How the Apple TV will work | Hacker News Reader

How the Apple TV will work

thetechblock.com

29 pointskesernio54 comments

I would be stunned if Apple released an actual "Apple TV" display. It's a super-low margin, commodity business, with very low turnover (how often does someone shell out a grand for a TV?) It's not at all clear to me that there's a strong argument for Apple even to get into set-top boxes; where's the revenue? Rents from the cable companies? Ick.

Maybe they'll get in bed with the devil as they did with the iPhone, but a) none of the mooted ideas for an expanded Apple TV are anywhere near as disruptive as the original iPhone was and b) they can't divide and conquer with the cable companies the way the could with the cell providers -- they're still fundamentally regional monopolies, and so a big part of Apple's advantage in the phone world just won't exist. That seems like a loser to me.

If it was an 8k tv (8000 pixel wide display) and I had access to all of pixar/disney's back catalogue in that resolution I'd be interested.

Well, sure, we'd all like a pony.

EDIT: But the problem here isn't even getting hi-res re-renders of Pixar movies (do-able, if insane), it's getting you to buy a new 8K TV every eighteen months or so. Unless and until someone figures out how to utterly destroy existing TV business models, nobody is going to try and build value-add TV sets. It's a fool's errand.

Most Apple customers don't buy new devices every 18 months. Apple only needs to make customers happy enough (and locked into their ecosystem) so that when they upgrade at some point, they still buy Apple.

Once you have an Apple TV you're locked into the Apple ecosystem for as long as you have it. You'll buy lots of tablets and phones during that time that act as interfaces to it.

Also: http://i-want-a-pony.com/

Edit: Apple are probably the only company that could make an 8k TV and have content ready to watch on it, or at least they are in a position to have have a product ready before anyone else. They could manufacture them at scale to make a decent margin selling them at a premium whilst locking consumers into their ecosystem for years to come.

Who sits 5 feet from a 42" TV set? That would roughly be a retina display 8000 pixels wide. You are also looking at something like a 400mbps data rates to feed it.

Well, it's 16 times the picture resolution at the same temporal resolution, and you can do a damn fine job with 10Mb/s high profile H.264 at 2K, so … yeah, I guess that's about the right order of magnitude.

But holy diminishing returns, Batman.

not sure if these are accessible outside the uk: http://news.bbc.co.uk/1/hi/programmes/click_online/9774380.s...

"But when the screens are even larger you get a sense of being there - it's like looking through a window." - http://www.bbc.co.uk/news/technology-19370582

It just fundamentally makes no sense to me. The TV business is just too small. Even if Apple magically took over 100% of the market, it would still be small potatoes for them, and there's appears to be little room to grow the market as a whole. It's saturated.

I could well be wrong, and I'll happily admit it if it turns out that way, but for the moment I just don't get why so many people insist that Apple is going to get into the TV business.

There are a few things wrong with this assumption:

1) Apple exclusively looks at potential revenue when introducing a new product. That they introduced and still sell the Apple TV even though it's still just a "hobby" pretty much negates this assumption.

2) You look at the _current_ TV market and conclude that it's too small. You could have looked at the smartphone market in 2007 and made the same argument against launching the iPhone. What happened instead was that the iPhone had mass market appeal, and smartphone market share exploded.

If Apple is somehow able to do to the TV market what they have done to the smartphone and tablet markets, they don't need to worry so much how the existing TV market looks like and whether that market is saturated. They only need to worry about whether the product is something enough people want to buy.

1) Well, I'm really addressing the idea that an Apple TV would be Apple's "next big thing", which is almost always how it's presented. People aren't talking about Apple selling TVs as a hobby, they're talking about Apple selling TVs as their next huge product line. If Apple comes out with a "hobby" TV product that has no significant influence on their balance sheet, I'll consider myself correct on this one.

