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January 19th, 2007
"My experience has been that creating a compelling new technology is so much harder than you think it will be that you're almost dead when you get to the other shore."
-- Steve Jobs
There is a strong sense in the industry that the Apple iPhone will become a wild success. The most insightful article I've read on the matter comes from Time Magazine -- "Apple's New Calling: The iPhone." In the final paragraph of the article, Time quotes Jonathan Ive and provides one of the most profound and insightful conclusions about Apple that I've seen since Macworld.
When our tools don't work, we tend to blame ourselves, for being too stupid or not reading the manual or having too-fat fingers. "I think there's almost a belligerence -- people are frustrated with their manufactured environment," says Ive. "We tend to assume the problem is with us, and not with the products we're trying to use." In other words, when our tools are broken, we feel broken. And when somebody fixes one, we feel a tiny bit more whole.
And that, in a nutshell, is how the Apple TV will shatter the best hopes of Comcast, Time Warner, DIRECTV, and Dish Network, to name a few. To be sure, they'll all still be around in five years, but they will never achieve the growth and dominance they seek.
Allow me to explain.
The HDTV Industry In Denial
The HDTV industry in this country has some serious problems, problems that are similar to the mobile phone industry. Namely, some basic human needs have become both subverted and overwhelmed by technological greed and meddling.
In the case of mobile phones, the simple human need to communicate with another person has been turned into what amounts to, to put it politely, testosterone poisoned executives whose intention is to nickel and dime Americans to death. Each customer is a revenue stream to be entangled in an ever increasing need to push buttons. Perhaps text messaging your vote during an NFL game is the ultimate example of that kind of titillation, but the end result is a system that's broken. The iPhone will succeed, to everyone's eternal amazement, because it fixes something that's dramatically broken.
The iPhone will make us feel more whole.
Similarly, in the case of HDTV, we have many symptoms of a movie and TV industry that is going to get a lot more broken before it gets whole again. Here are just a few examples.
- Dish Network partners with Lionsgate films. Fragmentation.
- DIRECTV wants to become your Apple TV substitute. Fear of Internet TV.
- Disney has struck a side deal with Comcast. Covering their bets.
- HD DVD may get the jump on Blu-ray because the adult film industry is embracing HD DVD. Sony is clueless.
- Motorola hopes to do for home TV what Apple did for the mobile phone. Hope is not a strategy.
- Netflix wants to deliver movies directly to your Web Browser. Fear of Internet TV -- and Blockbuster.
In other words, all the players are in a panic, everyone is circling the wagons, everyone wants to strike a deal that secures their position no matter what. No one has a vision, and if they did, they couldn't execute it because of the scratch-your-eyes-out competition.
Let's look at just a few of the problems Apple can address.
The cutoff date for analog TV transmissions in the U.S. is February 17th, 2009, a mere 24 months away. Yet the vast majority of consumers are still having a hard time understanding High Definition TV. I asked a salesman at a Best Buy store in Denver how much training they get on HDTV before they hit the floor. The answer: "Zero. Get out there and sell!" The general technical confusion, retail indifference, and carrier dirty tricks, in turn, demoralizes customers about the prospects for a happy experience in the management of their video library and viewing experience. If you doubt that, reflect on the Sears experience selling iMacs a few years ago.
Apple can't solve most of the industry's problems, but they can deliver on an easy-to-use system managed by Apple in all phases from purchasing through delivery to archiving and display. Apple can help their customers enjoy the content instead of struggling to deal with the pandemic in the industry. Customers are frustrated over their options, the quality of the equipment, and constraints that don't serve their needs. The biggest problems Apple can bypass are:
- Both the software and the hardware of set top boxes that include a DVR, from any carrier, are widely criticized as crappy. The Ethernet ports, if they exist, are crippled (for now). And if you buy an external, high quality TiVo-like DVR, you're locked out of the integrated pre-program mode from the carrier's channel guide. So says Walt Mossberg.
