Sunday, 30 December 2007

Blu-Ray Apple TV


Apple TV has clearly not lived up to expectations, since Steve Jobs now refers to it as a "hobby". The product was always a little ahead of its time, in two respects. Firstly, it envisages a day when optical media (such as DVDs and CDs) are abandoned, despite the fact that Blu-Ray and HD DVDs are just now hitting shelves, and secondly, the iTunes Store does not yet offer a large enough range of movie downloads, and no high-def or rentals.

As a result, Apple TV is effectively a product in search of a market. In my view, the solution to this is clear - address early adopters with the best solution for a Blu-Ray player (better still if it can play both Blu-Ray and HD DVD formats, but since Apple's in the Blu-Ray camp, this is unlikely).

Right now, a lot of people are considering purchasing a high-def player, and for those who don't go for a Playstation 3, a Blu-Ray Apple TV could become the most popular choice.

Combined with an improved Apple Remote (see previous article) the one other enhancement that would broaden the potential market for Apple TV is a display. This would make it ideal for hooking up to audio systems to play music without the need to turn on a TV set to navigate menus.

A Blu-Ray drive and a display will inevitably push the price up, but could potentially turn this much-forgotten product into a smash hit. Naturally, at some point in the future, the optical drive can be dropped in favour of downloads again!

10 comments:

  1. We just got an AppleTV and it is a really cool little box. It's just so nice that I think anyone who uses it will find they need it. The key is having your content on there, and that means ripping your DVDs with Handbrake. Once you've got your content in there, this thing really rocks.

    That's why I don't think AppleTV will ever gain an optical drive. I don't think HD will stream to your other devices due to bandwidth limitations, and having to go switch disks, etc. pretty much defeats the purpose of the AppleTV.

    Some folks have cleverly written that AppleTV is the future, and the future isn't here yet. That's fair, it's going to take forever to rip all the disks we've got. I totally see the advantage of buying video downloads instead of physical media when you want to use it like this. That's the future, and not DRM-infected HD disks. I was so happy to trash records and audio tapes, and probably even happier to put my CDs in a closet and forget them. I'll be ecstatic when I've got all the content on a server available anywhere through devices like AppleTV, slingbox, etc. I'm going to make that happen for me pretty soon, I've got 3 machines ripping DVDs for me.

    BTW: A great improvement for AppleTV would be the ability to mount it on the wall behind or beside a VESA mounted TV.

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  2. I'm a big fan of Handbrake too, and I agree that Apple TV is a great product as it is. It's just a shame that it's not more popular. I went to the Regents Street Apple Store in London to buy an Apple TV for my parents, and they don't even have the boxes out on the shelves any more. Someone had to go "hunt around" in the stockroom to find one, which made me suspect that they don't sell many.
    Completely agree about the DRM-infected HD disks as well - I see them as an interim technology, bridging the gap until we have the bandwidth and storage for HD downloads.

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  3. How exactly hasn't Apple TV lived up to expectations? You assert this as an apparent fact without providing any evidence, making it appear as though you have taken as fact the unsubstantiated reporting elsewhere on the Web.

    When Steve Jobs referred to Apple TV as a "hobby", he surely meant that Apple is taking a "wait and see" approach to the product, and is not initially expecting stellar sales. He specifically noted that no one yet has made a viable business of similar devices.

    Your comments about Blu-Ray are interesting, though I disagree that Apple will take that route, which would deflect it from the path it has been following for years and which only now is coming together—a complete end-to-end home entertainment digital download delivery system. (Whoa, that was a mouthful.)

    Read about Apple's plans for RFID and a universal remote in your living room.

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  4. Hi John,

    I enjoyed your articles on RFID and the universal remote. I wish Apple would do a universal remote - they'd do a great job of it!

    Fair point regarding Apple's expectations concerning Apple TV - I don't think that explicitly stated what their expectations were. In January '07, Tim Cook said "we'll see as we move forward, it's really too early to tell," (Q1 2007 Earnings Call).

    But there are clues that indicate Apple expected big things from Apple TV. Steve Jobs initially talked in terms of it being one of four businesses (i.e. putting it on a level with Mac, iPod and iPhone). And when Gene Munster of Piper Jaffray asked Tim Cook if we should expect a niche market for Apple TV, similar to Airport Express, he replied "from how we're positioning the product, as Steve indicated in the keynote, we see this as the DVD player of the 21st century so it's clearly not a niche." Also, at launch, a large area of Apple Stores was devoted to the product. All of this points to Apple's initial optimism.

