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Predicting iTV [Mar. 6th, 2012|11:48 pm]
Tomas Gallucci
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So there is a rumor that got started right after Steve Job's untimely death and as his timely official biography was released: Jobs had figured out a way to make TV better. Walter Isaacson claims he had the following exchange with Steve:

"‘I’d like to create an integrated television set that is completely easy to use,’ he told me. ‘It would be seamlessly synced with all of your devices and with iCloud.’ No longer would users have to fiddle with complex remotes for DVD players and cable channels. ‘It will have the simplest user interface you could imagine. I finally cracked it.’”

Ever since those words have been posted on every news site known to mankind as click bait, there has been much speculation as to what iTV would look like. Horace Dediu (@asymco) of asymco.com fame summed it up best:

So it is that I approach the question of Apple’s TV disruption. My working assumption about the next Apple TV is that it already exists. It’s none other than the existing Apple TV, improved.

I don't disagree. In fact, I'd like to expand on that thought.

Expansion on Dediu's thought
I think that Apple will get into the television set market. There's no reason why they shouldn't.

Look at the 27" iMac. It's native resolution is 2560 x 1440. A blu-ray in all its glory has a resolution of 1920 x 1080. Film, by contrast, is 2K or 2048×1080.

So we can see that the iMac's screen can definitely handle your blu-rays without breaking a sweat and can even show film in its native resolution.

You may recall the Red One a camera that debuted capturing video at 4K or 4096×2160. (Source) The Scarlet was a later, cheaper alternative that captured 3K, but has since been redubbed Scarlet-X and now captures motion at 4K as well. The Epic captures motion at 5K and is currently the camera being used to film Peter Jackson's The Hobbit.

When the Red One first came on the scene, it came along with Redcode, a format that was designed to stream from the camera in real time to a Macintosh running Final Cut Pro. In fact, you could run three cameras simultaneously.

4K is becoming the Next Big Thing® in cinema. 4K projectors have been on the market for a while, albeit at steep prices. I predict that if the projector at your local theater doesn't support 4K now, it will within 24 months.

  • I think that iTV will be 4K.

What could the "simplest interface you could possibly imagine" be? Some have concluded that it would be your voice, namely Siri. If Siri is to control or TVs, I don't think it will start in the set itself; more or that in a bit. Right now, I want to illustrate the major problem with a voice-controlled television:

  • I think that iTV will be controlled by either the iPhone, iPad or the iPod touch.

That's quite an expensive remote control when you think about it, but there are a few immediate advantages:

  • The remote can always be found because people don't leave iPhones just laying around.

  • Even if they did, the remote could always be located via Find My iPhone.

  • The iPhone already has Siri integrated into the product.

  • Since the iPhone/iPad/iPod Touch is a touchscreen itself, you can "touch" the television without having to get up from your chair.

  • Because you have two natural ways to interact with your TV by making an iOS device a remote control, you now have "the simplest user interface you could imagine".

  • Demand side will force Internet Service Providers (ISPs) into being the dumb pipe they were always destined to be

Presume that I an correct about iTV being a 4K set capable of running iOS Apps or having an App store of its own. Further assume that there is pent-up demand for this television set, much like the huge disappointment known as the iPhone 4S. All of the apps that get downloaded for the iTV, all of the 4K content, all of the music streamed/downloaded from iCloud–all of this data has to be carried over a wire to your house and the millions of other proud iTV owners.

Look at the demand that was placed on cellphone service providers with the iPhone. Ever since the iPhone launched, AT&T hasn't been able to keep up with the demand for both voice and data. Verizon was forced to invest heavily in Android because they punted on the iPhone. Verizon, Sprint and T-Mobile have foamed at the mouth in the press talking about how their business was losing customers because of consumers moving to a competitor who did sell Apple's phone when the didn't have the iPhone and bragged about how well business was booming once they got the iPhone. (T-Mobile, of course, at the time of this writing, is foaming, not bragging as the currently do not carry the iPhone.)

An even better example of the power that demands for Apples products wield can be seen in the branding of the device. Cell phone service providers are notorious for branding the ever-living-shit out of the products that they force on sell to their victims customers. Verizon–the largest carrier in the United States– egregiously engages in this practice. Yet, if you look at the iPhone, you will only see one company's logo ensconced on the device. Hint: it's a picture of a piece of bitten fruit.

This is no oversight. Apple was able to demand that their logo be the only logo on their phone because without the iPhone, carriers lost millions of dollars of business a day. If demand is that high for a phone that is aesthetic, has an interface so intuitive even a three year old can use it, is constantly backed up and Just Works™, what will the demand be for a television with the same characteristics?

Given what can only be unprecedented levels of demand and therefore bandwidth needed to transfer content onto the device, ISPs will be forced by their customers to either provide fast, cheap, unlimited bandwidth or be fired as a competitor will be hired to do that job.