- The HD DVD, Blu-ray war has customers thinking about...neither. Combo players are maybe a year away and will be grotesquely expensive. Hard disks are cheap and can be backed up. As I understand it, if you scratch your Blu-ray disc, the industry wants you to buy a new one.
- So far, the quality of the HD players and media have been generally unspectacular. So says Widescreen Review Magazine. HD discs are priced unrealistically.
- Lots of vendors would have you pay for and watch TV and movies on your computer, but most customers want to watch them in the living room on a big screen.
So where are we? Selecting an HDTV is hard, but the prospect of selecting a carrier and being subjected to their peculiar rules and constraints fills the bucket of frustration. Content providers abuse their customers with excessive DRM and the carriers mass produce the cheapest set-top DVRs for mass consumption possible. There's no funding or vision for something like Apple TV's software. Exclusive industry agreements make getting all the things you want impossible. You can't get the content you want on the display device you want, when you want it. Does that sound like a broken system? It does to me.
If It's Broken, Apple Will Fix It
Right now, all the attention is on the iPhone because mobile phones are so badly broken, and they're so tightly wired into our lives. So that's where the biggest pain is right now. But after Apple fixes the mobile phone industry, the HDTV industry is next on their agenda.
There is no such thing as infinite choice. The movie and TV (and Internet video) industries are going down a rabbit hole of undisciplined and extravagant choice. Each company who is a player has intentions of dominating a niche and establishing themselves in the market. Each player has visions of glory, but only a few will succeed because that's the way customers are. They tend to preferentially chose and that simplifies the market. And when the customers don't do it, mergers designed to eliminate irritating competition help things along.
The Macintosh, the iPod, and the iPhone form a coherent ecosystem. That ecosystem is stable and has a vision. As Jonathan Ive said of the iPhone, it fixes your problems and makes you whole. Apple will provide choice with coherence, DRM with grace, and content management that's a joy instead of a nightmare. And they'll do it with Mac OS X, AirPort, and Apple TV.
There is no doubt in my mind that I would rather have a Mac Pro with a terabyte of storage under my desk with a consumer class 2 TB external RAID 5 (they're coming) as my ultimate high-quality DVR. I'd rather transmit this content to an Apple TV, well engineered to drive my HDTV than be subjected to the lowest bidder, lowest common denominator, el cheapo set-top DVR that comes from the rusted racks in the Comcast warehouse. Or pay DIRECTV $300 for one and find out later, Oops!, if I want a great new feature, I have to buy a new one.
There is also no doubt in my mind that the collective minds of all the content providers and carriers will never be able to build a reliable content management system that is a joy to use. Intel Macs, Mac OS X and iTunes are better systems for managing personal video content than any software that's going to appear on a set-top box. Period. Without Apple, the HDTV customer in 2007 will be relegated to selecting the least of many evils, and they won't be very happy about their choices.
Apple TV is just the first of many products in that line. Like the iPod, it will get off to a slow start. There will be endless competing products and services that appear as if they'll relegate Apple TV to obscurity. Pundits will predict that Apple will never get a toehold in the industry. But in a few years, when the dust settles, the HDTV and video experience will greatly benefit from Apple's fix-the-problem skills in the same way they fixed the personal computer, its OS, the MP3 player, and the mobile phone.
The TV and movie delivery system in this country is now fragmented, fundamentally broken, and all too self-serving. I'm going to go with the company that makes me feel whole again. So will you. So will millions of others.
John Martellaro is a senior scientist and author. A former U.S. Air Force officer,he has worked for NASA, White Sands Missile Range, Lockheed Martin Astronautics, the Oak Ridge National Laboratory and Apple Computer. During his five years at Apple, he worked as a Senior Marketing Manager for science and technology, Federal Account Executive, and High Performance Computing Manager. His interests include alpine skiing, SciFi, astronomy, and Perl. John lives in Denver, Colorado.
