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Editorial

As Others Target Apple TV, Apple Stands Pat

Apple may have a lot more in store for us with the Apple TV, but, for now, others are moving aggressively in what appears to be an assault on Apple's dormant product. Why Apple is not moving more quickly with enhancements is an interesting question to explore.

Consumers buy a product for several reasons:

  1. It has a combination of functions and features that are desirable.
  2. It provides something that can't be obtained anywhere else.
  3. It stands alone as an appealing device.

Companies with a weak product can enhance it by forming partnerships. Company A sees something they want in company B's product, but there may also be some reciprocation. Suddenly, while the freedom of the often imaginative smaller company is gone, the new, bigger product is more than the sum of its parts, and that explains reason #1 above. An example is Netflix streaming available on certain Blu-ray players.

The second way companies compete for customers is with exclusive agreements. For example, AT&T says -- if you want an iPhone, you must make us your wireless carrier. Another technique is to use wealth to subsume the competition or entice third party developers into exclusivity.

Customers are often unhappy as a result of the arrangements above because there is inevitably something missing that they want. That is, if they know what they want.

Along Comes Apple

Apple, on the other hand, strives to make complete products -- products that stand alone on their own merits and exude simplicity and quality. Partnerships tend to tie Apple's hands and buying up the secondary competition just pollutes Apple with unwanted, inferior products and/or bitter executives.

Apple prefers to design products that customers will actually stand in line for with joyful anticipation rather than products that present a never ending feeling of being screwed.

For example, there is a school of thought that says Apple would achieve a breakthrough in the market if it partnered with Hulu. My wife and I have used Hulu from time to time, and the viewing experience, despite high speed broadband, has never been terrific. Some shows are agonizingly slow to load. And if we want to watch TV with minimal commercials, the video quality of high definition on a DIRECTV DVR, with a time delay to skip over commercials, is a superior viewing experience.

In addition, using Hulu requires a keyboard and mouse and a Web browser. Even with an Apple wireless keyboard and mouse, there is extra clutter. Finally, the content is not in high definition.

The net of all this is that while there are many people who, for various reasons, prefer to mess around with PCs and Macs and keyboards and mice connected to their TVs, and they don't mind SD content, there are many others who appreciate the design, elegance, immediacy and simplicity of the Apple TV. Apple knows which market it wants to go after.

Choices and Sales Numbers

The PC world is a world full of confusing options and dizzying choices. One thing the current Microsoft TV ads ("You Find It, You Keep It.") reveal is that when faced with the choice of one "very cool" Mac or running around the PC store, dazed by all the options, it's better in Microsoft's mind to have alarming and abundant choices. And when Lauren or someone else in that series leaves that Best Buy with a really cheap PC, if they weren't actors, they'd ask themselves: "What did I forget? What didn't I get with that choice?"

Apple measures its success by sales numbers. Apple elects not to reveal those Apple TV sales numbers, but best estimates put the number in the 1-2 million range. If competitors are constantly jousting to add crap to their products, like Twitter to Xbox, then it's a sign they're trying to use one of the first two defective strategies mentioned above, not #3.

I have been critical of the Apple TV for a long time. I believe that Apple will eventually be forced by the market place and technology to improve the product. However, I can also see how Apple can be proud of a very focused, elegant and simple product that delivers commercial free content on demand and fast. Until a competitor figures out how to undermine the mindset of Apple's demonstrated customer base, big changes don't seem to be forthcoming.

That said, if I ruled the world, I'd make just one tweak. I'd strike a deal to have Netflix on the Apple TV, accessed with the current, simple Apple TV remote control. Just saying....

6 comments from the community.

You can post your own below.

odin said:

You missed the fact that Hulu has recently released Hulu desktop for the Mac and PC. The app allows the Mac user to control the browsing and viewing of contact without touching the keyboard and/or mouse if they so desire. All functions are controlled from the Mac’s remote. Also, Hulu does offer some HD content. I’m not suggesting Apple by Hulu, but your research seems to be faulty.

   Quote

John Martellaro said:

Yep.  I just downloaded the hulu app.  I noted that the license agreement specifically forbids running it on the Apple TV.  Hmmm….

-JM

   Quote

YodaMac said:

I agree.  The last thing I want in my living room is a keyboard and mouse - just a simple remote and comfy couch.  smile

I’ve loved using my AppleTV, ripping many of my own DVDs to create a library as fun to browse as my music collection.  And although I’ve installed and played with Boxee (Hulu, etc.) on my AppleTV, I’m continually disappointed.  Tons and Tons of content - that all looks like crap!!!  That’s definitely NOT what I want to view on my HDTV.  At least all of iTunes SD and HD videos look great on the “big screen”. 

Apple has added HD movie purchases, and the only thing I’m waiting for now is HD TV Show rentals or subscriptions.  That’s the final brick for me: then Buh-Bye cable.

I don’t want Twitter, Facebook or any of that on my Television.  I’m glad Apple isn’t chasing those “fads”.

   Quote

jcn_13 said:

Wasn’t there a rumor or report a few months ago that the chief engineer or technical lead for the Apple TV had left the company under less than friendly conditions? If true, it could indicate that something is undergoing change and that could either be good or bad for Apple TV users. In any case, I’d bet that if we don’t see something significantly new in the next six months then it could be “game over” for the Apple TV.

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John Martellaro said:

I didn’t see that rumor, but it would explain a lot.  A similar thing happened when a lead engineer left Apple, and Apple was forced to discontinue the Xserve/RAID awhile back.

-JM

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deasys said:

Apple elects not to reveal those Apple TV sales numbers, but best estimates put the number in the 1-2 million range

ipodobserver     /story/35336

“Piper Jaffray analyst Gene Munster, in a note to investors on Monday, estimated that Apple sold 1.6M Apple TVs in CY2007 and will sell 2.9M units in CY2008”

That’s 4.5 million by the end of 2008…

ipodobserver   /ipo/article/analyst_makes_the_case_for_apple-branded_tvs/

“For the near term, Mr. Munster said Apple will sell some 6.6 million Apple TVs in calendar 2009”

That’s over 11 million by the end of this year…

And for some independent corroboration, see this comment from February from XBMC developer/atvusb-creator author to:

ipodobserver     /ipo/article/boxee_and_its_implications_for_apple_tv/

“AppleTV sales increased 3X over the quarter. Humm, thatís right about the time when I released the first Launcher that enabled running XBMC and Boxee on the AppleTV. Downloads skyrocketed to over 100k in less than two months and I know from feedback that many were first time users that bought an AppleTV just to run XBMC or Boxee. My estimates are 1-3 million sold based on hard download data.”

I think you’re way too low, John.

   Quote

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