2) I addressed that in my comment with "appears to be little room to grow". Unlike the smartphone market, everybody, and I do mean everybody, already owns a TV. Maybe there's some secret sauce that can make a lot of those people buy new TVs, but it seems unlikely. Keep in mind that while Apple massively grew the smartphone market, they're still minuscule compared to the overall mobile phone market. It looks amazing at first blush that Apple is selling ~100 million smartphones a year when that was the size of the entire market in 2007. But it's substantially less amazing, IMO, when you consider that the mobile phone market overall was over a billion units/year in 2007. Apple really just nibbled a small portion of the larger market. I'm having trouble finding decent figures for the global TV market, but it looks to be vastly smaller than the mobile phone market was in 2007, let alone in 2012. Unlike smartphones, there's no larger market to convert people from, and people mostly already own enough TVs.

I think the point to note is that _everybody_ owned a cell phone before the iPhone as well. If you look at revenue share of the mobile market, I think Apple and Samsung now dominate the entire mobile market because smartphones have higher margins (Nokia dominated previously).

Likewise, the iPad grew independent of whether the PC market was saturated or not, in such a way that the industry now separates it into a "tablet" market. But of course, people are doing stuff on tablets that they could have been doing on laptops.

I agree that if they are to sell it as their next huge product line, it has to be more than a regular Apple TV in a frame. They have to do something similar to what they did to the PC market with the iPad, and that's not easy to do in the TV market. What it needs to be, and whether Apple will pull it off, I don't know.

While I agree it isn't necessarily an obvious move I disagree on the reasoning. The volume and total value is there but margins are small and the existing products are already physically stylish and offer a lot of features (although there is room to improve on the UI).

If Apple could come in and get their usual margins and take a noticeable market share it would be worth it.

http://bgr.com/2012/07/23/samsung-lg-lcd-tv-sales-market-sha... - first useful link googling TV market size.

44M TVs in Q1 (low season in Europe and US but quite a big one in China due to New Year) of which Samsung took 19%. If we assume average price of $500 (maybe 50% of that number are small 24" and less cheap TVs) and a conservative total of 160M TVs annually it is about an $80BN market. If Apple could get 5% of that it is still $4BN annually or about what they get from iPods or 2/3 of what they get from Mac desktops. And if they go for it I'm sure they would be aiming for at least 5% of the market.

The other bonus is that maybe half of that share would come from Samsung who is not only the biggest manufacturer overall but winning at the top end too. This would hurt Samsung more than a billion dollars from a lawsuit.

The reason to make an Apple TV display is to eliminate the multiple remote control hell. You can't get to the best user experience with the TV knuckleheads in the loop.

I'd consider buying an Apple Display once I moved to a bigger house. A significant portion of Apple's customer base doesn't have cable, or any interest in cable.

But they still watch TV shows and movies, mostly on computer screens at the moment. Getting a Cinema Display isn't quite the same thing. I think a lot of people would buy an Apple display if it did the following:

  * Had a beautiful display  
  * Seamlessly plays movies and TV shows from computer
  * Was good enough, without obvious flaws, that it eliminates  
  * the anguishing 'which HD TV do I buy?' decision.
  * Can be put in a part of the house separate from the computer, for social events  
  * Can also easily play music, for social gatherings.

Oh, I'd buy one in a hot second. A consumer focused consumer electronics device? Yes, please. But it makes no sense that I can see for Apple to get into the business. I wish there was a venue for me to bet against this cockamamie idea.

>A significant portion of Apple's customer base doesn't have cable, or any interest in cable.

I think this is just internet confirmation basis. Most of Apple's customer base is iPhone users, and most of them are just normal people with typical cable service.

Actually, I just meant young, college educated people. Very few people in that demographic have cable subscriptions, compared to the population as a whole.

Specifically, I'm thinking of my friend's houses that I've seen in various cities around Canada. Not many televisions.

Actually, I just meant young, college educated people. Very few people in that demographic have cable subscriptions, compared to the population as a whole.

I'd love to see some figures on that, because I'm not sure it's true. Fewer subscribers, yes, but "very few people in that demographic"? I think that a significant majority still do.

'very few people....compared to' is equivalent to 'fewer' - it's a relative term.

I'd also love to see stats, I couldn't find any.

