How Apple Could Own the Interactive TV Market

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Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every Monday on Techland.

There has been a lot of speculation around Apple and its TV plans ever since Steve Jobs told his biographer Walter Isaacson, “I’d like to create an integrated television set that is completely easy to use. It would be seamlessly synched with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it.”

The wording of this quote has caused many to predict that Apple is actually making a full-blown TV set. While this is possible, I am in the camp that believes this is not Apple’s plan. I think the company has a more game-changing approach to creating the interactive TV of the future.

(MORE: Why the TV Industry Can’t Ignore Apple)

For one thing, people have their TVs for an average of seven years and although Apple could update the software on an Apple TV set, this would limit doing anything in component or hardware innovation on Apple TV sets that would already be in people’s homes. Also, Apple’s model so far is to get people to buy new hardware every two years or so, which allows the company to deliver hardware and software innovations in new models on a regular basis.

For Apple to really shake up this market, I believe that it is looking at two distinct approaches that would be game changers in their own right. The first would be to build up content for the current Apple TV set-top boxes, and perhaps more importantly, create a dedicated version of iOS that becomes an actual platform for interactive television. Jobs said that he wanted to deliver a simple interface, but today’s iOS user interface would not translate well to a TV. However, Apple could clearly use iOS as an interactive TV operating system and create a new interface on top of that to make navigating interactive content on a TV very simple.

Apple could then create a software developers kit around this special version of iOS designed just for the TV and set third-party software vendors loose to create and develop apps just for the TV.  Also, since the operating system would be based on iOS, all of Apples existing media content would work seamlessly on current and new Apple TV devices.

The Wall Street Journal wrote an article recently suggesting that Apple was talking to the cable companies about letting consumers use an Apple device as a set-top box. While this is also possible, I think something even more interesting may be going on here.

Apple would love to have a content relationship with the cable companies for existing iTunes media offerings. And while Apple could perhaps create a set-top box for cable companies to use, I think a more likely scenario is for Apple to co-develop a next-gen cable box that uses a dedicated iOS interactive TV operating system that has access to Apple’s ecosystem of content, software apps and hardware links to current Apple mobile devices.

In fact, this represents the second approach to Apple’s cracking the code for future interactive TVs. In what would be a landmark decision for Apple, I think that the company could be considering licensing its iOS interactive TV operating system not only to cable providers and set top box suppliers, but also to existing TV manufacturers.

Imagine for a minute if Apple’s new iOS TV operating system, with a new and easy to use interface was on your cable box or your TV and it would let you tap into Apple’s entire ecosystem of content and services. It would work seamlessly with your iPod, iPhone and iPad as well. And since Apple would give the developer community the ability to create TV-optimized apps, it would also add value to any device that has the interactive iOS operating system, too.

I realize that the idea of licensing any Apple operating system is heresy but the chance of using this approach to eventually dominate the future TV might be too hard for Apple to pass up. If Apple only kept it for itself and used it in a dedicated TV set and future versions of the Apple TV set-top boxes, the company’s potential to dominate the market would be limited.

But there would be another advantage to this approach. To date, Google TV has been a complete flop. It uses a modified version of Android and its user interface and connection to Google’s ecosystem and Android mobile devices is very weak. I believe the key to its meager reception lies in the fact that Android was designed only as a mobile OS and unlike iOS, cannot be adapted for the TV in the same way. In fact, an early backer of Google TV, Logitech, took a huge financial loss from backing Google TV and got out of this program completely.

Now imagine if TV vendors were offered the chance to license the Apple iOS interactive TV software, with access to apps capable of running on other Apple devices that are sold in huge quantities each year. And given the sorry state of set-top box software and user interfaces, it would not surprise me if Apple has success with some of the cable companies, too. If this happens, Apple could push Google’s Android-powered TV platform aside and end up with a dominant position in the interactive TV market. It could make it difficult for Google to catch up.

MORE: How Apple Could Reinvent TV

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every Monday on Techland.

20 comments
jay.blogs.blogger
jay.blogs.blogger

Apple will not license its OS to TV vendors because it doesn't need to. They have been making high quality cutting edge high resolution displays for years and can easily create their own television in a similar vein to their competitors Sony and Samsung. The brand is so string that people would buy it because its Apple. They don't need to dominate the market via OS licenses and this would not guarantee huge returns or profits. Apples profits come from customers clamoring to buy luxury well design products as a television vendor barriers to entry are small...

Jesse Bernal
Jesse Bernal

All I know is that Apple TV should work with my cable box and give me fantasy football and baseball updates.  They could even call it the Apple TV SPORT.  

Johnny5k
Johnny5k

Licensing their OS to existing TV manufacturers is just not in Apple's playbook. They MIGHT license it to set top box suppliers, but only if that's their only chance to integrate with the content providers' content. It would likely be done in a way similar to the ATamp;T-only release of the original iPhone - Apple would work closely with a few of the biggest cable providers first, and later expand to smaller ones. But even then, Apple would demand complete control over the entire interface - not just a "Apple TV" option buried somewhere in the menu. And even if that did happen, don't count out an Apple TV set. No, the television market doesn't have the same kind of upgrade cycle that cell phones do; but that isn't reason enough to think Apple won't release a set of their own. It's the last screen that Apple hasn't integrated into yet (other than via their 'hobby' AppleTV box). It's inevitable that they will sooner or later, but not until they have it just right. People are willing to pay a little more for Apple hardware because it's reliable, intuitive, integrated and supported (with software updates) for a few years.

iPhone Galaxy S
iPhone Galaxy S

I believe that Apple do that by making fine products

ClayManBob
ClayManBob

I just don't get how it's going to be any big deal.

