
TV Will Be Apple's Undoing - ssclafani
http://online.wsj.com/article_email/SB10000872396390444813104578018301108074448-lMyQjAxMTAyMDIwNjAyODY3Wj.html
======
dr_
From Fortune: "This is not the first time Jenkins has peered into Cupertino’s
future and foreseen doom. Two years ago, in a column entitled “The
Microsofting of Apple?“, he excoriated Apple for rolling out “increasingly
junky devices” (referring to the iPad) and for making a strategic decision to
“cut off its users from a huge amount of Web content” (referring to mobile
Flash).

Since Jenkins wrote that, Adobe (ADBE) has conceded that mobile Flash doesn’t
work and Apple has sold more than 100 million of those junky iPads."

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dasil003
I have a strong suspicion this guy is just pontificating without actually
having spent any time with people in big content.

> _Video-content owners aren't looking for a savior and ultimately won't be
> satisfied with anything less than an open ecosystem accessible by any
> device._

Big content doesn't give a _fuck_ about open ecosystems. They care about cash
money and to a lesser extent they care about control. What they don't want is
a Netflix decimating and dominating the market. They may be wary of Apple
because of their dominance in iTunes, but if they can grow the market (which
their app store model seems like it has a shot) then big content is happy to
play ball with them.

~~~
kabdib
I've worked in the TV (set top box) business. Oh, god.

The cable companies (a) despise their customers, (b) hate to innovate, and (c)
their /short term vision/ is on the order of five years.

Cable Labs? A firewall against companies that think they can intrude on the
space. Want to do something new and whizzy? No problem, just pass some
compliance tests . . . which takes months or years.

Also: TV is harder than you think. Think "legacy network with some interesting
regulation thrown in" (e.g., handling emergency broadcast signals, batshit
insane limits on use of bandwidth) and that's for starters. Comcast's back
ends are running horrible software stacks, and interoperability with that
stuff is really hard; you get to build your own back-end for testing, probably
millions of dollars . . . and then you get to integrate with Time Warner's
stuff, which is all different, and Rogers, and so on.

TV is all about smiling people circling each other with knives. It's full of
entrenched players who are happy to screw anyone, including big companies who
think they can do end-runs around carefully erected defenses. TV is war.

~~~
w1ntermute
> Also: TV is harder than you think. Think "legacy network with some
> interesting regulation thrown in" (e.g., handling emergency broadcast
> signals, batshit insane limits on use of bandwidth) and that's for starters.

Well fuck that. Just do it all over the internet. The ideal system would be
one where you don't purchase channel subscriptions, but individual shows. Then
you can watch the shows you've purchased as many times as you want, on any
devices you own. Of course, you will get "live" broadcasts in the form of
being able to play it live when it normally airs for the first time on TV.

This is exactly what Apple's vision is, and I hope they find a way to make it
happen, but I'm not very optimistic.

~~~
kabdib
Again, it's harder than you think.

\- You have to get content. Those people want to be paid. You are in
competition for this.

\- The cable companies control your air supply -- the bandwidth to your
customers -- and unless you make them happy, your customers are screwed if
they watch your stuff. Bandwidth caps on the order of 25GB / month are just
crazy small for any amount of TV watching.

Apple could probably afford to buy Comcast (and Warner). That would suddenly
be interesting.

~~~
w1ntermute
> Again, it's harder than you think.

That's why I said I'm not optimistic. I have the confidence that Apple can do
an excellent job of creating a solid and intuitive UI and service. I have very
little confidence that they will be able to make the sort of content deals
necessary to make it have practical value.

I don't think the bandwidth caps are a big issue, because 720p video is
probably 1 GB/hour. You would have to watch 8 hours/day to hit a 250 GB limit.

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culturestate
I have to wonder how much research the author actually did:

> _Video-content owners, including...the NFL and Major League
> Baseball...aren't looking for a savior and ultimately won't be satisfied
> with anything less than an open ecosystem accessible by any device._

Well, MLB is already on the Apple TV, along with the NHL and the NBA.

