Apple’s Path to the Living Room Runs Through the Cloud


Based on recent patent applications and company acquisitions, it appears that Apple (s APPL) is looking to move its media delivery systems to a cloud-based media storage system, according to a research note by Paul Sweeting at GigaOm Pro (subscription required). This approach could be a key part of helping Apple push into the digital living room market, valued at $53 billion.

Recent comments made by CEO Steve Jobs in reaction to Google TV indicate that Apple’s approach towards innovation in the set-top market is, in his words, to “go back to square one and tear up the set-top box and redesign it from scratch.” Those remarks are in line with reports that Apple is planning to make a major update to its Apple TV product.

By acquiring streaming music service Lala — and then shutting it down, Apple gained software designed to manage cloud-based media storage. In addition, two patents filed in 2008 and 2010 indicate a system for pausing a piece of media on one device and then resuming it from the same pause point on another device, as well as a content tagging system.

If this cloud-based structure is integrated into the iTunes Store for apps and media alike, Apple will find itself with an effective media distribution platform that encompasses streamed, purchased and stored content.

Related GigaOm Pro Content: Apple’s Path to the Living Room (subscription required)


Palo Alto jones

Ummm, a company called ActiveVideo based in the Valley is already doing the CloudTV thing for Cable and other media devices. They claim to be on a path to 20 million homes. So, not sure if this is a new concept.

Paul Jones

Check out a recent post I wrote on this. I entirely agree with you Liz.

The new rumors about Apple TV moving to the cloud, if true, will be a game changer for consumers and how they access and consume content. They will also create a new source of competition for the cable companies and Netflix alike.

Here is How I Envision Apple TV in the Cloud Will Work

First off, I envision that Apple will essentially store a copy of your entire content library that exists on Itunes in the Cloud. That means that they would have a copy of every Song, Movie, TV Show, App, and Book that you have bought and/or stored through Itunes. Then, wherever you are in the world, on whatever device you want to use, whether that be your smartphone, your personal computer, your television, or even the television in your hotel room, you would have the ability to access your Itunes library and consume the content on whatever device or screen that you desired. Furthermore, if the piece of content that you desire is not currently part of your library, you could purchase it from wherever you were, and consume it instantly, without having to actually go through the painful process of downloading the content to your own device. Instead, you would instantly have access to all content, by virtue of an Internet connection, on any device, anywhere you travel in the world.

I realize that these are bold statements, and that there are numerous technical issues involved with making this possible, however, I believe that this is part of Apple’s broad goal. As a result, I believe that there are potentially serious implications for both the cable companies and Netflix alike.

To begin with, in my opinion, the most significant implication of moving Itunes to the cloud is that Itunes will shift from being a tool that requires the user to wait for a download to one of instant gratification, allowing the user to instantly stream any piece of content from the cloud without having to wait for a download. Just recently, I wanted to watch an episode of Dexter, however, was frustrated that I had to wait the 30 minutes for the episode to download from Itunes, and so found myself turning first to Netflix to see if it was available for streaming, only to eventually turn to my VOD channel on Showtime to watch the episode. If the episode was available to watch instantly on Itunes, I would have purchased it through there rather than turning to the other services. The shift from a download to a streaming focus puts Apple in direct competition with VOD of the cable companies and instant streaming via Netflix.

By shifting Itunes to the cloud, and introducing a new version of Apple TV that connects it to ones TV, users will be able to stream and purchase any movie or television show through Itunes as easily as they can purchase it and watch through the cable companies VOD box or Netflix via the Roku. Unless the cable companies or Netflix can offer better pricing or unique or exclusive content, I believe that Itunes in the cloud may pose a serious competitive threat to both sets of companies. Apple’s offering will be much more broad and unique, in that they will allow users to consume not only video but also multiple types of audio content, and games, across multiple devices, wherever they are in the world, whereas the cable companies and Netflix are going to be limited to serving the user only video content.

It will be interesting to see how this plays out over the coming years, and whether Apple can secure enough content to offer a directly competitive service to the incumbent cable companies. I think they will, but only if they can demonstrate to the content providers that it makes economic sense for them to do so. This is the unknown, which is why we will need to wait and see how this will play out. I can assure you that the content providers have one foot in Apple’s door, but yet they don’t want to bite the hand of the cable companies, which feeds them. Stay tuned.

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