Apple Will End the War of the TV Set-top Boxes

| Editorial

Black boxes for delivering video content are flooding the market, and, as fast as they appear, they're updated with new designs. Is it just a phase the industry is going through? Where is this all leading? More importantly, how can Apple differentiate itself?


At first, Google tried Google TV. The Kevin Bacon ads, as he sat with a keyboard, were so bad, we just knew the product would fail. And it did. Then came the Google Chromecast, a definite improvement. But now, it seems, Google isn't satisfied with Chromecast, and now we have rumors of "Android TV." It sounds like the "Let's see what sticks" department.

Meanwhile there have been millions of words written about the rumored next generation Apple TV project, many of which have been my own.

The feeling I'm getting from all this is that most of the tech giants don't really know where all this is going, and so they're inching along, blind, guided by just a few basic principles.

  • Keep developing Internet TV technology with custom content and advances in hardware until that "magic moment" happens, the mythical trigger point, the "Aha" moment when the solution captures the viewers in a powerful way. Perhaps we'll know it when we see it. Perhaps it's apps and games. Perhaps it's family FaceTime on the big screen. Perhaps it's something not yet conceived. The first one there wins. Maybe.
  • Along the way, develop improved, metrics of what people are watching and the products they want so that indirect advertising in other related channels becomes more effective. Win-win.

I see all these black boxes as a temporary phase the industry is going through. When there is no real vision for a larger solution, then the obvious course is to do what everyone else is doing and, along the way, hope that a happy combination of content and technology will provide the winning solution.

Nice for now, but not the Future of TV

What About the Customers?

Customers don't see it that way. First, it's long been known that TV viewers don't like lots of black boxes connected to their TVs. Going directly through the TV's HDMI ports, in general, creates technical problems with Dolby sound and it introduces the well-known TV bogeyman: Which device am I watching? How do I change to another device? What is the set of content on this device? Which device do I use to get to a specific program? Have I been seduced into paying too much for redundant content?

That bogeyman, in turn, leads customers to pick just one horse on a trial basis. Perhaps it's the one that has the content they're familiar with. Perhaps it's the one that's easiest to use. (As Google found out with Google TV's failure.) Perhaps it's loyalty to one company: Amazon and Fire TV, Apple and iOS or Google and Android. It seems a shame to be so constrained, doesn't it?

Uncertainty about being able to get all the content customers want and fear of losing their connection to live sports, still the ace on the hole for cable and satellite, has so far led to these little black boxes being a supplemental experience -- not a complete substitute.

Cord cutting, despite the hype, remains a very isolated "1 percent" phenomenon, as Philip Swann at TV Predictions has pointed out on many occasions.

As a result, I see these efforts as an attempt to appeal to a technical minority with the desperate hope that the technology will trickle down to the masses. That's not a good bet. We know that because of Apple's history.  For example, the iPod wasn't a trickle down technology.  It was an instant cutural phenomenon.

The Big Picture

Exactly none of the current efforts are designed to address the pain points of consumers. Dazzling them with smaller and smaller, ever changing devices is a dead end. Offering special, original content makes for dazzling promotions, but it leaves the viewer with the uncomfortable feeling that if they embrace the new, they'll have to give up the accustomed. There is pain with too much choice.

In addition, the current efforts have been on the hardware performance (but not its physical form) and the content. Very little work has been done in improving the actual viewing experience, both with the hardware and software. That's the magical, indescribable, technical unknown of our time. That is, what are the true viewer pain points now and where do we want to get to in the future?

One way for Apple to proceed is to think deeply about the viewing experience and make all the little black boxes irrelevant. I doubt that Apple's ultimate goal is to build just another next generation Apple TV, undistinguished and indistinguishable from the competitors. By fundamentally improving the experience, the details of content and the spec war of the little black boxes goes away. The situation reminds me of the transition from DOS to the Mac's mouse and GUI in 1984. Or the sea change in how we got on the Internet with the early iMac in 1998.

I have always maintained that in order for Apple to fundamentally improve TV viewing, it has to control the entire experience. That probably means making the whole widget: the on-screen experience, the display hardware, the electronics and the user control interface. Everything.  Just like the iMac commercial above.

We don't shop for modems anymore. There's no market for those little boxes that got smaller and faster. The experience was rolled into the innards of our Macs. And so this is the challenge for Apple. Make all those little black boxes irrelevant and change the world.


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Very well put. I really thought we would see the beginnings of this last year. It probably is still a content issue holding things up. The traditional providers are slow to capitulate their control.


I have always maintained that in order for Apple to fundamentally improve TV viewing, it has to control the entire experience. That probably means making the whole widget: the on-screen experience, the display hardware, the electronics and the user control interface. Everything.  Just like the iMac commercial above.

You left out the biggest thing though: content. Apple cam make the best widget in the world but if it’s still beholden to the local cable company or you can get these channels and shows but not those, then it’s still a non starter. Even worse the producers of film and tv saw how Apple grew to control the music business, and want no part of that. Even if they would make more money, the majority of studios, producers, networks, and talent won’t give up their little bit of control. Sure you can subscribe to some channels through AppleTV but not a lot of other ones and you’re still limited to if your local cable provider handles that channel. Until that fundamental issue is resolved I don’t see an AppleTV device being much more dominant than any of the others.