> _Apple's rejection of Google's superior maps is an obvious example, but it
> goes with the turf. Apple's spectacular success with devices naturally led
> to the temptation of a network-effects empire. To such empires, maps are
> just too important as a way to gather information about users and hit them
> with ads and e-commerce opportunities._

Does _anyone else_ really believe that Apple switched from Google maps because
they want to build a "network-effects empire" in order to show people more
ads? Google is in the ad business; Apple is in the selling-you-devices
business.

> _Let it be said that some techies see evidence of a more rational impulse
> within Apple. They say Apple's browser and HTML5 support are conspicuously
> superior to Android's. Within Apple apparently there are teams committed to
> making sure Apple devices are competitive in the open-ecosystem world that
> is coming._

This...I don't even know. Steve Jobs _himself_ said (albeit in relation to
Flash) "New open standards created in the mobile era, such as HTML5, will win
on mobile devices (and PCs too)."

Apple won't come undone because their TV doesn't sell; Apple will come undone
when competitors can consistently make markedly better products.

~~~
kahawe
> _Apple's rejection of Google's superior maps is an obvious example_

Also, they never "rejected" Google's maps. They simply chose not to distribute
it as a default app anymore and now Google has not yet gotten their new Map
App ready.

Just one of the many examples where the author clearly twists and distorts
reality in the article to fit into a very loose chain of arguments.

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quesera
I thought iPod HiFi was their undoing!

They've had so many, it's hard to keep track.

My instinct is that the TV is a stalking horse. Zero doubt that they're
working on something, and it looks like a TV, but it has to be something a
whole lot more than iTunes+flatscreen+Siri. I know what _I'm_ hoping for...

But if I'm wrong, or if it fails, or both...it will hardly be Apple's undoing.
Their most profitable product lines are still growing fast, and the others are
doing respectably well. They'll need a new product line in the next few years
to maintain growth, yes, and there are other threats. I'm not worried about
this one.

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macavity23
_Simply, content is king again._

I really don't like the dichotomous 'X is king'/'X will lose the war' mindset
- it's lazy and it leads to sloppy thinking and bad decisions. Yes, content is
important, but so is infrastructure, and execution, and ease of use, and so
on. In fact if I were to come up with a single reason for Apple's success,
it's that they understand this - they do the hardware, AND the software, AND
the online ecosystem. Apple doesn't do hardware or software per se - they do
SYSTEMS.

Nobody has got the Internet/TV meld right yet. Seen a Google TV recently?
Certainly it will be tough for Apple to get it right, but dismissing them like
this is just nonsense.

~~~
rkwz
>Nobody has got the Internet/TV meld right yet.

Umm, xbox?

~~~
pmjordan
Maybe it's different in the US, but in Europe, the Xbox is basically just a
gamer thing. Many people who play games on their iDevices and maybe even a Wii
wouldn't even consider buying an Xbox - the branding/marketing/positioning
tells them it's just not for them. Also I think the content situation for
streaming in Europe is a mess, so most people still watch DVDs or satellite
pay-TV or cable (with set-top-box lock-in). That said, if Microsoft released a
rebranded Xbox (not using the Xbox brand) as a pure media device (and sorted
out the content issue), they might be on to something.