I think you are wrong about the importance of the current TV platforms to many people. TV is less important to single and certainly childless people who have more opportunity and desire to go out and socialise rather than stay at home.

I don't really see anything in the list that really needs Apple's help.

  * Had a beautiful display

Have you looked at the mid/high end Sony or Samsung TVs recently? I would be interested in how you think they could be significantly improved.

  * Seamlessly plays movies and TV shows from computer

DLNA does this pretty well these days. If you mean specifically from DRM protected iTunes videos it might be a narrower question that only Apple can really answer. Sony TVs (probably others too) can act as DLNA renderers so if you have a DLNA controller app on your phone it can push content from the PC/NAS/server to the TV without having to go through the TV UI.

  * Was good enough, without obvious flaws, that it eliminates

Not sure what this means. Most TVs (if you ignore the small size super cheap ones) handle HD very well and many especially at the mid/high end from major brands also upconvert pretty well. Certainly beyond the average viewers ability to see the problems in most cases.

  * the anguishing 'which HD TV do I buy?' decision.

That is all about you but I don't think you would go that far wrong with a mid/high Sony/Samsung.

  * Can be put in a part of the house separate from the computer, for social events

Put it where you want it!

  * Can also easily play music, for social gatherings.

Most now support this. Either from DLNA or USB device. Having said that the capability of the speakers in slim stylish devices is distinctly limited. Apple will also have this issue. Of course if you have a separate (possibly surround) amp and speakers there is no problem but that solution lacks elegance and style.

Oops, my formatting got messed up. This was supposed to be one point:

'Was good enough, without obvious flaws, that it eliminates the anguishing 'which HD TV do I buy?' decision.'

Specifically I was thinking of MP3 players before the iPod, or my parents' own HD TV purchasing decision.

The 'separate part of the house' point was to counter the common cry of 'just use a computer monitor', which is the current solution.

I probably should have parsed it better despite formatting.

Still the point probably stands that if you guess how much an Apple TV would cost and look at what you can get for the same money you will probably be impressed by most aspects except possibly the UI.

You're probably right. But I don't care enough to look. I suspect there are other people in the same boat, and that an Apple TV could open up a new market for high-end TV purchases.

I could be wrong. But one of Apple's assets is that it's trained consumers to trust it's merchandise across categories. If Apple makes it, and I have a need for it, I'm comfortable buying it.

Your post makes a lot of sense, but personally I'm not going to bet against Apple on this. No one would have predicted them having the effect on the cellular world they did either.

I largely agree. It is a low margin business and the current competition is better than it was in the phone market before the iPhone and the divide and conquer probably won't work in the TV market.

Better controls using iPhone/iPad as the control device (with most of the UI on the small screen and just the content on the big screen) will help but I don't think that Apple could sustain the combination of margin and volume that they are use to though they probably can squeeze retailer margins.

The reason Apple might do it could be to hurt Samsung more than they can with lawsuits.

Seems to me the same argument to be made on Windows laptops vs. MacBooks. Windows laptops are a commodity business, whereas MacBook owners pay a premium for Apple products. Why is this different?

It's a pretty good question. One, Apple entered the market for PCs a long, long time before it became a commodity business, so history plays a part -- they can play these games in a commodity business because they have been playing these games in a commodity business.

But people buy TVs not to run software, but to watch movies and TV shows, so value-added TV sets are basically dead in the water. The real business Apple has to attack is the cable industry, and they have zero leverage or competitive advantage in the sickly morass of rent-seeking and quid pro quo backscratching that is regulated telecoms monopoly world. By analogy, the TV makers are Dell, Lenovo, Acer &c, and the cable industry is Microsoft.

The only conceivable change is for Apple to forge direct business relationships with the production houses and rights holders, and the cable companies are buying them up as quickly as they can to prevent this sort of disintermediation.

"But people buy TVs not to run software" - at the moment. Maybe that's the secret. After all, people bought mobile phones for while but didn't buy a lot of content or apps because the interfaces were horrible.

