Skip to main content

Prediction on How the Apple iTV Will Succeed

Will Richmond of Broadband Directions shares his insightful picks for 'seven broadband video trends' in 2007. His company is a market intelligence and consulting firm specializing in broadband-delivered video. The following is the first prediction, you can read the remaining six at his website.
Apple's iTV box will likely succeed (but only if more than just iTunes video is easily accessible). This is clearly my most controversial prediction and the one I will devote the most ink to. Let me stipulate upfront -- standalone appliances like these are indeed the "third rail" of consumer electronics. I understand all the reasons why they don't succeed. And the list of failures is long and undistinguished.

However, my bet is that is that if ever a company stood a chance of succeeding and a box potentially met a clear consumer need, it is Apple and iTV. (by the way, "iTV" is just a code name, expect a new name prior to launch). Apple's user-centric design, functionality and coolness quotient are its key differentiators.

First, for those of you who missed it, back in September Steve Jobs pre-announced the company's iTV box. Product pre-announcements are very rare for Apple. The iTV teaser suggests that Jobs wanted to both lay some pre-launch buzz groundwork and also simply couldn't contain his enthusiasm for this product's market opportunity.

To understand iTV's market opportunity, it is necessary to understand current broadband-delivered video viewership. As I see it, the amazing ramp up in broadband video consumption this year is surpassed by an even more amazing fact -- that virtually all of this viewership has occurred on users' computers.

Think about it -- virtually all those clips, full-length programs and movies are consumed on the PC, not the TV! Nobody could have predicted that. But of course the TV is still the preferred viewing device for just about everyone. So logic suggests that if someone could make an affordable, easy-to-install box that unshackled users from their computers, allowing them to easily bridge the PC/broadband world with the TV, there would be a market for such a product.

And that this could be far more than a niche opportunity, given that it could potentially disrupt cable and satellite operators' set-top box/walled garden stronghold.

iTV's success turns on one key factor: Apple's content strategy for the product. And the hitch in iTV's potential is that to date Apple's content model has been to aggregate paid-only media in iTunes, its digital download store. The company has gotten off to a decently strong start selling TV programs and the like on an 'a la carte' basis for $1.99 or more. But carrying over this paid approach is not a strong enough content strategy to support iTV.

In fact, in the music world, a recent Ipsos study showed that only 25 percent of MP3 owners use fee-based download services. That's been OK for iPod sales because many people still have large CD collections (or share theirs with friends), which can be easily ripped to iPods. But what would the equivalent source of video content be to support iTV? Possibly DVDs, though converting them for iPod use is far from a mainstream activity (plus, why bother anyway?).

How about the free video podcasts from a Byzantine array of providers also available through iTunes? Doubtful. Quite simply, if Apple extends its iTunes paid approach to iTV it would be forcing iTV buyers to pay for each and every incremental piece of video content to get value out of their iTV purchase. The number of people willing to shell out $299 for an iTV box without readily available free content is tiny.

Therefore, the alternative -- providing easy TV-based viewing of free, ad-supported broadband video -- should be iTV's core value proposition. Cracking this nut allows Apple to break open the video distribution value chain, with consumers finally getting TV-based access to the broadband content they love. And it positions iTV as the key building block in making 'long tail' video content accessible on TVs, potentially setting up Apple as a longer-term competitor for all video services (i.e. a possible competitor to cable and satellite).

Exactly what content should be easily available through ITV is less clear to me. Certainly a key selection criterion is video that is either NOT currently available through cable or satellite. Many video content providers still dreaming of becoming a digital cable channel would salivate at the opportunity to be accessible on consumers' TVs. Plus broadcast and cable TV networks would love a way to get their broadband-only webisodes and other 'broadband channels' all the way to the TV.

But the most tantalizing content deal would be one with Google/YouTube. Consider how many YouTube devotees would love to get convenient access to this content right on their TVs. Since Apple has no in-house advertising skills and assets, and Google is the reigning advertising king, a partnership would be mutually beneficial. With Eric Schmidt, Google's CEO, now on Apple's board of directors, the personal relationship between him and Jobs would help clear the way for a deal.

Packaging and offering easy access to ad-supported video would be a big content strategy departure for Apple, but a necessary one for iTV to fully flourish. Remember, selling hardware is what Apple's really all about. Given Apple's famous appetite for secrecy, I expect we'll only find out how Steve Jobs has decided to play his hand upon iTV's official launch. If it's to be iTunes-only paid video, I'll downgrade iTV's likelihood of big-time success considerably.

Popular posts from this blog

Linux Phone Standards Forum

A new Linux Phone Standards Forum (LiPS) has been founded to promote mass market adoption of Linux telephony terminals through standardization, interoperability testing and market education. The founding members include Cellon, France Telecom, FTM Labs, Huawei, Jaluna, Mizi, Open Plug and PalmSource. LiPS will support device manufacturers and operators in bringing to market Linux-based devices at lower cost (due to lower deployment costs through standardization), while facilitating the programming and development process for software and silicon vendors. The Forum said plans to work with other organizations such as the OMTP and OMA to identify requirements of distinct device categories including smartphones, feature phones, fixed-line, or converged devices. For each of these categories, or profiles, LiPS will define standard API�s that support relevant applications and services as well as a certification process for technology providers. In keeping with the open source philosophy, L

Cloud Services Gain New Momentum in Europe

Across European nations, more CIOs and CTOs are investing in public cloud services that become the essential foundation for the design and delivery of innovative digital transformation projects. Public cloud computing spending in Europe will reach $113 billion in 2022 and will double to $239 billion by 2026, growing at a 22 percent 5-year CAGR, according to the latest market study by International Data Corporation (IDC). Investments in Software-as-a-Service (SaaS) will continue to lead most of the spending in Public Cloud in Europe in 2022, but Platform-as-a-Service (PaaS) will be the fastest-growing segment. In fact, PaaS enables digital business deployment via the quick testing and production of new software applications. Public Cloud Market Development Professional services, banking, and discrete manufacturing will be among the top spenders in public cloud services, absorbing almost 60 percent of the overall public cloud services spend in 2022.  Human-centric industries are adjustin

Strategic Digital Transformation Spending Trends

Looking ahead, many Chief Executive Officers (CEOs) continue to selectively invest in new strategic digital transformation projects that enable a significant competitive advantage. Some additional investments may go towards improving existing IT infrastructure and operations.  Worldwide IT spending is now projected to total $4.5 trillion in 2022 -- that's an increase of 3 percent from 2021, according to the latest updated estimate by Gartner. For now, most CIOs will be relieved that their budget is safe from major cuts. While IT spending is expected to grow in 2022, it will be at a slower pace than in 2021 -- partly due to a 5 percent cutback on spending for personal computers, media tablets, and printers. Digital Transformation Market Development "Central banks around the world are focusing on fighting inflation, with overall inflation rates expected to be reduced through the end of 2023. However, the current levels of volatility being seen in both inflation and currency exch