  • iTV will be a disruptive product

This is despite some ISPs-turned-media companies (Comcast by purchasing NBC) or media companies-turned–ISPs (AOL/Time Warner [content creators] offering internet access via Time Warner Cable) understanding–much like Facebook–that content is king and the only thing better than being a producer of content is controlling the distribution of the content produced. As Horace Dediu points out:

Television is more than the TV set or a set-top box, or any box. It’s more than channels or broadcasters or producers or aggregators or distributors. It’s all of these things; plus more. It’s a value network of great breadth and complexity. It’s a highly modularized industry with well-defined business model boundaries and inter-dependencies. I would argue that its very breadth is what has kept it rigid and immune from disruptive change.

There was FUD in the air when Comcast announced their intentions to purchase NBC. What would happen when both a cable company and and ISP were the same entity and that entity was also a major producer of content for both mediums? Could this entity have a monopoly on that content and price gouge the consumer, much like Hollywood's next great business model of praying for stars to die?

This fear hasn't fully played itself out. Comcast hasn't become monopolistic–yet. NBC shows are available for streaming via Hulu. Time Warner Cable ISP division can deliver NBC's content either to a television set or to an internet-enabled device. Is Comcast simply biding its time? Is Comcast a benevolent dictator that will deliver content that people want, when they want it, how they want it at prices they can afford?

An equally interesting question is this: how does all of this content get paid for? As Dediu said above, it gets paid for by the vast network of advertisers: global, national, regional and local. Hulu–a kissing cousin of television–also has a business model predicated on advertisers.

But Apple's business model is different: customers directly subsidize the cost of the content. Once purchased, that content is the consumer's for eternity. (At least, so long as Apple can deliver the content; presumably the eventuality of not having the rights to continue to honor this social contract with their customers has already been averted via contractual language.) And instead of being tied to a physical location, Apple's model allows you to take your content with you wherever you go.

In fact, with iCloud, you don't even need to take the content per se. If you forget to put a movie on your iOS device before you leave for that all-important flight, you can download that content while sitting in the terminal. Though this may not be the most practical or economical thing to do, it is, by no means an impossibility; the limitations here are bureaucratic ones, not problems in need of solutions.

The economics of bandwidth on a plane or in the terminal are controlled by the convenience factor: that is, internet connectivity is of great utilization to you on the plane or in the terminal, thus the airport or airline capitalize on this opportunity in the hopes of making a profit. Rest assured that a lot of money changes hands in exchange for internet access in this use case.

The practicality problem is really an economic problem recast. Since you don't have access to an unlimited supply of bandwidth pending your journey, all that need be provided is a product that competes with the nothing you have, and thus value is created. The double whammy is that there is no internet service competition for your business in this market.

And that leads me to my final point:

  • iTV–even in its existing form of Apple TV and iCloud–allows you to cut the cable and trash the DVR.

Marco Arment (@marcoarment) writes:

Like many modern geeks, we don’t have cable TV service. Our TV set is merely a monitor for game consoles and media players. We can watch movies and TV shows, but not live — only via iTunes and Netflix. It’s more limited than cable TV: relatively few shows are available, and we’re usually pretty far “behind” the broadcast schedule for current shows, making it difficult to talk to people about current TV shows. (This may be a feature, not a bug.) And it requires effort: when a TV episode or movie ends, nothing happens. It’s up to us to decide what to do next and make it happen: either find something else to watch, or turn off the TV and do something else.

This arrangement dramatically changed the way we watched TV. We can watch whenever we want: everything accessible to us is “on demand”. We can pause anything and resume it at any time. We haven’t regularly seen commercials since we cancelled our cable service five years ago. And we only watch shows that we actually think are good, rather than killing countless hours watching whatever’s “on” because it’s not quite bad enough to turn off.

It’s great.

Cable TV customers have attempted to gain these benefits with the DVR, but it’s a bad hack. Even the best results are more like an automated VCR than true on-demand video, and almost nobody reliably gets perfect results. The way to escape the dysfunction of broadcast TV isn’t to record it and play it back later.

Now imagine if you had either two HDTVs and two Apple TVs in two rooms in your home today. Alternatively, imagine if you had two iTVs in two rooms. In either scenario, you don't need a content provider. Satellite goes away. Cable goes away. Over-the-air broadcast can go way too; there is always the weather radio and apps for times of inclement weather. Are you a sports junkie? There's an app for that.

No more spaghetti cabling. No more hooking and un-hooking devices from too few ports on your TV. No more confusing menus for your satellite or cable box.

Content you've bought and paid for the right to randomly access any time, anywhere in the house on a huge, high definition screen. Content that you can take with you, or simply download when you get where you are going. And you can play that content on a high definition TV too, compliments of the iPhone and iPad supporting HDMI adapters.

And as Arment pointed out, you can do all of this without intrusive ads. Fascinatingly enough, there is a built-in audience being built right now to whom the concept of a show or movie being interrupted by advertisements are foreign.

These are my predictions for iTV.

[User Picture]From: darkest_writer
2012-03-07 02:35 am (UTC)
It's about time you posted ;) I was wondering if you forgot our deal.

