So, with rumors about the next version of the device being built into a high-defintion panel, let's examine the pros and cons of three possible courses for this under-marketed product:
- Status quo: An updated, separate, plug-in box. The benefit of this approach is that the device is cheap. Apple TV can be had for just $99. This solution also doesn't compete with existing TV brands -- any modern TV can support an Apple TV box with just a standard set of plugs. Also, the device is basically like a screen-less iOS device, so the engineering is relatively simple. Drawbacks include a lack of brand on the attached TV panel, the fact that the product is hidden (no brand exposure on the physical device), and that the TV experience is not Apple from end-to-end. Apple never likes to cede experience, and in this world, old-school TV brands and cable/satellite set-tops are front-and-center with consumers (startup screen, main guide, settings, etc).
- The leading rumor: An integrated Apple TV device and panel. This idea allows Apple to deliver a full Apple experience, keep hardware and software combinations to a minimum (good for support), and to display an Apple brand on the physical device. The main problems are: 1) it will be expensive, as the large panel cost is part of the required investment; and 2) consumers might be wary of adopting a combined TV-computer solution (previous efforts of this have failed in the market, including Google TV).
- A new concept: A slide-in hardware box. We've haven't heard of this concept outside our own internal conversations, but it makes sense given that it builds off the successful iOS device accessories model. Essentially, a compatible TV panel would support an Apple designed interface, including a slot for physically attaching the new Apple TV box. For Apple, this means the brand would be front and center, but consumers wouldn't have to buy only Apple panels (just those that support the interface/slot). Importantly, initial acquisition cost would be low, as the expensive panel would be a separate purchase. Would panel makers bite? Some would, especially low-cost providers like Vizio. In time, just as the speaker manufacturers adopted iPod interfaces en masse, the panel makers would all come around if consumers embraced the approach.
That's fine, but, really, it's still -- and always has been -- about the content
No matter what the physical device looks like, certain issues with content will continue to hobble any Apple (or Android/Google) TV approach. Key issues include:
- Filling the gaps in critical programming. Content providers still are tied to cable and satellite providers, not offering their full-range of programs to consumers using any Net-connected device for a la carte pricing (content stores like iTunes or Amazon Prime don't count; e.g., you can buy the HBO series True Blood, but you can't subscribe to full HBO broadcast streams). What could solve this situation? Either CableCARD (independent set-top box hardware) finally takes off, which is unlikely, or renegade programmers begin to break their current deal mentality. Critically, live sports needs to be available. We have seen cracks emerging, as sport leagues offer limited video over alternative devices (e.g., MLB.TV and the NHL app), and cable companies themselves are streaming content to devices (e.g., the Xfinity iPad app).
- Settling the issue of competing interfaces. While Apple likes to deliver the whole experience in one device, users and customers of YouTube, Netflix, Hulu Plus, iTunes, Amazon Prime, and other services must navigate differing interfaces. For a full, next-generation TV experience, Apple will have to offer it all, or it will have to provide a shell for delivering content that preserves enough of third-party branding to appeal to those companies but not so much that consumers are confused with the interfaces and overall look-and-feel.