Blog Post

Whither Apple TV?


Three years after the “DVD player for the 21st century” was first introduced by Steve Jobs, the Apple TV still doesn’t actually have a DVD player, and doesn’t actually have much of anything, at least compared to the competition. Apple’s (s aapl) media center device languishes as little more than a video kiosk for the iTunes Store in the living room. Meanwhile, competitors in the media center market stream the future to couch potatoes everywhere.

Boxee is just the latest example of that future. NewTeeVee reports the startup behind the media center software has just received $6 million in venture capital. This brings total investment to $10 million in less than a year.

According to CEO Avner Ronen, the company has recently seen “increased pace from the biz dev side.” Translated from marketing speak, that means consumer electronics devices want Boxee. The company plans to nearly double its staff off 11 to bring more content and more apps to Boxee. When a company with 20 people is handily beating Apple in the race to the living room, it begs the question: whither Apple TV?

After introducing the Apple TV in September 2006, then reintroducing it in January 2007, the device went on sale for $299. It was an awkward beginning. There was little content available for purchase, and the Apple TV needed to be tethered to a computer over a network to manage content. While Apple shortly added a model with a larger hard drive, it took a year before the company addressed the core feature.

“Apple TV was designed to be an accessory for iTunes and your computer. It was not what people wanted. We learned what people wanted was movies, movies, movies.”

So said Steve Jobs concerning Apple TV “Take Two,” the software update that allowed users to purchase and rent video content directly from their Apple TV. It was a badly needed update that put the Apple TV back in the game, but that was 18 months ago. Since then, the biggest news concerning the Apple TV was the company officially declaring it a “hobby.” Worse, at the conference call in October of last year, Steve Jobs remarked regarding the media center business that “I don’t think anybody has succeeded at it. And actually the experimentation has slowed down. A lot of the early companies that were trying things have faded away.”

This is just not true.

Besides the most recent news about Boxee, there have been other major developments related to media centers and content. At the same time the Apple TV was announced, Amazon’s (s amzn) Unbox service came out. Rather than fade away, it’s now HD. In May 2008, Roku brought out a $99 set-top box for streaming movies from Netflix. Shortly thereafter, Microsoft (s msft) brought Netflix to the Xbox 360. Let’s not forget Hulu, the aggregate video content site that appeared in 2007. Hulu has seen a five-fold increase in viewership since last year.

Streaming is the future for video in the living room, but the question now is whether Apple wants anything to do with the living room at all. Remember, this is essentially a software platform that can be updated at will. If there was ever a time for Apple to get back in the business of the living room, the expected Apple Event in September would be it. Let’s hope Take Two isn’t a wrap for the Apple TV.

19 Responses to “Whither Apple TV?”

  1. I think one of the real big problems is that more and more people have gaming consoles in their living room. With free or relatively cheap apps I can connect my iTunes library (Connect360) and stream Hulu (Playon on XP via Parallels) to my 360, not to mention the built-in Netflix functionality. People have the stereo for audio output and the TV for visual output and are looking to streamline the other appliances that feed those two outputs. A gaming console (Xbox and PS3 in particular) is going to be much more powerful than a small digital video appliance and gives you way more functionality than the Apple TV can. Why have an Apple TV, a DVD player, and a gaming console when the gaming console can just serve all three purposes?

  2. The real reason why Apple does not offer what the author thinks it should, is that Apple does not want to become a victim of streaming. In other words Apple seems to know something the author may not, although it is eluded to with the author’s statement that “the future is streaming”.

    Emphasis must be put on “the future”. Google loses over $1M/day on YouTube – due to the high costs of bandwidth. Hulu and others the same. If Boxee hosted content they would lose the money they just raised in about 6 days.

    Apple’s hobby, the AppleTV, probably costs it nothing. Google’s hobby, YouTube, costs it dearly.

    I don’t even have an AppleTV, but we have 3 iPod/iPhones in the house and some cables to hook to TV. The DVD player, also hooked to that TV, gets little use.

    • Who said anything about free?

      AppleTV allows you to pay for content. It should also allow you to easily access content that is available via other models—like Hulu’s advertisement-supported content.

      Before you knock Hulu, you might want to note that they had $70M in revenue in 2008 with a net of about $10-15M, depending on who you ask and what you factor in. Slim yes, but not at all bad for a streaming video company relying on an advertising model.

  3. Jack bauer

    well, i love my apple tv. even my wife can’t live without it. why people complain, i have no idea. mine never disconnects from the network, never freezes, has all my movies, tv shows and music that is in itunes, all 2TB worth. you don’t have to sync, just have it in itunes and appletv will stream it. perfectly. maybe because i went all in and everything in my house is apple, but my streaming is flawless. at one point last week, 1 kid+wife in living rm, streaming movie on 52″ HD TV, 1 kid in BR streaming movie to laptop (itunes shared from mac pro to anyone on home network), 1 kid wireless laptop and the 4th (yes, i have 4 teenage boys!) was streaming on his iphone.
    not 1 hiccup. amazing products!

  4. Dave E.

    Throw a Blue-ray reader in the Mac Mini then I’ll be forking over another grand to Apple and extremely happy. Oh and the Apple TV might as well die off because of lack of functionality and standard hard drive space for going exclusively digital media.

  5. >> Steve Jobs remarked regarding the media center business that “I don’t think anybody has succeeded at it.

    What part of that statement is “simply not true”? No one has succeeded at the set top box market. Boxee is a niche product in a niche market. Same goes for Roku, AppleTV, PS3, Xbox 360, Popcorn Hour, and the dozens of failed products by Linksys, Netgear, etc. Set-top boxes will be successful in the future but no one has been succesful at it yet.

    • Jobs’ entire statement was that no one has succeeded, experimention has slowed, and early innovators are fading. Amazon, Netflix, and Microsoft, are all early innovators expanding their services. Hulu is an excellent example of experimentation that has caught on. The problem for Apple is that streaming content is in opposition to their business model of selling and renting content. That business model is going to have to change some, or the Apple TV will never be more than a hobby.

  6. Boxee is the only reason I bought an Apple TV and the main reason I use it.

    Whether by acquisition or alliance, the next Apple TV firmware update should include Boxee. That would be game-changing.

    And maybe Apple could help Boxee with the horrible aesthetics on their remarkably-functioning app?

  7. Drshame

    The Apple TV is the “Apple II” version of the Mac Mini.
    Apple has a very capable entertainment server: The current Dual Intel Mac Mini.

    Has DVD, has I-Tunes, runs Hulu, Plex, Front Row, Boxee and with an Eye TV Tuner, becomes whatever you want it to…in effect a Mac Tivo.

    I have a hacked Apple TV that gets everything from ATV/Hulu/Boxee .

    It doesn’t work well, is intentionally crippled and remains “old technology”. It needs a DVD and built in-digital tuner.

    The Mac Mini is already here, hooks into my 1080i LCD HD TV, and plays audio thru my stereo system…is on my 80211b wireless network and works with my Tivos and my main Mac Pro System.

    Stop asking for an upgrade….it’s not even needed!

  8. Bigs_in_DC

    I would love to see more options for the Apple TV, including some apps. It is a great device for my large collection of music and videos, but i would like to be able to view more content from the internet.

  9. Jordan Golson

    Hulu is expressly forbidden from working on any set-top boxes that connect to a TV. Hulu will not be coming to the Apple TV, or the Xbox 360, or anywher else anytime soon I suspect.