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Comment by masklinn | Hacker News Reader

No, that is the very issue outlined in the AllThingsD Jobs quote (third quote block):

> The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set top box for free.

Competing with free is hard, and replacing existing top-box means replacing free operator-provided set-top boxes.

Replacing top-box is what AppleTV does, and Jobs very much says it won't achieve mass-acceptance ever, hence his conclusion that:

> I’m sure smarter people than us will figure this out, but that’s why we say Apple TV is a hobby.

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Right, there were no such thing as free phones on the market when the iPhone came out...

There were plenty of free (subsidized to zero) phones available when the iPhone came out. They weren't feature-competitive but they were available, free, and mediocre. From a set top box perspective, this isn't necessarily a differentiator.

However, having a set top box in your home theater stack at home is not as usefully trendy as carrying an iPhone. It's also more setup hassle and has to work with other devices made by other manufacturers, something at which Apple has never been good (wanting to control the whole ecosystem).

I don't think the AppleTV replaces any top-box right now, nor is it meant to do so. As long as you can't watch live tv with it, almost no-one will use it instead of their cable subscription.

That said, I don't really see problems with giving away the AppleTV for free with a one or two-year subscription; the iPhone is already available for free on contract in a lot of countries, and the AppleTV is a lot cheaper to produce.

If the AppleTV gets iPlayer and 4OD (I guess the equivalent would be Hulu for the US) then I would cancel my cable box immediately.

I've got Freeview for live digital TV, the AppleTV could then take care of all non-live watching.

I think the idea is also to replace the service that gives you the free set top box. Given how savvy users are already replacing their cable TV subscriptions with Hulu and Netflix, I see a lot of room for an easy, well-built, integrated service like this.

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