Apple Should Have Bought Time Warner When it Had the Chance

| Editorial

It's a challenge, from the outside, to figure out just what Apple wants. For example, just like the original iPhone deal with AT&T, Apple appears to want to leverage off the Comcast network and then create its own relationship with the customer. AT&T benefitted from that, but Comcast, despite some unhappy customers, is not that desperate. That puts Apple back at square one.

_____________________

Apple knows how to do certain things very well. It knows how to build modern, low-power, consumer products with great industrial design. It knows how to build beautiful, intuitive user interfaces and create amazing user experiences. Often, Apple buys small, advanced technology companies for perhaps several hundred million dollars, at most, and usually much less in order to acquire great technology and talented people.

What Apple isn't so good at is buying large companies that would conflict with Apple's special culture. Also, Apple has demonstrated a reluctance to get into the business of building and managing a nation-wide communications network. Not only is it arduous, expensive and low profit in itself, but it doesn't fit well with Apple as a global supplier of consumer goods. But that was then.

What Does Apple Have to Offer?

Apple, in my opinion, would like to sell great TV hardware to customers, but it's been blocked at every turn because it isn't vertically integrated in the TV market place. Comcast, on the other hand, has all the bits and pieces. It has Cable Labs for R&D. It's building a next generation home platform called X1 "that combines a vast library of traditional TV and OnDemand programming with additional content and features." It has a vast TCP/IP communications network that's making huge strides with IPv6. If the acquisition of Time Warner is approved, the Washington Post notes:

The combined company would have 33 million cable subscribers and nearly as many broadband users, giving it enormous power in negotiations with networks over licensing fees and in determining what shows reach consumers on mobile devices, laptops and television sets.

So what does Comcast need from Apple? A company that's achieved a distinction for taking possession of the of the customer experience and turning an expensive communications infrastructure into a simple data pipe, in inglorious servitude.

Seizing Control

Back in 2011, I proposed ("The Latest Blow to Apple’s TV Venture") that one path for Apple would be to buy Time Warner, seize control of a fairly large but digestible network and install its own vision of the next generation TV experience.

Not only would Apple have been in a position to procure and then offer a wide range of TV content, but it would  have provided a vehicle for Apple to get its feet wet with and develop new home TV technology. As I recall, Robert Cringely concurred — possibly others as well. The anti-trust scrutiny would probably have been less than Comcast's offer today.

It seems to me that that acquisition by Apple would have faced severe challenges, presented grave risks, but also provided huge payoffs. Apple would have had the most advanced TV network in the U.S., and would have had customers swooning over its imaginative, advanced TV technology and legendary customer service. The rude and rough experience of operating such a network would have elevated Apple's networking, cloud, and enterprise offerings to a much higher level. But success would not have been safe and certain, and so Apple shied away.

Today, Apple is still sitting back. The Apple TV has good content, but Apple has been denied the sweeping content deals it has sought to make a next generation TV system compelling enough that tens of millions would cut the cord. (That's not happening.) As I explained in my own article linked further above, it's still a supplemental service that has, ironically, the best Netflix experience. Comcast is probably going to deny Apple the opportunity to turn it into a dumb pipe, servicing Apple's glorious ambitions with cool consumer TV goods.

Just what does Apple want? And what is Apple willing to do to get there?

Comments

aardman

Maybe they’ll just by Comcast instead after it gobbles up TWC.  Because the moment Apple acquires Time Warner then they can kiss Comcast goodbye either as a customer or partner, forever relegating whatever they hope to offer in the TV space to a regional playing field.

John Martellaro

aardman: My thesis was that Apple has had nothing so compelling to offer Comcast that Comcast would give up its customer relationships. And Comcast would still have to abide by the DOJ neutrality agreement signed during the acquisition of NBC/Universal.

aardman

Haven’t thought through the implications of the neutrality agreement, but precisely because Comcast doesn’t think it needs anything from Apple, the only way Apple can truly play in TV land now is if they buy Comcast.  Which I guess means, they never will.  At least not in the foreseeable future.  But stranger things have happened.

Chris Chiera

In general everyone loves Apple and everyone in general hates Comcast and Timewarner according to surveys. If Apple were to buy Timewarner, or Comcast, or Verizon and so on, people would end up hating Apple like they hate those companies. Because those businesses have too much room for hate. As a customer, if my cable goes out, it could be weather, it could be comcast, or could be my privately owned router, it could be my computer, it could be my dns by google, it could be countless things, but as a customer we would immediately blame Comcast, even if it wasn’t them. Apple hires smart guys and gals at it’s stores but would be much harder to hire that same talent to drive to every house in america for repairs or installs and thus people would still have poor experiences. Now I hate Comcast based on many past experiences that even had the Comcast executive office personally call and apologize but I think Apple would look just as bad if they got in that business.

On the other hand if they partner with Apple, they can provide the great interface, and anytime cable goes out it would prominently say on screen. Cable is down contact Comcast for a resolution…aka make it clear it’s comcast and then as a customer you would be able to continue to love Apple but hate Comcast. Just like you can love your phone by hate Verizon.

If anything I could see Apple buying Tesla before they buy a Comcast or a Verizon but even Tesla would be unlikely because even though regular cars kill 40 or 50k if one person dies in an Apple car people would end up feeling hatred for Apple.

If Google Fiber comes to more cities I don’t know of anyone who wouldn’t leave Comcast in a heart beat but even Google knows it’s not financially viable to create a national network. They are simply doing it to show the public was is possible so we complain to the goverment and comcast to get off their butts.

RonMacGuy

Apple needs to just launch some high-powered, low-orbit iSatellites across the USA, enable iDevices to talk to satellites instead of cell towers, and voila - instant network complete with high speed internet, voice/iMessage, and Apple TV broadcast capability.

jimstead

Apple isn’t interested in ruining their culture, nor getting involved in a heavily regulated business, never mind possible monopoly implications. Buying one of these companies would be a sure sign they have lost their way.

VUE Audiotechnik

This is wrong for so many reasons, TWC is a dumb pipe with bad customer service and as all cable companies is a government enables un regulated monopoly (cable companies used to be regulated but the same era of deregulation that created the banking crises created the modern cable company). 
Cable companies offer very expensive poor internet connectivity (making the US a lagging country in terms of internet speed and access). Their bundling of content, bait and switch marketing and extremely poor customer service make them one of the worst rated businesses that consumers deal with.
Apple does not need a network it needs content and the content companies will see the data that the new viewers do want or use cable and will be looking for new internet distribution models and Apple and other will have their day. 
The Cable companies will not have the same kind of control of TCPIP based distribution as they do of broadcast / Cable content and no none will put put with their poor service and practices.

webjprgm

I agree with @VUE Audiotechnik’s view, except that part of the premise of this article is that Apple won’t get the content deals it needs. TimeWarner would give them those deals. There are other avenues upon which to hope, but nobody is letting Apple have it’s way like they did for music on iTunes so I’m guessing it will be a while before Apple is able to get the right content.

They definitely do not want to be a cable company.

If you could plug everything into an AppleTV (that had a million ports in all varieties) then plug the TV into that, could Apple take over the UI and present cable, iTunes, and Netflix content without any further content deals?  (My personal TV setup has everything running into my LG TV and from there to my surround-sound audio system. It seems plausible to use AppleTV as a focal point instead. This includes 2 HDMI devices and 3 RCA devices as inputs.)

Log-in to comment