Hidden Dimensions - Another Christmas Arrives, Same Old Apple TV

by
November 19th, 2008

"Leadership can be thought of as a capacity to define oneself to others in a way that clarifies and expands a vision of the future."

-- Edwin H. Friedman

Apple has been particularly aggressive in setting standards and showing leadership with the iPhone and new MacBooks. They've removed FireWire from the MacBook, to many people's alarm, moved to DisplayPort video technology, and, on the iPhone side, completely disrupted an industry that was asleep at the wheel. And yet when it comes to the digital living room, Apple has shown very little leadership.

From time to time, we've heard rumors about all kinds of neat ideas for Apple to seize the initiative in casual home theater. For example, there as the rumor about Apple selling HDTVs with a Mac inside -- a very doable task. We've heard about Apple adding DVR functionality, presumably under license from TiVo, to the Apple TV. In my own case, I've advocated keeping the low cost Apple TV, but turning the Mac mini into Apple TV Plus (or just a small Mac if preferred, as it is now).

The company that has exhibited enormous ingenuity, leadership and industrial design has been remarkably quiet during the period before the Christmas buying season and has announced that their holiday line up is complete. Even as many consumers are eyeing Blu-ray players as low as US$128.

Worse, other companies who sense a power vacuum are moving in on Apple to secure a beachhead in the digital living room. A few weeks ago, I wrote about how Netflix is moving, with hustle, to steal Apple's mind share, market share and revenues. The two Blu-ray players with Netflix access now cost about $310.

At Sea, Adrift

There's no doubt that Apple is a successful and wealthy company right now. Large companies typically have large ambitions. And yet, Apple's Steve Jobs continues to refer to the Apple TV as a hobby. The phrase may have seemed cute the first time he said it, but the word hobby has slowly taken on new meaning as something that Apple just doesn't know how to do very well, and yet we wonder why they keep doing it.

Is Apple waiting for a technology to develop? Is Apple shackled by some hidden agreement or contract that inhibits their ability to compete? For example, does the contract with movie studios to deliver SD and HD streaming content prohibit Apple from adding a DVR or other technologies to the Apple TV? Or worse, is Hollywood toying with Apple, stringing them along with SD movies for sale and only HD streaming? If so, is Apple so confident in Mr. Jobs' negotiating skills that they're willing to let the current Apple TV technology linger while competitors enjoy the freedom to innovate and compete?

In the Macintosh world, Apple jealously preserves for itself degrees of freedom so that it can compete with PCs. We have heard from Mr. Jobs that there are some markets Apple just won't delve into. Nevertheless, in general, Apple is the company that innovates and Microsoft is the company that follows.

When it comes to the Apple TV, however, Apple seems remarkably content to drift, and customers who have come to expect the very best from Apple, a highly competitive company, are left wondering why they are treated as second-class Apple citizens.

For example, the fixation on the simple remote control, which seemed cool at first, has hobbled the growth of the Apple TV. One can imagine that the next step might be the addition of a wireless, virtual keyboard that can be projected on the coffee table enabling full Internet access.

It's not that many hundreds of thousands of users don't like their Apple TV. I like mine. Rather, the issue is why Apple, with all its talent, won't take up the challenge for its own customers to take the next step.

Box Fatigue

The biggest challenge faced by consumers is the so-called "box fatigue." Every company wants to sell us a box, but space under the HDTV as well as consumer patience with setup and configuration is limited. Think about all the HDTV commercials that don't even show speakers -- just a beautiful 46-inch LCD hanging on the wall. That tells us something about vendor fear of the implicit HDTV complexity.

We have Blu-ray players, A/V receivers, the satellite or cable set-top box, an Apple TV, a Roku box for Netflix. And now Blockbuster is talking about their own box. It's crazy.

All we really need is one box that's connected to the Internet and a way to select content. The idea that customers would be confused by the "whole" Internet (or that there's too much porn on the Internet to allow a connection to the family Plasma TV) fall into a class of technical challenges that can be solved with imagination and engineering, not censorship or design laziness. After all, we have Parental Controls in Mac OS X and the Apple TV runs a version of Mac OS X. Also, tens of millions of Apple customers are accustomed to a keyboard; let's not underestimate them.

Next, Apple, unlike the cable and satellite companies, has the knack of making money on hardware. It makes sense, in my opinion, for Apple to create the world's coolest Apple TV, the only hardware box anyone will ever need, and let any company engage customers without actually having to design and deliver their own hardware.

So if you want to watch Blockbuster movies, you sign up with Blockbuster, and they enable their software on your Apple TV Plus, in the style of the iPhone App Store. If the customers want to work with no one at all, they just use Apple's fabulous (yet to be delivered) virtual keyboard interface to fire up Safari and access hulu.com.

Apple likes to control the user experience, and that's vital on the iPhone. But can anyone claim that the on screen user interface on the current Apple TV is so incredibly beautiful and sacred that it must not be marred at all costs? Can anyone claim that an Apple TV, based on Mac OS X, would be any more vulnerable to the Internet bad guys that its cousin, an iMac in the nearby Den? Can anyone claim that adding a keyboard, albeit the world's coolest, would destroy the user experience?

Throttled by the Boss

So long as Steve Jobs has labelled the Apple TV a hobby, no one at Apple is going to stick his or her neck out and rock that boat. The product just sits there in the Apple retail stores, lingering as a hobby for the consumer as well, taking up one of the TV's (or receiver's) HDMI slots, causing sync headaches for a few, and not delivering much in the way of HD content for sale. Meanwhile, Mr. Jobs keeps believing that Hollywood will someday let him sell feature length movies in High Definition.

It's not like Steve Jobs to be satisfied with second best. It's not like him to miss a business opportunity in a relevant market that's ripe for disruption. It's not like Apple to go for months, whole quarters, without security or feature updates to its products.

In my opinion, what would be cool is for Apple to rethink the Apple TV. Release the constraints of the simple remote and move on, unconstrained by Hollywood's contracts. An Apple TV Plus with a virtual keyboard, unlimited access to the Internet and all its video sources, and a built-in DVR (for SD content only) might be the tipping point such that we would only need two boxes connected to our HDTV for all time: a Blu-ray player and an Apple TV Plus plus with its associated App Store. Everyone else's hardware (thank goodness) would be squeezed out. Eventually, a more successful Apple TV would open doors to Apple selling HD movies for those who prefer that.

Like a teenager on drugs, a Macintosh connected to a HDTV is a terrible thing to waste.

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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