~~~
malsme
I think something like YouView has the most potential. It needs a few more
years of development, but it could be bundled into TVs and resold to
broadcasters in other countries as a state broadcasting standard.

~~~
josephlord
Not going to happen (bundling into TVs and being resold to other countries).

Firstly it is not a standard in any meaningful sense but a platform that
happens to be owned by the main free channels and the telcos. It's actually a
bit like Android except Youview can push updates without even the
manufacturers approval!

The rest of Europe has adopted HBBTV as a standard already and much of the
world is adopting similar HTML based solutions if not HBBTV itself.

As it currently stands a hard disk is required and that is unlikely to be
bundled into many TVs in the near future. Spinning rust is too bulky, it adds
cost. Flash is too expensive still for the Youview minimum of 250MB (or is it
even more than that).

For the major TV manufacturers the loss of control of the TV UI is a major
issue and they are unlikely to do that unless they really have to. For the UK
alone it is very unlikely. I'm surprised that some have gone the GoogleTV
route to be honest but I think they were imagining it would take off like
Android has. Also going the Youview route removes their potential revenues
from operating their on online platforms.

So for the above reasons Youview as it currently stands will not make any
impact outside the UK (and it won't actually make much inside either) and
won't make a major part of any TV manufacturers line up.

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inthewoods
My favorite quote:

"A similar miscalculation led Microsoft to treat Netscape as a mortal threat
and into a self-defeating tussle with a reciprocally purblind Justice
Department. The Web did indeed create enormous opportunities that were seized
by companies other than Microsoft, but Microsoft is still around and doing
fine."

That is some serious revisionist history going on there. The author seems to
forget that Netscape was a huge threat to Microsoft. Microsoft then shifted
their strategy to focus on the web in, what I would argue, is one of the more
impressive pivots by a large company. That pivot led to Internet Explorer
crushing Netscape and becoming the number 1 browser. It also led to a radical
reinvention of the Microsoft developer toolset to focus on the web - ASP,
ASP.NET, etc. These technologies may now be passe, but they were pretty
cutting edge at the time. And even though Microsoft has now, in my opinion,
fallen really far behind in the world (missing most of mobile, etc), you can't
say that it was a miscalculation to go after Netscape - think of where they'd
be if they'd not gone after them.

~~~
talmand
I feel the only reason that Netscape was considered a threat by Microsoft was
because Microsoft made them into a threat to be dominated and crushed. It's
true that Netscape was working on things that could have potentially lowered
the value of the OS market but that wasn't just Microsoft's sole source of
revenue. Unless Netscape released products that totally replaced Microsoft's
line of software then people, especially businesses, were going to continue
purchasing Windows.

You are quite correct it was a hugely impressive pivot for Microsoft, even
though they claimed there was no such pivot since the web was part of the
plan. Funny that Win95 didn't initially ship with a browser nor did it install
TCP/IP by default but they tried to convince people that it was a "web OS"
from the beginning. Then they did their typical thing for the time; create a
browser that they eventually released for free, then make it required for
Windows, start duplicating other Netscape products to undercut them, and then
claim it was their intention from the beginning the whole time. Netscape's
demise was just a natural outcome of their superior planning and execution.
The Dept of Justice eventually disagreed with them but Netscape was already
dead in the water by then.

Now, considering that the result of all this was the era of IE6 that we are
just now starting to get out of over 10 years later, I would say that the
Internet would have been better off without their pivot. Granted the tools you
mentioned are nice but there's no reason to think that Netscape, or someone
else, wouldn't have done similar things and possibly better since they most
likely wouldn't have tied them to a specific OS. These days hardly anyone
makes web tools tied to one OS, mostly Microsoft does that.

As for Microsoft, where would they be today if they hadn't crushed Netscape? I
would say that, because of the competition, they would have made better
products and be stronger overall. Once they crushed Netscape they stagnated a
great deal that eventually caused them to fall behind, as you point out. Their
complacency allowed others to step in to become serious competitors that
finally resulted in the web tools you mentioned.

I would even say that because of them crushing Netscape with tactics, used
elsewhere as well, that resulted in huge problems with governments around the
world caused them to be reluctant to be aggressive; which resulted in them
missing the mobile window. They are just now seriously trying to get into that
game.

Of course, most of this is based on hindsight, which is easy to comment on.

------
josephlord
He isn't completely wrong...

TV won't be Apple's undoing but it also isn't obvious that they can win big
there.

It is a complicated business with a number of interlocking players at
different levels and vested business interests. It is also a global business
with rights packaged up at a very national level and sold with exclusive
deals.

