Weekly Update

Xbox One takes over Input 1

Since the official unveiling of Microsoft’s Xbox One next-generation game console this week, more than one commentator has noted its resemblance to the ultimate TV device described by Steve Jobs to his biographer, Walter Isaacson, shortly before his death (see here and here).

“‘I’d like to create an integrated television set that is completely easy to use,’ he told me,” Isaacson wrote. “‘It would be seamlessly synced with all of your devices and with iCloud.’ No longer would users have to fiddle with complex remotes for DVD players and cable channels. ‘It will have the simplest user interface you could imagine. I finally cracked it.'”

And indeed, the Xbox One does a lot of the things Jobs imagined. It has a single voice- and gesture-activated interface that can control live TV, apps, games and second-screen content. To understand the full impact of Microsoft’s power move in the living room with the Xbox One, however, it’s useful to recall what Jobs said at the AllThingsD conference in 2010, before Isaacson’s book came out:

The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us… The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines innovation in the sector. The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it. But right now, there’s no way to do that.

Jobs got it mostly right. The reason the crude, under-powered cable box retains pride of place in the living room isn’t simply that it’s subsidized by the cable provider; it’s that it typically occupies the first input — increasingly HDMI 1 — on the back of the TV set. With live TV –still by far the most popular use for a TV set — on input 1, all other types of content and functionality become secondary and are left stranded behind the inertia wall that discourages people from frequently switching inputs.

With the Xbox One, Microsoft hasn’t so much torn up the cable box as shoved it aside. The unit’s HDMI pass-through feature, kludgy as it may seem, has the effect of getting the cable box off HDMI 1 on the TV so the Xbox One can go there instead. It’s a small, technical detail that could have significant impact on the behavior of those who use it. Now, when they’re watching live TV they will already be using the Xbox; turning on one will mean turning on the other. Now, accessing all the other capabilities of the Xbox will be a simple as changing channels, using the unit’s voice-driven Snap mode multitasking capabilities (“Xbox, movies”).

Best of all, it does not require any prior arrangement with a user’s cable or satellite provider. It does to the pay-TV service provider what the original iPhone did to the wireless carrier. With the iPhone, Apple supplanted voice communication as the defining functionality of a mobile phone with data. In effect, it shoved voice off Input 1 on the phone and replaced it with data. Apple then took over the data channel with the App Store.

The big difference, of course, is that people were buying cell phones anyway. Apple didn’t need a Trojan horse like gaming to get people to buy a phone. It just needed to offer a more compelling phone.

For Microsoft’s strategy to work the Xbox One needs to prove a compelling gaming consoles, and on that score this week’s announcement didn’t have much to say. But at least it’s aiming at the right target in the living room.