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News

The Real Goals of Apple TV

I believe that Apple has very modest and mixed goals for the Apple TV, and that is going to make it very hard to compare that product to all of its competition.

Every company on the planet that owns video content is looking for a way to either develop a delivery system or partner with a company that can deliver Video on Demand (VOD.) There have been many stories and editorials on this subject lately, and so I won't recount all of them. In short, the alternatives to Apple TV are staggering.

What interests me more is Apple's own motivation for the Apple TV. Clearly Apple doesn't think that it will become one of the early leaders in this VOD war. Some companies, cautious of the success Apple has had in controlling, to some extent, the music industry are reluctant to team with Apple. Others, like Sony, have their own vision for a complete delivery system ranging from HDTVs, PS3s, Internet delivery hardware, and content delivery services.

I see Apple working, instead, in many different directions with the Apple TV, no single one of which can be used as a predictor of the system success. The Apple TV...

  1. is a way to generate hardware revenue. Apple's profit margins almost always guarantee that their products are profitable even if not dominant.
  2. is a hedge against the future. It can grow with the technology and gives Apple a platform and doorway to the future.
  3. will promote Apple's online sales of movies and TV shows which will put it in a stronger position when it does come time to deal with potential content partners.
  4. will be there to pick up the pieces when other services fail. Apple can then propose a partnership with a weakened, chastened competitor.
  5. gives Apple an entry point, if they ever elect to exploit it, for computer games without having to build a game console -- a losing proposition against Sony, Niintendo and Microsoft.

As a result, I think it will be very hard to write articles that portray Apple's prospects against the myriad of competitors. Apple won't dominate, but they'll make money and position themselves nicely. That's a modest goal compared to Apple's overwhelming success with iTunes and the iPod. As a result, many confusing articles will be posted in the future about the apparent failure of Apple TV.

Instead, the real story for the Apple customer will be how the Apple TV does or does not fit in with all the other video gadgets competing for those precious few HDMI inputs on their HDTV. And how its services compare from a user experience standpoint against the rest of the world.


Apple TV

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