While the biggest MSO's in each country (cable, satellite and terrestrial
operators depending on the market) have the scale to lock in key
content/channels to exclusive deals it will be fairly hard to break into the
market in a devastating way. At the moment they have the scale and the
revenues to do exclusive deals with the content creators (that they don't
already own) to keep a large proportion of their customers from leaving. They
(not the content creators/owners) are the big bullies in the market and would
be hard and expensive to topple.

An AppleTV (including screen) if it does happen will need to be a good enough
content offer for most people or it will not be a massive success. If they
still have to use their cable box it can't be a game changing user interface
because you are looking at the STB interface most of the time.

It's not impossible for Apple but it also won't be easy, particularly to go
global. It will cost money to get content which might break Apple's principles
and set a bad precedents for them. They also can't go that expensive because
while I'm sure the UI will be better Samsung/Sony and some of the others
really aren't that bad and the cosmetic designs don't leave that much room for
minimalist improvement.

The business case for Apple is far from clear for me at this point but it
would be a way to take the war to Samsung that would cost Samsung far more
than a billion dollars even for an Apple relative flop. The collateral damage
might kill Sharp unless they supplied the panels and would be another knife in
Sony/Panasonic/Toshiba that they could do without.

~~~
batista
> _TV won't be Apple's undoing but it also isn't obvious that they can win big
> there. It is a complicated business with a number of interlocking players at
> different levels and vested business interests. It is also a global business
> with rights packaged up at a very national level and sold with exclusive
> deals._

Funny, the said the exact same thing about mobile...

~~~
josephlord
Nearly true but I think the situations are really different - the rights
packaged up and sold with exclusive deals didn't apply in a relevant way and
there wasn't the same level of complexity.

Carriers were essentially indistinguishable from a customer viewpoint. There
was no significantly different content depending on which carrier you used or
at least nothing that you would care about if you had an iPhone. This does not
apply between broadcast platforms. The exclusive deals any carriers had for
content were small scale apps or information services not multi-billion deals
for packages of content for particular countries.

Apple played divide and rule between the carriers brilliantly working with a
single operator in each country. In some countries that might work for TV
where there are well balanced alternative platforms but in others it won't
work because there is a dominant player who won't give up control and the
challengers are too weak to help Apple much.

In TV there are the content originators (movie studios, sports leagues,
independent production companies), one level of aggregators that commission
and purchase from the originators and bundle it into channels and another
level of aggregation by the service/delivery/billing platforms (MSOs). And
then it is sold to the customer. These divisions are not clear and ownerships
ofter cross levels.

In mobile it was fairly simple with carriers being the clear centre of the
business, buying and subsidising phones and running the infrastructure. There
were a couple of platforms running across different phones such as BREW and
JavaME but they were more feature tickboxes than major market players.

This doesn't mean it was easy for Apple but the fact they had at the time a
truly revolutionary product and reality distorting leader AND there was level
competition between the carriers meant that they could pull off an amazing
industry changing deal. They had to pull off this deal once in each country
not with dozens of different rights holding players (they don't need them all
but one deal per country would only be enough with the dominant MSO and
probably wouldn't be on good terms as the MSO would know that there is a risk
that Apple would want to cut them out when they were big enough).

I also didn't say that it was impossible for Apple to break into the TV market
in a massive way but I certainly don't think it is easy or that there is a
clear route to massive success. I certainly don't believe it is possible at
their current margin levels for either hardware or content but it will be
interesting to watch.

I used to do what was really a Business Development and Product Planning role
for Sony's European TV Business so I have met with many cable, and a few
terrestrial and satellite operators in Europe to persuade them to make their
content available over their networks to consumers TVs with CI+ (think
European CableCard but not quite such a broken model). Later I worked with
many channel operators to bring them onto Sony's Internet TV platform so I do
have some understanding of the TV business.

------
nathan_long
Rubbish.

> Video-content owners aren't looking for a savior and ultimately won't be
> satisfied with anything less than an open ecosystem accessible by any
> device.

