One of the memes I’m seeing in the discussion of the iPad is that the Apple TV is one of Apple’s failures. It seems to be a common idea and an easy target, but I think that idea is dead wrong. Yes, it hasn’t sold 800 billion units like the iPod and the iPhone, but that it hasn’t been an insanely successful product doesn’t make it a failure.
(quick digression; when people decide to go talking about “apple’s failures”, the common commentary is something like ‘Apple’s failed products like the Apple TV and the Cube’ — when you realize that the Cube was released in 2000 — that’s ten years ago — and people looking for anything to criticize in Apple’s product line can really only come up with two examples in a decade, well, that says a whole lot about Apple’s success, no? )
I’ve got two arguments why the Apple TV isn’t a failure. It’s subjective and certainly open to discussion, but hopefully this will cause you to stop and consider…
First: Apple doesn’t consider it a failure. If it did, Apple would have dropped the product and moved on by now. They’re still selling it, supporting it and enhancing it — so Apple clearly sees a future to it. Otherwise, it wouldn’t be available to buy.
Second: I’d argue that for a product to lose, some other product has to win. The product that beat the Apple TV is…. It is… Um…
See? The answer is “nobody”.
And that’s why Apple still has the Apple TV and what gives the people who like making immediate judgements on things the quivers. The market the Apple TV is in is still forming. Nobody has won. Nobody has lost. The fight is still in the early stages.
I’m frankly a little surprised at this, I thought the market would mature and mainstream faster than it did. One component that has slowed it down is the lack of standardized interconnects — i.e. the failure to launch of the Cablecard. It’s not clear to me if Apple was ever really looking at the Cablecard as a solution here, but if they were, it didn’t happen and it never really became an option.
So Apple’s real solution here is downloadable content, and that’s dragged by the relatively slow adoption of fast/cheap broadband in the states. It’s also dragged by the owners of the video content being in no super hurry to hand over control of the market to Apple the way music was handed over to it. the music studios hate how Apple can dictate business to the studios instead of the other way around, and so there’s been this deadly and slow dance for control between the studios and Apple, and since the volume (i.e. “money”) isn’t there, the studios can take their time and push for better deals and hope for alternatives so they can play someone off against apple for leverage. So far, nobody’s really come up with something that remotely competes with iTunes in numbers and scale, though.
What can push this market forward is a change in the dynamic. Apple TV wasn’t the product to drive adoption of iTunes for video on a mass scale, so there’s no strong incentive for studios to buy in and get on board. Because of that, it’s been a slow and steady grind to get content into itunes, so things move in slow motion.
But just suppose Apple were to come out with another product, one that hooked up to iTunes, was a good experience to watch video on, was priced in a way that the general consumer would buy it — and sold a zillion units? Suddenly the studios are going to hear cash registers, and more importantly consumers complaining loudly about the things they can’t watch because they’re not in iTunes. And that creates incentive to cut deals to make it available, because now there’s demand (and revenue). And that demand (and revenue) puts titles in iTunes, so suddenly the iTunes/AppleTV option is a viable alternative to Netflix or pay per view.
So my argument isn’t that Apple TV had failed, but it was waiting. Waiting for something to come along and do what Apple TV alone couldn’t do, which was drive demand and sales and rentals via iTunes to generate revenue which attracts the studios which brings in the titles which generates more sales of units which an Apple TV can leverage because the consumer wants ot be able to watch their movie both on their — device — as well as their TV without buying it twice.
And it seems to me Apple just announced that device. And that device has the potential to create the environment where Apple and the studios can sit down and work out getting all of the content into iTunes for consumers to consume. And when they do, suddenly people will realize Apple has this device they sell where that content also will end up on their TV’s!
And gee, Apple just happens to have it sitting there, waiting for consumers to discover it. And because Apple, unlike the pundits, realized the market was still creating itself and was willing to be patient, it has a product there and ready to succeed when the market matures enough to allow it to. That’s a LOT easier than trying to create a product to catch a market as it explodes any day…
So if you ask me, Apple’s stupid like a fox here. It knew that sooner or later, it’d need the Apple TV. It put it out there, it learned from it, it let it help Apple figure out how to create and own the market and bootstrap the functionality they needed to do so (like video rentals, which now exist and are sitting there waiting for the tablet. That wouldn’t have happened without Apple TV being there to implement it for). And when the market starts to grow because tablet sales drive content sales whichget the studios on board which drives consumer interest (and tablet sales which drive content sales which….), Apple can introduce an updated Apple TV to take advantage of it and start the buzz and hype to push it into the success curve — and because they started the process years ago and were patient and didn’t cut off support of the device when it wasn’t an immediate insane success, they’ve made these next steps a whole lot easier for themselves…
Apple TV isn’t dead. It’s in make up waiting for the second act to begin.