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Apple TV faces significant barriers to mainstream adoption, even for Apple

Unless Apple TV becomes more open, similar to Android, it will not disrupt the TV market the way the iPhone did the smartphone market.

By Steven Max Patterson on Mon, 12/10/12 - 9:17am.

Apple CEO Tim Cook attracted a lot of attention when he said that TV is "a market that we see, that has been left behind" in his interview with NBC anchor Brian Williams. However, the more important Steve Jobs-inspired Cook quote came later in the interview:

"Our whole role in life is to give you something you didn't know you wanted. And then once you get it, you can't imagine your life without it."

The statement leaves the viewer wondering how Apple can redesign the television experience to meet this standard.

The sheer volume of Android shipments limits the attractiveness of Apple devices as a sole distribution mobile end-point for television networks and content providers. This exists today as free Android or iOS apps restricted to registered cable or satellite TV users who stream the current seasons' content on the set-top box to the mobile device. While streaming to mobile devices is a convenience, it won’t move the "can’t imagine life without it" needle for Apple.

Apple TV was introduced at the same time as the iPhone. Apple is closing in on shipping a total of 300 million iPhones since that date. Apple regularly releases the number of iPhone units it ships; however, Apple TV shipments are not materially significant and have not been released.

Apple TV is a small device about the size of a can of tuna fish that lets users connect their home network and iTunes, Netflix, Amazon and other content networks to their high-definition televisions. It offers streaming from iPads, iPhones and Macs and provides streaming of purchases of television shows and movies. But iTunes, Netflix and Amazon are not a replacement for watching the television that consumers love the most for two reasons. Firstly, current news and sports are not available. Second, top TV shows are restricted to the previous season unless the network offers the current season for free. Clearly, plenty of people can still "imagine life without it."

To achieve growth and scale with Apple TV, Apple must somehow disrupt the television business in the same way that it disrupted the music business. One could argue that Apple tamed theft of music content with iTunes, but others might argue that the iPod encouraged the theft of music content. It is indisputable that Apple profited handsomely while the music labels lost money. As a result, it’s unlikely that the TV content creators and studios are going to ask Apple to disrupt the television business. When sitting at the negotiating table, TV content creators and studios must be very conscious of their losses from pirated content, only offering Apple and other streaming services less valuable content in lower demand by content pirates.

There has been a lot of open source-related innovation around television distribution by the developers of Google TV, Roku and Boxee. This is a very innovative segment. Anyone with Geek-Cred has had a computer tied into their home media center for at least a decade, all of them trying to make video content consumption more diverse and interesting and less expensive, which has produced an inspired group of developers who contribute as employees and as open source contributors to Google TV, Roku and Boxee.