Christopher Pelham

I think the mantra that Apple controls the music industry through iTunes is really overstated. Apple has some control, to be sure, but it has resulted in tremendously more income for the record companies and as well as in consumer satisfaction. And Apple makes a very tiny profit percentage wise from the sales. Their bigger profit is from eco system boost. And even so, since they removed the DRM, people are not really locked in. Overall, it was a big WIN for the music industry. If Apple or another company can provide consumers a much better experience for TV/video, I’m sure it will also be a WIN for video content makers. It’s really apples (no pun intended) and oranges though because the problem before was that consumers wanted to switch from physical media and stores to digital media and purchases, whereas with video, the video is already digital, it’s just that it’s hard to get it all a la carte and it’s hard/impossible to search and find where a show is available across most/all services. Cable companies and networks are more like CD stores than record labels. They should die/morph into just be data pipes, rather than being bundlers of subsets of data. And they don’t want to die. A unified a la carte video access system will be a WIN for video makers but not for networks and cable companies in their current form. We’ll still need cable companies though until wi fi can handle higher speeds and near unlimited data consumption. so they can still make money for awhile….

Rob Williams

Good one, more articles like this please.

John Martellaro

geoduck: I didn’t discuss content because 1) Content comes and goes,  2) no tech company can win a content war thanks to equipartitioning by the content holders, 3) Apple has shown no interest in vertically integrating into content ownership. 

Apple didn’t buy a modem company to build the original iMac. It didn’t buy any ISPs.  (But Apple did invest $200M in Earthlink in 2000.)  In the end, Apple improved the Internet experience of existing content.

That’s why fighting a specs war with future generations of black boxes and trying to obtain game-changing content is a losing proposition— in my opinion.


Apple has a concept of the TV control mechanism implemented through “Apple TV” that requires technology not yet generally available.  I think that is the reason we haven’t seen anything new.  The product will be released when they can implement the vision they have.  That is what Steve Jobs did when he designed the iPod: not from the music player perspective, but from the user perspective.  And I think he released the iPod when he could make it do what he wanted it to.  I am hopeful that the recent purchase of those TV’s indicates Apple is testing on large screen TVs - that was my first thought when I heard the news - and that a product is close.

Larry Rice

Excellent article.  I think it’s worth pointing out, though, that the “pain points” for most consumers aren’t directly content-related.  I see two, every day:

1. The user interface for most set-top (cable & satellite) boxes is horrendous.  Balky, slow, and cumbersome to use.  AppleTV’s UI is marginally better, mostly because you can connect a real keyboard via bluetooth.

2. The components of the entertainment system don’t interact, and aren’t integrated.  The TV, set-top box, streaming box, DVD/Bluray player, gaming console, and audio system all require different (horribly designed) remotes. “Universal” remotes aren’t.  The set-top box doesn’t know if the TV is powered on.  The TV doesn’t know if the audio amplifier is controlling the volume.  The DVD player doesn’t know if the TV is set to it’s HDMI input. Why is there not a single control protocol for all these devices that lets them interact in a rational way?  Why does my 80-year old mother (or anyone!) have to use five or six remotes to control an entertainment system? </rant>

If you ask most people what they hate about their TV/entertainment setup, I’d be willing to bet that these are the two biggest points of pain.  Can Apple solve this problem?  It seems insurmountable, given the thousands of pieces of legacy equipment that need to be integrated.  We’ll see.

Glenn Miller

I hope Apple comes up with something amazing in a new iteration, but so far I see them far behind the pack with Roku probably being in the lead in terms of user experience and Google setting the price point or at least challenging it. Seems to be that the only thing Apple TV has going for it presently is Airplay and that is the very thing that keeps me wary of it. If Airplay is your lead feature than your purpose for your product is further tying people to your ecosystem. Airplay needs to be icing, not the cake for me to buy in.

Oh and cord cutting? I think HBO is the huge domino that needs to fall. As soon as HBO fully declares independence from cable providers, we’ll see significant movement to a fully streamed television environment regardless of the hardware.



2) no tech company can win a content war thanks to equipartitioning by the content holders,

And that’s the problem. The iMac is a good comparison. The iMac had access to the whole internet, all the “content” the user could ever want. I don’t think it, or Apple, would have succeeded if the internet had been divided up into Dell’s internet, and Microsoft’s internet, and Comcast’s internet etc., and the iMac only had access to a fraction of it.
Thank goodness for Net Neutrality.
Yet that’s exactly what we see in the TV realm. Some channels go to everyone, some go to Apple, some will go the the new Android Box, some go to NetFlix, others these boxes but not those others, some are on Cable only and no systems get them. Until this has been cleaned up, and I don’t see it happening for a very long time, I don’t see an Apple entry into the market doing much. The cable companies and channel owners see to it that they will still be limited to some channels and miss out on a lot of others. You will still need multiple boxes and multiple subscriptions to see everything you want. There’s a direct corollary to cable. We have a couple dozen channels we watch. We subscribe to a couple hundred because each “package” has one or two we want and the rest we never look at. This is done deliberately by the cable providers and the channel owners and will continue into this new space.
The question is if not content what would an AppleTelevision bring to the market? The answer is not much. I disagree with Larry Rice on this. I see the cable systems and set top boxes having sub optimal but ‘good-enough’ interfaces. There is not enough improvement that Apple could bring to the space to warrant an upgrade by most people.
If Apple cannot produce a paradigm shift in the interface and still is trapped in the world of these channels but not those, then they cannot revolutionize this space as they did with music players and phones and tablets.
An AppleTelevision would be competing against $300 LCDs at Wallmart and Cable and I don’t see them winning that war.

Jack N Fran Farrell

Content lock-in locks are broken and will never be fixed.  Anyone not wanting to pay a 30% added margin for content can buy a $35 dongle. Incentives for a Faberge Egg destined to pop out an over-priced program have never been lower.

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