I'm not suggesting this will necessarily happen - but I think Apple is likely to play to strengths - app infrastructure and interface design - as much as anything else.

Agreed. I just bought a 55" samsung smart TV on black friday. It was $1300 and was the first large scale TV purchase I have made in a decade.

I already have a mac mini hooked up to the 42" in the bedroom, and I never use that. While nifty, I just don't see apple building a TV business because the revenue stream is too low.

I agree, but I also said this when the rumour came out about Apple getting into phones. Cell phones were cheap crap back then with no margins. I really don't think it's a completely 1:1 comparison, but Apple does tend to surprise me occasionally.

> I would be stunned if Apple released an actual "Apple TV" display. It's a super-low margin, commodity business, with very low turnover (how often does someone shell out a grand for a TV?)

You could say the exact same thing about computers, but look at what has happened.

Again, though, Apple has been making computers since before computers were a commodity business. They didn't look at the HP/Dell/&c. market and decide to get into it.

If they do offer a display, it's almost certainly going to be in addition to the set-top box. A sort of "this is how it should be" offering that's tightly integrated and reasonably high quality, that competes in the segment of the display market where there are decent profits, but where most consumers simply don't shop. Not unlike the situation with Cinema Displays themselves.

As for revenue: AppleTV is, up-front, a logical necessity to keep iTunes relevant as "living-room video" becomes increasingly digital. They'll likely integrate cable "packages" not unlike the way they've done Hulu/Netflix/MLB and use the thing as a "break even"-ish business to make the whole ecosystem more attractive. Which is to say: there needn't be a whole lot of revenue for this to be a necessary move for Apple.

Though there's a good chance chance Apple may do an app store for the AppleTV, in which case gaming is likely to not only drive set-top upgrades on an iPod schedule ($100-200 a pop, upgrades every other year or so), but also reinforce iOS device sales for smart-controller/second-screen-style game and app functionality. This has the potential to combine (direct sales and 'halo' sales) for iPod-like device revenue.

Apple has been experimenting with the Apple TV on and off this year with adding streaming content portals of their own content. Netflix has pushed some updates as well. In the 6 months or so I've owned one I've seen more activity in the last 6 weeks than in all the other months together.

6 months is not a long enough data set to be conclusive, but paired with Cooks' comments I wonder if internally they're starting to see what can they do with the box that's already there. They've pretty much shown they can add and remove additional content portals without an update, so they can introduce new content at any point, so the more interesting question isn't 'what features do we get next', but 'what content are they signing'.

A shiny new piece of Apple kit is great, but the Apple TV in it's current incarnation is, well, fantastic. Would Siri support be nice? Sure. I'm not sure how much use I'd get out of it, Siri struggles recognising my North England accent on basic words, let alone with relatively complex titles ('Siri, find me Californication' 'Did you mean...'), but for some people I'm sure it'll be great.

The idea of Apple releasing a standalone TV doesn't quite scratch the itch for me. TV sets in general is a market where the consumer demands low, low pricing with relatively few exceptions (B&O springs to mind), so they'd be entering a knife fight of pricing. I'm sure Apple could come in with a beautiful TV, all shine and minimalism and oozing quality, and I'm sure they'd sell some, but it's probably not the best value proposition.

Here's the problem.

There's nothing in it for the Cable companies outside of getting rid of the cable box - which is at the cost of giving up control of the software ecosystem.

Second point if this type of deal was possible, Microsoft would have already done it. Microsoft has 30 Million Xboxes in peoples homes already, they've been working closely with cable companies on this initiative trying to make them happy. The Xfinity Xbox app has streaming already, but its not replacing your cable box anytime soon.

Also, side note, if this did happen (which it won't) a DVR solution would just be a cloud based DVR. The cable operators are doing this already.

To be fair, Microsoft is doing it with UVerse in the US and Optik in Canada. Because they use Mediaroom IPTV, you can use your Xbox as a full blown receiver.

Good point and absolutely true my comment is pretty specific to the US terrestrial Cable Markets.

I have all the IPTV apps on my phone (BBC iPlayer, 4oD, Sky etc...) and I use these apps to play video on my Apple TV.