TV is not ready for streaming yet. Too many pauses, stops, jerks, etc. to get my attention.

Let me know when something actually happens.

Bill Collins
Bill Collins

the big bad apple is getting TOO BIG for its britches !

Fatesrider
Fatesrider

Apple can't dominate the "interactive TV market" until it does one critical thing: Stop adhering to its business model.   Apple's obsessive and (to most people despite the marketing hype) self destructive control of their follower's "experience" can't mesh at all with the business models of all the ISP's out there. 

Apple does NOT share.  It never has.  It can't, according to its business model.  It has to control every aspect of their follower's "experience" in order to justify the 50%+ price above other comparable devices, products and services (After all, it colluded with e-Book publishers to fix prices because they wanted to "dominate" the market).  One of those aspects is fixing the price high and making people think they're actually getting value by deriding (or suing) other companies.

Apple is the Microsoft of the 2010's.  A bloated company who makes its followers drink the cult kool-aid through psychological manipulation.  They create badly designed devices and software, provide "geniuses" to help their poor, idiotic customers when that bad design gets in the way, puts out propaganda that the "experience" is everything, derides those who criticize their tactics and makes its followers think they're somehow "special" in a good way instead of a bad way.

I don't like Apple.  The hardware itself is fine - on par with or even better than most other manufacturers - but their design, the business model and their OS software are awful - especially on computers.  The ONLY thing that keeps them going is how they shout down detractors and keep the hype machine going.  Their only genius is in marketing this tripe to the hopelessly naive who have too little sense and too much money.

I don't give a rat's patuti if you disagree with this.  I'm not promoting any particular company here.  Nor any particular service.  I'm bashing Apple for what it does and is.  It is deliberately deceptive, controlling, manipulative - you know, all the things Microsoft was brought to the Justice Department for back in the early 2000's.   Apple's prescient 1984 commercial doesn't depict a nameless, faceless monolithic organization oppressing the masses.  It depicts the end-game scenario should Apple rule the world.  I hate them because of the things Apple can't, and never will, deliver: Freedom, choice and value.

Whine and bleat and moan about this hate-rant if you will, the market proves Apple can only sell mostly useless toys to naive fools who will then demand more pointless gadgets to turn that useless toy into something that looks functional, but isn't.    Apple users are the least computer literate people I've ever met and require the most support for using their devices.  They merely prove the P.T. Barnum adage about a fool and their money and the Lincoln adage about fooling some of the people all of the time.  But a better, and more appropriate one comes from Joseph E Levine:  “You can fool all the people all the time if the advertising is right and the budget is big enough.”

bfdd
bfdd

not sure if serious... has the author of the article spent anytime with an Xbox 360 and a Kinect?  I can yell at my TV to control Netflix, Hulu, Youtube and various other things.  Not to mention there are literally millions of these consoles, hooked up to TVs across the USA.  Then there's the PS3 and Wii as well.  Apple has an uphill battle if I've ever seen one in this space, especially when one of the other offerings doesn't even require me to do anything but talk to my TV to view the content I wish to view.  Author obviously has little to no experience with other media options out there.

Gary McCray
Gary McCray

Now that 1080P TV is commonplace, fully integrating the television into the computing, tableting, smart phone environment is only a short leap.

No doubt Apple is preparing to be a significant player in that arena.

Their expertise in effective and ergonomically minimalist interfaces is perfect for the next level of integration.

Interesting is that what we are talking about is actually best represented by what Bill Gates called "Convergence".

Maybe next Christmas, but this Christmas belongs to the IPhone 5 and the Mini IPad.

ddfletch
ddfletch

It has been almost 24 hours since an apple article appeared. I was beginning to feel withdrawal pangs. Between CNN and Time I have come to count on a pro-apple article every 6 hours on the hour.

Could I suggest that you pop up an article speculating about how awesome the iPhone 5 is going to be and how only the technically illiterate could possibly pass on owning one?

Daner Doodle
Daner Doodle

meanwhile, vizio's co-star is on high demand, potentially filling the voids mentioned in this article.

iOS_TV
iOS_TV

Sounds like alot of speculation. I agree that iOS for Apple TV with 3rd-party apps is likely, but  Apple licensing it to other hardware companies will almost definitely not happen. Just because Steve is gone does not mean the company will change their strategy.

http://iostv.com

Walt French
Walt French

“I think that the company could be considering licensing its iOS interactive TV operating system not only to cable providers and set top box suppliers, but also to existing TV manufacturers.”

Want to give odds of it happening — surely, if it were offered, at least one manufacturer would accept the deal — and any evidence outside of your imagination?

tristan
tristan

@Fatesrider you sound like a disgruntled ex employee..... You have the freedom to choose any product you like, the value is always in the eye of the purchaser and clearly the choice is the customers. Freedom to choice what i like and what i pay. secondly what products do you use? i.e. phone, computer, tablet? Never forget the origins, history of where they came from.... thank God there are people out their pushing design and function boundaries for us the customer.  

Gary McCray
Gary McCray

I have been a PC person since after S100 computers and I hated Apples closed architecture and closed business model.

But! they used that model in the end to make computers attractive and easier to use for most people than PC's. 

Their business ethics are just as vacant as Microsoft's (and the rest of current American corporate business for that matter).

But, in the end they have provided a useful and attractive product to a wide base of barely-computer literate people who would probably have shied away from computers completely if not for Apple.

Credit where credit is due.

EdTwidley
EdTwidley

you forgot to add "glue sniffer" in your list of qualifications...

BluBlue
BluBlue

 Apple apple apple apple BATMAAAAAAAAAAAAAAAAAN !!!