Overshadowed by the mighty iPhone, the Apple TV can bring high-def movies and music downloads from your PC to your home theater. Is it the next big thing from Apple?
How big will the Apple TV be?
If scattered blog reports are to be believed, the Apple TV is making its way into customer's hands today, after a few months of delay. The device, a simple box that pulls media from your iTunes account and plays it on your television, was previewed by Steve Jobs back in September of 2006. It uses Ethernet and Wi-Fi connections to connect to your home network, and connects to your television set using component or HDMI cables. Video quality is high-definition, up to 720p or 1080i, though not 1080p. An Intel chip, based on the Pentium-M, will supply the brainpower, while an NVIDIA GeForce-style graphics chip handles what we assume to be hardware compression for movies and music. We're still not entirely sure how the 40GB hard disk drive comes into play, but we imagine it provides a streaming buffer between your computer and your television.
The Apple TV will be huge, if it overcomes one simple obstacle. It is a difficult device to explain, and it may be even more difficult to explain to a customer who has come looking for a simple computer to do some e-mailing and Web surfing (full disclosure: this editor worked for a year in an Apple retail store). Also, Apple is competing against a variety of similar options, each with their own advantages and pitfalls.
Vs. Tivo
TiVo's problem was that it was difficult to explain. Can you create a 30-second commercial that tells the entire TiVo story? No, and TiVo enthusiasts who try to explain it to their friends sounds as crazy as, well, Mac enthusiasts. No wonder the "Apple is buying TiVo" rumor pops up from time to time. TiVo won't go away because of Apple TV, they perform dramatically different functions, and as long as customers are still subscribing to cable and satellite television services, they'll want a DVR. Still, when we have conflicting shows, we are more likely to purchase one on iTunes, "Heroes" for instance, and TiVo the other, say "24." We could buy another TiVo, and eventually we probably will, but the iTunes option is appealing because it is convenient and inexpensive. And if we forget to TiVo something, the Apple iTunes store always has it in stock, unlike TiVo which is at the whim of the television schedule. Also, not counting the price of content, the Apple TV, at $300, is less than half the price of a new high-def TiVo, and space is only limited by your computer's hard drive and backup media, instead of the TiVo series 3 paltry drive. Could the Apple TV eventually take on DVR functions? Maybe, but not without a Cable Card slot and a much larger hard disk.
Vs. Amazon Unboxed
Amazon Unboxed offers a stopgap between the Apple TV and TiVo, especially now that Unboxed downloads directly to your TiVo. We've used Unboxed, and it's not a bad service. There is a wide selection, but searching for titles that work with TiVo can be confusing, and at times disappointing. Like iTunes, Unbox works with PCs and portable media players, as well as TiVo devices. Also, pricing is similar to Apple's store, with movies from $10 to $15 or more, and television shows for a couple of bucks. Unlike Apple's store, unbox even offers rentals, which makes sense, since we guarantee you're don't need to own "Employee of the Month" after you've watched it once. The main advantage Apple TV and iTunes have over Unboxed is the high-definition output. Movies purchased on iTunes are available in three formats: portable, regular definition, and high-def, and one purchase nets you all three versions. We think high-def will be a driving factor in adopting the Apple TV, as television prices have sunk in the past couple of years, and consumers, with the Xbox 360 and Playstation 3, are getting more used to connecting high-def devices to their new LCD and plasma TVs. If Amazon offers high-def downloads, users will have a harder time getting them to their televisions, without an expensive Series 3 TiVo or a well-connected Windows Media Center device. In any case, even with support for TiVo and PMPs, the popularity of the iPod and iTunes basically ensures that most households with the former devices probably also own the latter.
Vs. Netflix
Netflix has a selection that Apple may never match. Unfortunately, Netflix requires just a little too much work from the average couch potato. We currently have three Netflix rentals at home that have been waiting to be watched for more than two weeks, as soon as we get around to it. Netflix has become like the movie rental version of a gym membership you never use, and we wonder how long we'll continue to hold onto "An Inconvenient Truth" before we're either in the mood to watch it or send it back unwatched. Thankfully, when we're in the mood for a Korean revenge trilogy, Netflix has import copies of "OldBoy" on hand, while we doubt this level of selection will come to Apple. Still, once Apple has signed on all the major, and most independent studios for the iTunes store, Netflix itself might become more of a niche supplier.
Vs. Blockbuster
Some people just won't want another box near their TV. Some people won't buy movies, or perform any transactions, online. Some people might just want a physical box in their hands. Not many, but some people. Blockbuster has the advantage of brick and mortar stores, an advantage they hold over Netflix even in the online distribution model of movie rentals. With Apple, though, this is only an advantage if Apple doesn't sell the movie you are looking for, and you are forced to trek to Blockbuster. Otherwise, Apple is an even more convenient option than your local rental shop. Of course, renting is cheaper than buying, and Blockbuster's late return policies have certainly loosened in the past year or so.
The real Apple advantages
So, there are two real advantages Apple holds over its competitors. The first, and most important, is the iPod. As the best selling music player, the iPod's built in audience is massive. Even if most iPod owners don't have an iPod that can handle video, they eventually might. And anyone who buys into the Apple iPhone is a potential video customer, and could therefore use the Apple TV. We think the Apple iPhone is just the tip of the iceberg for what's coming from Apple, in terms of portable video players, so we expect this market will only grow.
The second, as we've mentioned, is high-definition, an aspect that cannot be overlooked. High definition television sets are being gobbled up by consumers. High definition and enhanced definition (480p) are the standard on all three next-generation game consoles, and the Playstation 3 and the Xbox (with the add-on HD DVD drive) are capable of playing hi-def movies. Portable video cameras with high-definition sensors are shipping at consumer-friendly prices. Clearly, high-definition is the way of the future, and not the distant future, but the near-term. Apple is ready to sell high-definition movies the day the Apple TV appears in customers' hands.
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