The iTV is a very interesting concept and I rather like it, it would be so much easier and less of a pain in my ass to watch television.
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[User Picture]From: schpydurx
2012-03-07 02:38 am (UTC)
No, I hadn't forgotten at all. In fact, I was getting depressed that I didn't have anything to show for our promise. I'm a man of my word.

I hope this can make up for like two or three posts given it's length.
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[User Picture]From: darkest_writer
2012-03-07 02:43 am (UTC)
it does quite make up for it :)
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[User Picture]From: schpydurx
2012-03-07 02:40 am (UTC)
We know that the iPad3 is being announced today (I'm across the timeline)/tomorrow (Wednesday March 7). The question is whether or not iTV is being announced along with it.

I, for one, sure hope so!
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[User Picture]From: darkest_writer
2012-03-07 02:45 am (UTC)
I have been debating about getting an iPad, my sisters boyfriend has one and he let me fiddle around with it and I fell in love with a piano app and I really want one just for that app haha
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[User Picture]From: schpydurx
2012-03-07 02:47 am (UTC)
I predict that the iPad 2 will stay on the market and will be reduced in price.

But I'd hold out for the iPad 3 if I were you.
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[User Picture]From: darkest_writer
2012-03-07 02:55 am (UTC)
true! I wish that they were making a 64GB version though, if I bought one, it would be a like a place for me to keep everything, like my music, photos, movies,and maybe books too.
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[User Picture]From: schpydurx
2012-03-07 02:59 am (UTC)
The iPad and iPad 2 came in 64GB models.
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From: joped.com
2012-03-07 03:34 am (UTC)

Doubt it will be 4k

I don't think the new AppleTV will be 4k. 4k is still a fairly far way from normal consumer equipment. It is still far too expensive to produce, but prices will drop over the next few years.

Remote wise I agree, using an iPhone or iPad really makes sense. As it is, I have a DVR app on my iPhone that I will use when I can't find my remote.

On the content provider front Apple has a serious up hill battle. It is rumored that they have been shopping around subscription based content only to get turned away by every provider. No provider will agree to something that is a major threat to their core business model. Yes, it would shake up the industry, or it could destroy it.

Remember with iTunes it self the providers only agreed to let Apple do it at first only on the Mac. This way, if it failed it was only a few small percentage of customers.

Personally I think the biggest thing that the AppleTV could bring is apps. If you could install applications and cheap games on the AppleTV, Nintendo would be in very serious trouble instantly. Microsoft and Sony don't have to worry because they can still battle on the graphics front ... for now. But they will need to keep up or be left in the past.
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[User Picture]From: schpydurx
2012-03-07 05:14 am (UTC)

Re: Doubt it will be 4k

You raise some interesting points.

I agree that 4K seems futuristic, but this is exactly the kind of thing Apple loves to do. And they're already halfway there with the 27" iMac. I think they could easily double the screen size. The question is, could the double the resolution while they were at it?

Price has never been a concern for Apple either, though the did seem recalcitrant with the MacBook Air. And then they made a smaller one to hit their lowest price point in notebooks.

I agree with Arment's conclusion, "If all they do is make a really nice TV set like everyone else’s, it’ll probably be as interesting as the Airport Extreme: a nice product in its category, but not exciting or scaring the crap out of anyone." I don't think Apple would enter a market if they didn't think they could radically change that market for the better.

Thank you for the anecdote about the remote app for the DVR. Even DVR companies get it. They just don't understand having the rest of the pieces. Or perhaps they understand it, but understand that they don't have the capital and can't put together the content deals to replicate the could infrastructure that Apple has.

I think Google has finally seen the light but they're still clueless thinking they can muscle their way in instead of winning hearts and minds. In a follow up column, I intend to examine a theory that I have: Android will reach a pivot point this year which will help Microsoft and RIM more than it will help Apple, but the help will be temporary and the market will be ripe for one more big player that can come in and clean house.

I haven't heard that Apple has been rejected, though that stands to reason–unless today's show also includes iTV, Apple likely would have nothing to show because they can't get the content deals they want. On the other hand, I think that traditional broadcast is going to die with or without iTV. iTV will be quick and less painful.

Apple drug the music business into iTunes kicking and screaming, only to solidify the bottom line of the record companies. And these companies have the audacity to complain about piracy.

Lastly, I think you spot on about apps, especially games. I've been preaching for a while that if Nintendo wants to stay in the business, they need to port their titles to iOS.

But I'm not so sure Sony and Microsoft being able to battle graphics. The bigger iTV is physically, the more room they have to put in a more powerful graphics card and dissipate the heat as compared to what you can put in a console.
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[User Picture]From: panacea42
2012-03-08 02:31 pm (UTC)
Definitely some very interesting thoughts, and I can see a lot of it coming to fruition.
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[User Picture]From: ehowton
2012-03-14 01:37 am (UTC)
Very well written. I have no opinion on the matter.
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[User Picture]From: schpydurx
2012-03-14 08:07 am (UTC)
Very well written
Coming from you, that's a high compliment, Sir!
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