An integrated Apple HDTV?

According to Isaacson’s biography of Steve Jobs, one of this final plans was an integrated HDTV. Jobs was quoted as saying, “‘I’d like to create an integrated television set that is completely easy to use. 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.”  Considering Jobs’ obsession with secrecy and normally not discussing future products, this comes across as somewhat uncharacteristic even though previously, one could extrapolate some of these objectives based on the reasons why Apple released the iPod, and later entered the smartphone market. This is one of the key things Jobs discussed back in 1997 at WWDC as to why he and Woz started Apple. It was about creating and building products which they themselves wanted to use. The added twist to that was an uncompromising eye for detail regarding the products design. Just as the portable music player and smartphone market had mostly uninspiring products and/or consisted of really poor user interface/experience, so does the television.  The cynical side of me thinks that Jobs may have lobbed a decoy meant to throw the competition into a wild goose chase, expending effort away from their core competencies.  Apple corporate employees (full and temp) as well as contractors should be familiar with some of the methods used to determine where leaks are coming from which is why part of me thinks that while Apple does have prototypes in the work, another part of me thinks Jobs threw up a smoke screen regarding the details that he mentioned to Isaacson.

Back at D8, Jobs told Walt Mossberg the television market is a tough nut to crack because its structure is so balkanized where it is challenging to make a profit on the set top box (because it is highly subsidized and given away). This is why the Apple TV has been called a hobby. While it isn’t perfect, It does provide a glimpse into the sort of objectives Apple is trying to achieve with their box. I’ve outlined some issues that I’ve had with my 2nd generation Apple TV, but these are somewhat minor ones in terms of the broader challenges Apple faces in bettering the overall user experience. The biggest ones are on the backend infrastructure (video is by nature, bandwidth intensive) and with the content providers. The problem on the content side is that the providers do not want to lose control to a company like Apple which can dictate the terms like it did with music. The hardware and software technology is ripe though compared to just a few years ago. Now assuming this little tidbit about an integrated HDTV was not just so form of headfake…The backend (iCloud) has to be simple (as far as the user experience goes) and reliable. iCloud has unfortunately experienced some hiccups and its user experience has not been necessarily Apple-like in terms of it “just working”. As mentioned, Apple’s web services (.Mac/MobileMe) haven’t been stellar since it isn’t what I would call one of their strong points. The jury is still out regarding iCloud which is why I believe they need to address some of the initial teething problems quickly before a MobileMe like perception takes hold where people lose trust in it. As for the content, getting the providers onboard with ALL their content is going to be a tough sell. Yet, the whole landscape of cable television is changing with more customers choosing to cut the cable (especially in the U.S. where there are only a handful of regional providers — in high density cities like Tokyo where it was less challenging to wire up the infrastructure, competition is strong as there are more than half a dozen CATV operators, many which also bundle internet and phone service for a reasonable cost — e.g. J-Com which provides all 3 for around ￥10,000 per month — with Time Warner Cable, a digital TV and 10Mbit/1Mbit bundle already runs around $120 not including all the fees and taxes). Eventually, it is my belief that this old push model of bundled programming will lose out to the pull model. The old model is lucrative to both the content providers and the cable companies but not the consumers who end up paying more for a bunch of channels/programming which they rarely watch. It’s also one of the key reasons the content providers don’t want to negotiate deals which give away the keys to the kingdom. However, I’m one of those who believes that outcome will be inevitable because there is a whole generation who are pulling their content (sports fans are a whole different demographic though and represent a ongoing lucrative revenue source for traditional operators). As more subscribers are lost, these operators will need to find a way to make up for that lost revenue. I just don’t see them unbundling channels and allowing the customer to pick what they want ala carte. Increasing prices to make up for it eventually won’t work as that will only serve to drive more customers away.

So what have some U.S. cable companies been doing to try to make their offering more attractive. Well, a few have released apps that allow their subscribers to view some programming on mobile devices that are connected to the same home network. While it’s something, it isn’t a good enough carrot to prevent people from potentially cutting the cord. And while Apple has done reasonably well with iTunes, that by itself hasn’t been enough to motivate people to drop their cable completely.  There needs to be a disruptive enabler to get even more people to change their viewing habits and I believe one of them is Amazon’s Kindle Fire where it will help to push more users towards the pull content model. The Kindle Fire being lower cost, will be tempting to those who have been cost conscious and considered the iPad out of reach (Apple could change this though by lowering the entry point by selling the older version of the iPad at a lowered price once the 3rd version is released in 2012). Since the device is primarily for media consumption, that will bring in numbers of new on-demand content users.  The more users who take part in this model, the less the content providers can ignore this important revenue stream by not offering a full lineup, especially if they continue to see subscribers discontinuing their regular cable/satellite service. Apple indirectly benefits because more users will be accustomed to downloading/streaming content. The carrot Apple would be dangling is similar to following its prior strategy with the iPod and iPhone in terms of making the user experience of an internet connected television a more satisfying one (again, I’m under no illusion that it will be easy to pull off given some of the issues I have with the Apple TV).

An integrated Apple HDTV will also have additional carrots which could make it attractive especially if Apple brings applications to it (think gaming).  One reason the Apple TV doesn’t do this now is that it has to connect to a wide variety of 720p or 1080p models. Apple chose to support screen resolutions in iOS by catering to 3 (as of this writing) specific resolutions; 480×320, 960×640, and 1024×768 (on the iPad). Furthermore, they moved away from the concept of pixels by using points instead. The latter is resolution independent which means that as the density of pixels in a display increases, all the elements which are displayed becomes sharper. Apple also defines 300 pixels per inch as the number where the human eye can no longer distinguish the individual pixels on a display (they refer to this as a Retina Display). For example, the 3.5″ screen in the iPhone 3GS has 163ppi with a 480×320 resolution. With the iPhone 4, the pixel density doubled to 326ppi with a 960×640 resolution. The iPad and iPad sport a 132ppi 1024×768 screen so a mere doubling of pixel density to 264ppi for a 2048×1536 resolution would just fall short of this 300ppi number. However, because the average viewing distance of an iPad is around 15-18 inches, even a 240ppi display would look sharp and smooth from that distance.  The issue is more one of marketing than anything else but the reason for going through this exercise is that it allows developers to target specific resolutions when it comes to artwork without having to worry about handling a wide array of possible resolutions on the iPod touch, iPhone, and iPad. Televisions with different HD resolutions (720p versus 1080p) on differing screen sizes presents one of those challenges as far as resolution goes when it comes to handling artwork in an app (in terms of providing consistency and scaling it on flat screen TV’s of multiple sizes and resolutions which meet Apple’s standards).  By delivering their own 1080p solution, this all becomes a non issue. Furthermore, if the old cable business model continues, then just as how those providers offer apps to stream their current programming, those same apps (which would be subjected to certain usability guildeines) can be targeted at an integrated Apple HDTV. Such a set could also integrate Siri (controlled via an iPhone, iPod touch, or newer generation iPad) to control tasks like finding programs. Just how rapidly this sea of change will occur is anyones best guess at this time. However, since the cat is somewhat out of the bag that Jobs was seriously looking at tackling this market, it basically puts those in the old business model on notice that it is no longer a matter of if, but when Apple could enter this area.