    Who knows whether Apple TV has really lived up to Apple's expectations. Like everything else on this blog - this is just idle speculation :)

    I take your point that Blu-Ray would be a change in direction for Apple, but I could imagine that they might pursue it as a short-term tactic rather than a longer term strategic shift in vision.

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  5. macpredictions,

    Yeah, you're right about those contradicting indications that Apple has bigger plans for Apple TV. It seems possible that Apple might have expected more from the product, but it's equally possible that Apple, while understandably promoting it at its launch, had modest *initial* expectations.

    When the product launched, it was immediately clear that its feature set was limited, though flashy. And the content just wasn't there yet. Maybe the biggest unpublicized and unknown factor was in fact the inability to secure the video content as Apple perhaps planned for. Had that content been secured, another rev of Apple TV might have happened, but because the content wasn't secured, it's possible Apple decided to de-emphasize Apple TV until the content arrived.

    With these rental rumors, Macworld would be a great time to rev the product.

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  6. Apple TV was not originally conceived of or positioned as a "hobby"; this came much later and was more of an "off the cuff" statement than an articulation of an official position. Nonetheless, it was an excellent rhetorical move!

    That being said, it is important to realize that Apple did something very non-Apple during this launch: it intentionally kept the hype level to a minimum. Yes, Apple would have loved to have sold millions and millions of units, but they were right to plan for this not to happen. As said by others, it was a great idea years ahead of the consumer, a notion validated by my own primary research. Remember that Apple TV was intentionally launched in the shadow of the iPhone, meaning most eyes were drawn elsewhere (something Apple is uniquely adept at making sure doesn't happen - all the more evidence this was an intentional strategy undertaken by Apple).

    Forethought was indeed at play, as Apple intentionally set the bar quite low, from a public relations perspective and (consequently) a sales perspective. However, no one at Apple thought the platform would sell this poorly.

    We're already seeing signs that Apple is fully aware of the limits of the platform and the business model; a perception validated by the company's recent addition of movie rentals (which I advised earlier this year).

    It wasn't just that Apple TV as a platform was ahead of the market; so too was the entire concept of broadband movies to the TV. Apple is now quite aware of this reality and I expect timely adjustments to be made to the core model. Broadband movies to the TV will be real, and very soon, but it will take the right brand and right model in order to get the ball really rolling.

    Thank for the opportunity to contribute.

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  7. Hi Eggman. You make many great points. I love the idea that Apple deliberately launched Apple TV in iPhone's shadow - a trick that illusionists might call misdirection. I suspect that you're right. Apple TV was always part of a long term strategic play, rather than a short-term revenue generator.

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  8. The Apple TV is far too limited to be a huge success as it currently exists but does still have a niche. I bought my parents one for Christmas as it is so simple even they would have no problems using it. I wouldn't get one for myself due to it's limitations (I actually run Microsoft Media Center on a Mac mini).

    By the way, if you Americans think the availability of TV/Movie content on the iTunes Store is an issue it is orders of magnitude worse for the rest of us outside the USA.

    As a device to play rented movies from the iTunes Store the Apple TV would potentially become significantly more useful. Unfortunately, the likelihood is that a) the majority of the movie studios will still be too stupid to participate, and b) all the movie studios will insist on prices far too high considering the lower quality and fewer features (lack of surround sound, subtitles, movie extras, etc.), and c) many people including myself do not like renting which is after all a major reason for the iTunes Stores success in selling music.

    As the lack of content is a major issue, perhaps it is time for Steve Jobs to say to the Movie/TV studios if you are too stupid to provide the content and and make money out of doing so, then I will let customers provide their own content by recording TV. Apple would still make money by selling the devices and software.

    Recording TV for ones own use is perfectly legal. All Apple have to do (admittedly a significant project) is to produce their own equivalent of a Tivo or Microsoft Media Center.

    If the morons in charge of the Movie or TV studios tried to sue Apple they would get laughed out of court as they would also have to sue Microsoft as well who have for years sold such a DVR solution, along with every single VHS and DVD recorder manufacturer which remember includes Sony. (Who as they also own a Movie studio would then have to sue themselves!)

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  9. I think having an optical drive built-in is a good idea. However, I think that a better idea is to have a 3rd party build this rather than Apple.

    I operate the only Apple TV-related info/news site on the planet, http://appletvsource.com. The site has been around since day 1 of Apple TV's release in March. I just feel that Apple is not doing enough for this product.

    One of the main reasons for its "failure" was its reliance on iTunes content. I think Apple TV can shine by itself if Apple would open it up to 3rd parties. I have written an article "Repurposing the Apple TV" that demonstrates its potential.

    http://appletvsource.com/content/view/464/

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