I feel like Apple have completely nailed how IPTV should work

I think that using on screen navigation is awkward because

a) Navigating an on screen keyboard with directional keypads is very painful

b) If you have a keyboard on your remote, it's still awkward to type as you have to constantly look up to make sure you hit the right keypad

c) Using a remote to navigate on screen menus leads to really basic on screen menus (you're essentially limiting yourself to grids or lists)

However, by using my iPhone as a remote, I use that TV Channel's app to browse their library right in the iPhone, then just hit play and see it appear on my screen instantly. I can also watch a video on the way back from work, get home and continue on my screen.

The great thing is that companies have already developed all these apps, and they are instantly compatible with Apple TV without any extra work from the developers.

I reckon the next move from Apple will be to have a TV folder, which is similar to the way that the Newsstand folder works, you subscribe to TV shows and new episodes will appear in that folder, which you can then play on your TV.

----

Whatever happens, I reckon that this model is the future of on demand TV. Google will have Google TV/Android, Apple will have Apple TV/iOS, Microsoft will have XBox/Windows Phone (or maybe iPhone and Android apps too).

The money in the TV business isn't in the TVs, it's in content. That's why Comcast is a ~$100B company with a revenue of $60B/y. That's the business Apple wants and an Apple TV, either as a set top box or an integrated device is just a way of capturing that.

Which of course is the exact opposite of Apple's business model for all it's other devices, where it makes the money off the device and the content ecosystem is there to make the devices desirable and lock in customers (but those locks and chains feel sooo gooood!).

This is a long term problem though. I think the best Apple can do is keep involved in the market, have their products and services as well tuned and capable as they can for the moment when they see an opportunity to make a big move. The current Apple TV with iTunes integration, iCloud, Netflix, Airplay, etc means all the pieces are in place ready for them to fill in the content distribution blanks.

The one think they don't haveyet on Apple TV that I'd have expected by now is games. An A6 based Apple TV would make a great games platform. My guess is they want to do it, but have had so many major product updates recently and are so focused on mobile iOS, that they just haven't had the management bandwidth to address that yet. I wonder if a Dolphin port is possible, that'd show off it's potential nicely.

For example, ESPN is earning around $6 per subscriber (roughly 100 million people) from the cable/sat companies. If Apple sold channels a la carte, even at a $10/mo subscription, ESPN (Disney) would lose tens of millions of dollars per month and they definitely couldn’t demand the same premium they’re currently getting from traditional TV services.

I've said it before, Apple should take their cash and buy Disney. There's synergy - a word I rarely use - between the two halo brands.

This is pretty much my theory as well, though I am agnostic on whether it ends up as a set top box or a full TV. Maybe both: If they go with a carrier subsidy model, they could hand out a set top box at a price of more or less free, and offer some gorgeous TV with their usual margins. With the subsidy subtracted out, the sticker shock might not be outrageous. (Just pay no attention to the two year "Apple TV" contract...)

But assuming Apple does this at all, the big picture I think is nearly inevitable: Apple allied with the carriers, offering a device with a UI completely controlled by Apple, providing both traditional and "app-style" television, backed by those big data centers. It's certainly technologically possible for them to end up recording every channel in the U.S. for playback on demand, and I suspect that's where many of the tough licensing issues come up. How much control is Apple willing to cede to the networks (and vice versa) over "viewing windows" and what have you?

Perhaps it will be something like Bang & Olufsen V1 TV (http://www.beoplay.com/Products/BeoplayV1) which have a small compartment where a ATV can be hidden. That would make more sense to me, let someone else make the TV and then bundle an ATV. Perhaps with a shared remote.

Also B&O's newest TV, the Beovision 11 (a real beauty - http://www.bang-olufsen.com/en/picture/beovision-11) has a compartment for an ATV (or other similarly designed thingy) in the TV. B&O also has the capability of controlling the ATV with the their remote even though it is hidden in the TV. Pretty cool actually

If they really want to change the game, they need to find a way to offer a la carte network subscriptions and full on-demand (similar to HBOGo) for every channel. I would pay a premium for a service where I could buy HBO, ESPN and Comedy Central and have access to those network's entire archives as well as the latest programming.

