Pretty much everyone agrees that TV is the next big area on which Apple has set its sights. It’s hanging in the air just like the iPhone announcement hung in the air in late 2006. And when I say ‘TV’ I don’t mean a 50″ display, I mean a set-top box (although shouldn’t we call them set-under boxes now?).
I see Apple having two possible approaches:
1. Be a new cable company.
2. Be a new TiVo.
The first option is aggressive, but possibly lucrative. Cable companies are incredibly large money-makers and are only getting bigger. But can Apple take these behemoths head-on? It would be incredibly difficult. Both legally and technically. Technically you need to stream 1080p video over an internet connection that, in a lot of cases, is provided by those very cable companies. And our broadband speeds are pathetic compared to other many other countries. And legally…I’m not even sure how it all works but dealing with content providers directly is super hard. Especially if they are locked into agreements with existing providers or at the very least don’t want to rock that boat.
The second option seems a little unlike Apple at first glance. Aren’t they supposed to sweep in and completely change an industry? And they want to do something a little company did in 1999? Apple doesn’t sweep in and change an industry. They didn’t sweep in with the iPhone. They snuck in with an exclusive deal on Cingular, owned by AT&T at the time, and gave a better user experience than anything else on the market. And they could do something very similar and sneak in with an exclusive deal with a cable company. It wouldn’t be hard to give a better user experience than today’s set-top boxes.
In fact, I see a lot of similarities to how Apple took on the phone industry. Some suggested they would try to buy their own spectrum, and apparently Steve Jobs investigated the possibility. That would be the “Be a new cable company” approach. Own it from end-to-end. But the iPhone’s success says you don’t have to rethink everything to revolutionize an industry. They can cuddle up next to the AT&T of the cable industry (Comcast) and work with their Cingular-like subsidiary (Time Warner) to create a really great product that a lot of people will want. Then after it has limited success in a limited market, open it up to more markets and more cable providers.
It looks in recent rumors like Apple will try to be the new TiVo. In fact, I’d like to see them purchase as much of TiVo’s patent portfolio as they can. Perhaps even the whole company.
This ‘less ambitious’ strategy doesn’t rule out that Apple won’t eventually take on the cable companies. I would love to see Apple release a better DVR with a CableCARD slot (with all those newly purchased TiVo patents). It’s a little old-school, but it’s the equivalent of an unlocked GSM phone. It would be a trojan horse for eventually streaming content directly to users. For creating an App Store for channels I described in my previous post.