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Observer Comments
Fri Jan 19, 2007 6:22 pm Subject: Not the movie industry's iPod
QuoteGuest wrote:
... but I love what Apple has done with Apple TV - and I want one. But there is one issue that concerns me - it's QuickTime only (from what I've heard).
Worse: it is mp4-only. After all, QuickTime can read Divx and flash videos and all sorts of formats with the help of free plugins like Perian.
There are a few big problems with the AppleTV. The main ones are:
1. Poor format support. Why not let me simply stream video from my computer, so that anything I can play on my computer I can also play on my TV? 802.11n has the bandwidth necessary for this.
2. Poor output. AppleTV only supports 720p. That's a lot better than DVD-resolution, but it's not the max. People moving to HD want real HD, and that's 1080p (or at least 1080i).
3. Lack of selection. You're stuck playing iTunes downloads or other videos encoded as mp4. It won't play nice with your current library of DVDs.
These three factors make the AppleTV at best an addition to your current media delivery methods, and in no way a replacement. This is in great contrast to the iPod, which made portable CD players spectacularly obsolete.
I do agree that the AppleTV is the first in the line. There may one day be an AppleTV that is a hugely successful, market-changing device — but that AppleTV will be very different from today's. Today's AppleTV does nothing but try to tie people to iTunes, which is basically what every other media delivery company does (and what this article berates them for). Apple is not the savior of the industry people make it out to be. It's just another player adding to confusion.
Remember, the iPod worked with what you already had (CDs). It tied everything together. That's what made it great. The AppleTV doesn't tie anything together. It tells you "screw your current media (e.g., DVDs) and buy the same content again from us!"
With the prevalence of DRM, there's only so much Apple — or any company — can do here. Even DVDs have DRM, and while it's trivial to circumvent, it's still illegal, so no company can officially support it. That's the big difference between video and music. I can rip my CDs legally. iTunes makes it easy. Apple can't even try to do the same for video.
QuoteGuest wrote:
This may not settle well with the film and television industry but it will - in time. It did for the music industry.
There's your reason. The problem is that music sharing had become widespread BEFORE MP3 players become big. The music industry was trying to woo people into buying online music and they had to draw them AWAY from stealing to do so. So they knew that MP3 players had to play all the stolen music if anyone was going to buy them. Once they had an iPod they could start trying to sell online music, but they had to let them play their stolen stuff or they wouldn't have sold.
No one in the industry would ever admit that, but it had to be a factor.
The movie industry got a head-start, however, because of the larger sizes of movies. They had more time to plan.
Yes, people steal movies online but not nearly as many as music. The movie industry doens't HAVE to cater to them like the music people did with the iPod.
So they can tell Apple to make sure Apple-TV is locked down like they want or they'll pull their music off the iTunes store.
And Apple has to listen. It's legal in the U.S. to rip a CD to your iPod. It is NOT LEGAL to rip a DVD. So Apple has that leverage with the music industry...if the music labels get uppity Apple can just close the iTunes tore and tell people to just buy CDs and put them on their iPod. They'll still sell iPods.
But with movies they HAVE to have them on the iTunes store if they want to stream stuff to Apple-TV. The movie studios have much more leverage because of this.
QuoteMikuro wrote:
2. Poor output. AppleTV only supports 720p. That's a lot better than DVD-resolution, but it's not the max. People moving to HD want real HD, and that's 1080p (or at least 1080i).
lol - "Real HD?"
Why's that? Because there's something else better out there?
You do know that 1080p isn't nearly the max quality out there for motion pictures, right? I guess that makes it "Fake HD" too, huh?
LOL. I'm going to stop subscribing to evil cable so that I can get my content from where now? I missed that little detail. Where are my TV shows going to actually be coming from? Am I and "millions of others" going to be paying $2 to the iTS for each episode of a show we want to watch? So what is it comes over IP instead of cable. There has to be some huge company somewhere actually making all of this content available.
I like the interesting mix in the article though. The whole "fight the evil wealthy corporations" thing but then talking about how you'd gladly spend $4k on a computer just to act as a DVR. I definitely see myself and millions of others doing that! Fight the power!
