously gratifying, with sales just cracking the 1,000 mark. Federico Viticci of MacStories called it “a must-have for Apple TV owners interested in knowing everything about it, and well worth $10.” Bradley Chambers of Chambers Daily and the Out of School podcast, said, “It’s written in such a way that you don’t have to be an Apple nerd to understand
what he is talking about.”

I was also invited onto a bunch of podcasts to talk about the book. Thanks to Chuck Joiner of MacVoices, Gene Steinberg of The Tech Night Owl, Benjamin Alexander of Pulling the String, Zac Cichy of The Menu Bar (warning: explicit), and Kelly Guimont and Benjamin J. Roethig of the TUAW Talkcast for having me on their shows to
chat about the Apple TV.

One thing that I was asked about on each show was what I think the next Apple TV, rumored to be announced this spring, will look like, so I’d like to address that here. I touched on the topic in “FunBITS: Why Apple May Win the Gaming Market,” (4 October 2013), but I’d like to expand upon what I wrote there.

Much of the rumor mill surrounding the Apple TV revolves around Steve Jobs telling Walter Isaacson that he had “cracked” TV. But remember, a key fact is that Steve Jobs lied. Intentionally. A lot. Among other things, Jobs claimed at various times that no one wanted video on an iPod, that people didn’t read anymore, that Apple wasn’t working on a tablet, and that Apple wouldn’t do well in the cell phone business. Would Steve Jobs tell his biographer something juicy just to send competitors into hysterics? You better believe he would.

The Future of Apple TV — First off, I don’t think a fourth-generation Apple TV would look radically different from what we have today. I see no advantage to Apple offering a full-blown TV set. Remember, Tim Cook is a supply chain guy; he doesn’t want larger products if he can help it. Smaller products mean more can be crammed onto ships, planes, trucks, and in the back of Apple Stores. Apple’s chief problem is supply constraints; the last thing it wants to do is exacerbate that. Worse, TV sets need to come in a variety of sizes to accommodate different viewing distances, and it’s hard to imagine Apple being interested in stocking three to five different set

If anything, the new Apple TV might be smaller, though I doubt it, as Apple now uses the same casing for both the Apple TV and AirPort Express. That’s a production efficiency that’s hard to give up.

Nor do I think Apple will partner with TV manufacturers like Roku has done. It’s not in Apple’s DNA to partner with hardware makers on major initiatives, and it has never worked well for Apple in the past.

So what will we certainly see? I think an A7 processor is a given, likely along with an iOS 7-style design refresh. It’d also be hard to imagine a new Apple TV without 802.11ac Wi-Fi. Since Apple introduced the third-generation model chiefly to add 1080p support, I think 4K support is also likely, especially given reports that Apple is building its own content delivery network (CDN). Apple could get a big jump on the upcoming 4K market by being one of the first to offer 4K streaming content.

Apple might also enter into partnerships with cable providers that would enable you to use your Apple TV to replace your cable box, streaming live content through an Apple TV app that would also provide program listings. Don’t expect to see a clunky coaxial connector in the next Apple TV, but rather an arrangement similar to what Microsoft has with Time Warner to use the Xbox as a streaming cable box. Doing so doesn’t count against bandwidth caps, and I could see Apple making similar arrangements, which might also help explain why it’s building a content
delivery network.

Another possibility, and one I’d like to see, is support for Bluetooth audio devices. You can already AirPlay audio out of an Apple TV, but if you want to use wireless headphones, you’re out of luck (I offer a rather clumsy workaround in the book). Given Apple’s push for its own proprietary AirPlay standard, I can see why the company is hesitant to support Bluetooth audio, but at the same time, it’s also an accessibility issue. What about those who rely on Bluetooth-enabled hearing aids?

Apple could also add support for Bluetooth game controllers, a recent addition to iOS 7 and OS X 10.9 Mavericks. But the only reason to do that would be for gaming support, which would mean an Apple TV-specific App Store. I’m hesitant to predict that, since it’s been rumored since the second-generation Apple TV.

