"Opportunity is missed by most people because it's dressed in overalls and looks like work."
-- Thomas Edison
Apple faces special challenges with the Apple TV. That's because of the nature of the broadcast and TV industries, keen competition from Netflix, the proliferation of media outlets, like Hulu and Boxee, and changing viewing habits by younger viewers. One way for Apple to blind-side the competition is to deliver an iTablet, with a larger screen than the iPhone, designed to directly access TV and movie content on the Internet. Think of it as Apple TV Take 3. And, as always, Apple gets a piece of the action.
I have continued to believe that the evolution of the rumored Apple iTablet (or iPod super touch) is not based on technology alone. Nor is it based on the needs of the businessman or technical writers. Rather, it will be based on a keen understanding of Apple's customers, especially younger ones.
Exploring the Previous Concepts
Here's the line of logic. (Note, it may require a look at the links below to fill in the details of my arguments.)
1. The era of free TV on the Internet is coming to a close. That creates business opportunities.
2. Netflix has a distinct advantage over Apple right now. The company is fairly hardware neutral, so it has struck agreements with LG, Samsung, TiVo, Microsoft (Xbox) and Sony (Bravia) to deliver streaming content. Apple, with the Apple TV, is bound by its desire to sell its own bundled solution, Mac OS X + Apple TV hardware. However that entails selling the customer a living room box, always a hard sell compared to streaming built-in to, say, a Blu-ray player -- and yet another wired connection to the HDTV. Sure, a lot of Apple TVs have been sold, but I'm talking about going mainstream, not settling for a specialty product for principally Apple enthusiasts.
3. Habits of younger viewers are changing. Appointment television and the leash to a living room TV, owned by the parents, is giving way to a mobile viewing generation that wants to watch content whenever. Moreover, they're not as bound to the process of evening TV, like their parents, but pick and chose, leaving the formal medium for long periods of time.
4. The purported development of personal technology products is often delineated by tech writers who travel a lot. They don't have a special need for a third device to fit between the notebook and the smartphone. It's what I called the staging issue in a previous Hidden Dimensions, linked above. It means that business people, in their work and travel cycle, don't have room or a need for a small tablet. That HD is also where I pointed out the problems associated with UMPCs and how a lightweight MacBook Air, or MacNetBook, could become a viable addition to Apple's line up -- but only for technical professionals.
5. Personal gaming on a smallish device has become a Big Thing thanks to the iPhone. It's another market that begs for a small, slate device without a keyboard, which I have previously described in detail. That's nothing new, but the kicker remains...
The Solution to Apple's Problem is a Win for Customers
However, it wasn't until I started thinking about an additional role that the (iPad, iTablet, iPod super touch) would play that I realized that not only would it be a great game machine, ebook reader and display for medical professionals, but it also neatly solves the problem of competing with Netflix in a very Apple, focused way. That is, it bypasses the stationary living room box and gives the mobile, young user access to TV and movies, on demand, in a screen size & weight combination not matched by a traditional MacBook or iPhone. That has required some technology development, batteries and low power systems. Fortunately, Apple is building that technology base with the iPhone and iPod touch.
As a result, that middle-ground tablet product, so useless for the business or technical professional, is perfectly tuned for the needs of mobile youth who watch anything, anytime, anywhere.
So here's the complete list of the markets for this iTablet:
- Video chat
- Mobile TV & movie viewing
The nice thing is that every one of these markets has a business model that can be supported with iTunes. Every one of them is geared towards the next generation of mobile, video oriented customers, not towards the Netbook and PowerPoint users of the past.
The No Compete Claus (for Christmas)
In addition, such an iTablet doesn't compete against Apple's notebook line. We saw in Apple's Q309 Earnings Report that Apple has an excellent understanding of the needs of its notebook customers, and that precludes and repudiates the traditional netbook for the markets listed above.
Once we have a feel for the target markets of the iTablet, we can start to formulate some ideas on the design specifications. In my iPad essay linked above, I suggested it would not have 3G voice capability. The iTablet will be aimed at younger users who may either already have an iPhone or don't want to incur a 24 month carrier plan. But that doesn't preclude a 3G data plan for Internet access anywhere. Combined with faster 3G and, later, 4G speeds and ubiquitous Wi-Fi, the iTablet becomes the next generation TV, usable virtually anywhere.
A low power CPU from PA Semi, a small SSD for storage, a ten inch screen, iPhone OS 3.0 combined with Apple TV technology would seem to round out the design.
The idea of such a device also explains some of Apple's decisions. For example, no interest in a partnership with Netflix. The goal is to squash Netflix, not cooperate, especially since the Netflix CEO, Reed Hastings, sits on the Microsoft Board of Directors. Perhaps, with Apple's input, HTML 5 can be refined in order to completely bypass Flash (and Silverlight). Apple has never embraced Blu-ray on the desktop because the company has been planning for this Internet-centric device al along. So the artist concepts I've seen that include a DVD or Blu-ray player aren't credible.
One enduring question that remains is: why the delay? One possibility is the recession. Another is the timing. PA Semi probably wasn't ready with the CPU or chipset last Christmas, and believe me, this is a Christmas-oriented device. Another reason might be that Apple felt that current 3G networks weren't ready to support such a device with the kind of user experience Apple wanted.
Apple TV, Take 3
Right now the best information I've seen amongst the rumors suggests a ten inch screen tablet released in October. The amusing part is that many companies tried such a concept before, the UMPC and the Sony PSP. They all failed, relatively speaking, because they didn't pull together a complete package: Low power design, UNIX OS, great developer SDK, great UI, Apple industrial design, a precursor mountain of iPhone apps, and complete networking. Leave it to Apple to get all its ducks in a row and once again catch the competition flat-footed.
As this device starts to take hold, I expect to see an eventual decline of the Apple TV. Of course, there will always be a number of people who want to connect an Apple TV to a large screen HDTV just as there will always be some people who want a dedicated MP3 player. However, that number may not be enough to satisfy Apple in the long term, and I now believe that the Apple TV has been not only been a hobby but a fortuitous business tactic, a beachhead, to capture and hold Apple customers/viewers until the real, mass market, intended Apple product is ready.
No one knows what Apple will call it. iTablet? But underneath the hood, one can also think of it as Apple TV Take 3 for the millennials.