QuoteSmall White Car wrote:
lol - "Real HD?"
Why's that? Because there's something else better out there?
Yes, obviously. I'm surprised Apple doesn't want to offer the best that's out there.
Quote720P is has the same resolution as 1080i - this may not seem to be true but it is - interlace kills the vertical resolution in the image and reduces it by .7 and is therefor no better than 720p - Interlace SUCKS.
I agree, interlacing sucks. But 1080i is higher resolution than 720p. Lower vertical resolution, but higher overall (1920x1080/2 > 1280x720). The only reason I think anyone would consider 1080i is that many HDTVs use interlaced displays. 1080p is the best there is and the best there will be for quite some time.
Do people need it? Of course not. But then, people don't "need" HD at all. They don't need TV and movies at all. This is a luxury market, so needs are irrelevent. Again, people want the best there is. That's the driving force behind HD. And it's because so few companies are delivering that in a simple way that HD will probably not catch on until it's forced on everyone.
I have no doubt that the next version of the AppleTV will support 1080p. 720 is temporary, just like 320x240 was temporary for the iPod (and people said the same thing about that that they say about 720p now). But as it stands now, it is what it is, and it's not impressive. Right now, it'll only sell to Apple fanatics one way or another (for the three reasons I described). Since those are also the people who will probably be willing to buy version 2 or 3, too, I don't think it's a bad strategy for Apple, business-wise. But that doesn't make the product, as it is, any more impressive.
Sat Jan 20, 2007 12:18 am Subject: I felt good reading the empassioned and exceptionally though
I don't think anyone has mentioned it, but the MP4 limitation of AppleTV is not exactly a limitation of the device, but a limitation of iTunes. I can play all sorts of movie files on my Mac, but if I drag any of them to iTunes to be categorized, they need to be either Quicktime Movies or MPEG4 movies. Since Apple is using iTunes to organize things at the computer end for streaming and management, there's your main limitation. Whether the AppleTV COULD play another filetype should it get there, I don't know, but iTunes isn't going to put it there.
One could convert all their media to MP4. Probably not exactly something you want to do a lot or you'd want done in the background or overnight. Sounds like a good opening for an application developer: a tool that converts video files from a drop folder to MP4 and puts the files into iTunes or onto the AppleTV for watching while you're off sleeping or at work or whatever. 
Mu Airport Express blew out a few months ago. I'd buy an AppleTV to be able to stream my music and Internet Radio once more and give me the chance to play around with the video, too. Improvements will definitely come as the market hammers out its issues.
Sat Jan 20, 2007 3:37 pm Subject: Missing the big picture
I think a lot of people are missing the big picture. The AppleTV is not an either/or option. No one is saying that if you use an AppleTV, you must abandon DVD's or broadcast or anything else. The AppleTV adds something new to the mix -- the ability to stream your computer-bound content to your big screen, nothing more. If I rent a DVD from Blockbuster or NetFlix I can still play those if I have an AppleTV wired in; but if I happen to purchase a TV episode from iTS (which I can't do from a cable company), I can watch that too. Why do people always assume that the selection of one component eliminates all the others?
Sat Jan 20, 2007 8:32 pm Subject: Steve Jobs and Time
Your comments are shortsighted. The article looks to the future, as Apple is doing. Content of Demand (COD) is the future, and Apple is trying to get their ducks in order early. Note the development of the iPod, Apple TV is moving in the same shoes. Start slow, develop the market.
1018 i or p will come, so will other codecs. They DID put an HDMI port on it, didn't they? That's hardware, soft- and firm- ware will change other aspects of it's performance too.
In the meantime it really IS a way to begin to pull customers inti the ITS for content. Some news providers are beginning to put video podcasts on the ITS for subscribing by customers, and the number of other video content is skyrocketing.
It won't take too much more time before people can dump cable and just buy it as they watch it.
Content on Demand - look for it.