Why has Apple dragged its feet on an App Store for the Apple TV? One reason is personnel. Just as on iOS, Apple will want to approve each app, and that’s not an insignificant investment. Another is storage. The Apple TV has only 8 GB of flash storage, mostly used for buffering streaming content. An App Store-enabled Apple TV would need at least 16 GB — 8 GB for buffering and another 8 GB for user storage — and more might be necessary given the size of some modern games. A third problem is that Apple, unlike Roku, offers its own content store. Would Apple be willing to allow an Amazon Video app on the Apple TV, offering access to a competing content store?

Another rumor is that Apple will combine the Apple TV and AirPort Express into a single product. On the surface, this makes sense, as they use the same casing. But if it were your business, would you want to combine two inexpensive products and charge half the combined price? I wouldn’t. But as a customer, I’d scoop one up.

People like to speculate on Siri being used with the Apple TV, but I can’t see it, for two reasons. First, Siri just isn’t sufficiently reliable to be a primary interface. Second, the Apple TV interface is extremely physical, with most interactions being repetitive button presses. It’s also hierarchical, with content often duplicated in multiple apps, which could lead to clumsy interactions for anything beyond the simplest commands. Perhaps Apple could use Siri to cut through the interface, but I think it’s a long shot.

So there you have it. I doubt we’ll see anything mind-blowing in the next generation of Apple TV, but Apple loves to introduce products that people laugh at, only to dominate the market a short while later. People mocked the Mac, the iPhone, and the iPad, but who’s laughing now? Tim Cook, all the way to the bank.

The Apple TV Business — It’s important to bear in mind, whenever you read rumors or speculation about Apple, that Apple is a hardware business at its core. Apple isn’t about software, online services, or even changing the world, it’s in the hardware business. Much as they may generate non-trivial revenues, the App Store, iTunes, and iCloud all exist to add value to and create platform lock-in for the hardware devices where Apple makes its real money.

At $99, the Apple TV, in Apple’s eyes, isn’t yet a platform, but merely an accessory that adds value to the company’s real breadwinners: the iPhone, iPad, and Mac. Apple doesn’t make enough money on the Apple TV to invest the sort of resources into it that the company puts into mobile devices.

How could that change? The answer is cable deals, which could propel Apple TV sales volumes into a “real” business.

The genius of Apple’s iPhone business is that it has two customers: you, the owner of the phone, and the carriers. Apple markets to individuals, who then largely go to the carriers to purchase. The carriers buy iPhones at full cost, sell them to you for cheap, and make up the difference with expensive service plans. By selling through the carriers, Apple increases the retail footprint and penetration of the iPhone in a big way.

What if Apple did the same with the cable companies? Cable box interfaces are notoriously awful, and if Apple offered a significantly better way to access TV programming, subscribers might demand it. The cable companies could then make a deal with Apple to distribute the Apple TV, giving them to customers for free, or for a low monthly rental fee.

Once there was sufficient penetration, Apple could then add an Apple TV App Store, creating a situation where every Apple TV user is potentially an Apple customer as well. The cable companies would continue to own the pipes and offer the programming, but Apple would control the interface on top of everything, and that’s where the true power lies.

Of course, this is wild speculation (and the cable companies are undoubtedly wary of such a move by Apple), but if I worked for Apple and wanted to turn the Apple TV into a real business, it’s the angle I’d take. Because isn’t this what Apple does best? Identify a market with room for technical and interface improvement, build a better solution, and then take over.

Regardless, don’t put too much stock in these imaginings, and enjoy your Apple TV for what it can do today. Nor should you worry about your Apple TV becoming outdated quickly. My second-generation Apple TV still gets all the latest software updates, and I expect it will for the foreseeable future. And if you need help making the most of its current features, grab a copy of “Take Control of Apple TV!”

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