If they wanted an open ecosystem, they could have had it years ago. _It's
called the web. You might have heard of it._

Did the networks see Youtube and say, "oh, we could have people pay to log in
to a web site and watch TV! It would work on any web-capable device anywhere
in the world! Hooray!"

Heck no, they didn't. They don't want an _open_ ecosystem, they want one that
_they_ control. Rather than build one that satisfies consumers, they've tried
to destroy or control anyone else who builds one.

This is _not_ about openness; it's about _control_.

> Television is about to demonstrate the inadequacy of Apple's own business
> model.

Doesn't that sound a bit gloating?

> How TV content owners in the future will get paid is but the flip side of
> the question of how pipe providers will get paid.

This doesn't even make sense. We already know how "pipe providers" get paid:
ISPs get paid by customers and peering agreements, and content providers get
paid by viewers and listeners. The end.

What's holding up the future is not Apple or Netflix or Google; it's content
providers who want to keep getting paid for channels nobody watches,
distributed and restricted under complex international agreements, when they
could just offer _on-demand content, for money, over IP, to anyone in the
world._

> Expect the TV and broadband businesses both to reorganize themselves almost
> overnight.

You mean like, "hey, your cable TV is now an internet connection, so just
click the programs you want to see. The bandwidth we used to spend sending 100
channels while you only watched one is enough to send the 1 show you actually
want in higher resolution. Enjoy!"

I guess they'll do that overnight as soon as the internet gets invented.

------
codeka
Apple are already the largest company in the world, and they don't have TV.
Its not like they're _losing_ anything, so even if they don't "win" TV I don't
se how it spells their demise.

------
nicholassmith
Well, the author has some strange views at the best of times, but not
understanding the subject you're writing about is mighty tricky.

Apple sells content for it's devices, Amazon sells devices for it's content.
In the content marketplace Apple has significantly less invested than Amazon,
so really the article would be better suited there. And it'd still be a
terrible article.

------
jpalomaki
I don't own a TV so maybe I'm not the best person to comment, but my feeling
is that even though most modern TVs are filled with features, few people
actually use them.

Apple might do pretty well by just bringing to market an easy to navigate
device which would enable people to easily buy content from the networks (or
whoever owns the content). Just like we do on iPad.

------
hkarthik
Apple succeeded in music because music was already pretty beaten down by
piracy when Apple approached them with iTunes.

The same strategy won't work with TV because they saw the piracy danger coming
and made serious efforts to squash it and continue to do so before it
threatens their business model. They're sitting on a much strong position and
are unlikely to offer Apple favorable terms for distribution.

The way I see it, the only way to disrupt TV now is to build an alternate
production model in addition to utilizing new consumption models. I'm hoping
Netflix will see success with its original content and pave the way for other
companies, like Apple, to follow suit.

~~~
talmand
I've seen no indications that the TV and movie industries have been more
successful than the music industry in stopping piracy. The only thing that
slows video piracy is access to bandwidth.

~~~
hkarthik
I would argue that major content providers like Comcast and Time Warner have
done a lot to keep us from having access to bandwidth or imposing data caps
even when they provide the speed with their cable internet providers.

------
drats
>They say Apple's browser and HTML5 support are conspicuously superior to
Android's.

Not even remotely true for anyone who's used ICS. And it's not "Apple's
browser" it's the rendering engine from the KDE(GNU) world which Apple
improved, and Google improved just as much. Safari is so overrated it's not
even slightly funny. Chrome, Firefox and Opera are light-years ahead of
Safari.

------
drivebyacct2
> _Let it be said that some techies see evidence of a more rational impulse
> within Apple. They say Apple's browser and HTML5 support are conspicuously
> superior to Android's. Within Apple apparently there are teams committed to
> making sure Apple devices are competitive in the open-ecosystem world that
> is coming._

Huh?

------
Kilimanjaro
I can't believe how a 40" ipad with an apple tv stuck in the back with krazy-
glue won't sell ten million units in its first xmas.