Its obvious that is the future (HBO already does it and its amazing) so anything less would be a step in the wrong direction for them.

What are the benefits of making an actual Apple television over the current "Apple TV"?

Really the only thing I can think of is some kind of integrated iSight camera for "Facetime on your couch". And maybe some noise cancelling microphones for Siri. It could be neat but I probably wouldn't buy one.

All the other stuff like DVRs and whatever can just be done with an upgraded AppleTV puck.

It would be nice to have one interface that controls everything with Apple's eye for detail. The puck/TV combo today feels kind of like buying a bloatware-filled Windows machine to run OS X in a virtual machine.

Could Apple do a deal with Dish Network or DirecTV and use internet streaming in place of satellite dishes? That would let them avoid negotiating deals with regional cable carriers.

Have you seen the new iMac?

Now, imagine apple making that thin and beautiful of a screen at 32", 42", and 50". They could price them at $499, $749, and $999. People would buy that.

There are 2 things they could do to really pull people in - make TV easy and put iOS apps on your television.

Make TV easy - have a beautiful UI that makes it easy. Less clutter, easier to read channel guide. Simple setup. Etc. Maybe channel search via Siri. "Siri, I want to watch Fringe." And Siri finds you that episode via maybe a built in DVR, Apple's catalog, Hulu plus, or the cable company's on demand stuff.

iOS apps on your TV. Seriously, $1 games on your TV. Even $6 premium games like Infinity Blade. Compare that to $60 games like Halo 4 or even "cheap" Xbox 360 games at $15 or so. People would go bananas for that. The trickiest part for apps is the control mechanism, but for games, most of them could be made to use a game controller similar to what OUYA is doing.

If Apple can get those two things right, they will be able to charge a real premium for a TV. The reason TV's have low margins right now is that they have no value adds or differentiation. It's hard to justify spending $1,000 on a "smart" tv when a $400 tv has the same picture quality for the most part and every $50+ add on box and blu ray player has "smart tv" apps like netflix, hulu, amazon video, picasa, etc...

These are two hard issues though.

1) The main thing people are complaining about in "TV" UIs is the cable box UI. If you want to replace that, you need to do the whole CableCard thing, and now DVR is a requirement since most cable boxes have that. And your TV doesn't work for satellite TV, sorry.

2) You integrate the game hardware into the TV and now you have lifespan issues. Is Apple going to support games on your TV for the 10 years you own the TV, as hardware continues improving? Or are you just going to end up with something that theoretically can play games but none are actually supported on your old hardware?

You don't integrate the game hardware into the device. It's relatively easy for the cableco to give you fast, low ping bandwidth to a local cable switch within their network. That's where you put the game hardware. You create a new gaming platform and virtualize the console to a cluster hosted by the cableco. This game-rendering cluster is scalable, upgradeable and on demand. You don't need to distribute a lot of expensive, loss-leadin, power-hungry silicon to every house - that ends up sitting idle 90% of the day.

I agree generally with what you said, but:

> Even $6 premium games like Infinity Blade. Compare that to $60 games like Halo 4

There is a huge gulf between Infinity Blade and Halo 4. What iOS developers do best is beautiful, simple games – games with easy gameplay that've been polished to hell. There's still nothing resembling the top platform titles from recent eras – hell, I haven't seen an iPad game as good as Halo One, let alone the more recent games to come along.

There are many ports of AAA PS2-era games, like GTAIII, GTA:VC or Max Payne, so there's nothing inherently impossible in making complex iOS games.

Of course, those are (relatively) low-cost ports, so question whether it's economically viable to create an entire GTA-scale game from scratch for iOS still stands.

Have you seen the price on a cinema/thunderbolt display? No way a tv would go that cheap if they make one.

Also, does anyone actually use Siri? Like daily. I used it ones or twice when it was new and cool but screaming at devices is not something I prefer.

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