This is a follow-up to my three-part series on TV:
- Part 1: The Cord-Cutting Fantasy. Getting only the content you want without paying for everything is a fantasy. Pay TV is socialism that works.
- Part 2: Why TV has resisted disruption. Great content is differentiated, has high barriers to entry, and depends on networks.
- Part 3: The Jobs TV Does. The key question is attention, not set top boxes. What jobs do we hire TV to do?
I got quite a bit of feedback on the TV series – thanks for that! Here are a few additional notes based on some questions I received on Twitter and email.
In the introduction to Part 2, I said:
I should note that yesterday and today’s post are very US-centric; more on the international potential in Part 3.
Part 3 – The Jobs TV Does – argued for a model that competed for consumer attention instead of one that competed for content. This model has the added benefit of working everywhere, right now. To illustrate, in the iTunes Store, international availability is as follows:
- Songs – 122 countries
- Video – 109 countries
- Apps – 155 countries
The actual songs and video available differ hugely by country as well. Apps, for the most part, don’t. It’s this consistency and go-to-market clarity that is one of the biggest draws of the approach I predict.
Partnering with the cable companies
An analyst report from Brian White predicting an “iTV” made the rounds last week:
We were told that carriers will be an important part of the go-to-market strategy for Apple’s TV ambitions and subsidize the $1,500-$2,500 “iTV”, offering customers a single bill that will include a wireless plan (i.e., iPhone, iPad), Internet connection services, an “iTV” plan and other services. As we have previously discussed, the 60-inch “iTV” (50-inch and 55-inch may also be available) is anticipated to come with one iPad-sized “mini iTV” with the option to add more “mini iTVs”.
Leaving aside the product details, most of which don’t make much sense, there is a certain allure to this model. It basically replicates the iPhone model, where Apple sells a high-price high-margin product that is subsidized by the service provider. However, I don’t think this is the way they will go, for a few reasons:
- TVs aren’t phones. They’re replaced less often, and having a 30% margin (or 50% iPhone margin) would be exceptionally expensive for the same experience as a regular TV + Apple TV
- Apple building the actual set-top box is more plausible, but then there is the problem of balkanization in both standards and customer access. In fact, Steve Jobs was asked about this directly and gave a similar answer
- TV providers have little incentive to partner with Apple on favorable terms; in contrast, the carrier marketplace is far more competitive (which is saying something!). If Apple did partner with someone, it would likely be one of the satellite operators, who are unavailable to a great swathe of people, including many in Apple’s urban base
About those ESPN Numbers
That’s 36.712 million people, and lowers the a la carte price to around $15 (the affiliate fee is $5.13). That’s not completely outrageous, but as long as sports are scattered across multiple channels (including ESPN2), it’s still not practical.
Apple TV hardware
- At WWDC Apple will announce an SDK for the current Apple TV
- The control method will be an iOS device
- In the fall, Apple will launch an upgraded model that supports an optional wireless controller
There are two big limitations with the current Apple TV hardware:
- There is only 8GB of memory on board, which doesn’t leave much space to store apps
- The SoC is a single-core A5
When I wrote my prediction, I knew about the storage issue, but figured it wouldn’t be a problem for developers simply testing. However, I was under the impression from this article at Anandtech that the current chip was a full A5X (i.e. the same chip as an iPad 3). Thank to Kirk Burgess for pointing me to this newer Anandtech article that says otherwise:
The old A5 package measured roughly 14mm x 13mm, while the new package is approximately 12mm x 12mm. Chipworks removed and de-lidded the new chip, determining that it’s truly a new piece of silicon with a single core ARM Cortex A9 and a dual-core GPU. The previous part was a die harvested A5 with one CPU core fused off (S5L8942), but this new chip physically removes the unused core (S5L8947). The GPU seems to be untouched. There are other changes however, resulting in a 37.8mm^2 die down from 69mm^2 in the previous A5 design.
This means CPU performance is less than an iPad mini (or iPad 2), with similar graphics performance. That’s not great, and throws a bit of a wrench in my prediction. Perhaps the SDK will end up depending on new hardware.
There’s a decent chance nothing happens at all. The TV market is not an easy or obvious one, and while I think Moore’s law has made my prediction possible, there’s the bigger question about focus.
We decided what product do we want the most: a better TV or a better phone. Well, the phone won out, but there was no chance to do a better TV because there was no way to get it to market. What do we want more? A tablet or a better TV? Well, probably a tablet, but it doesn’t matter, because if we wanted a better TV, there’s no way to get it to market. The TV is going to lose until there is a better – until there is a viable go-to-market strategy.
We’ll see on Monday!