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Why the Apple TV Might Be a Dead-on-Arrival Product

May 15, 2014 | About:
vinaysingh

Vinay Singh

5 followers

Apple (AAPL) is planning to unveil new products this fall. According to Piper Jaffray analyst Gene Munster, one of those products could be a television set. Munster has been predicting that Apple will release a full-fledged TV for years, and now thinks that Apple could announce a TV this fall.

The problem is that, as Apple continues to delay, its competitors are moving in, offering alternative devices that seem to accomplish the same task at a much lower price.

Google’s $11 Smart TV

Google unveiled the Chromecast dongle recently. The device allows users to beam media from their smartphone, tablet or laptop to their TV’s screen.

But its most impressive feature is its cost. It retails for just $35 and includes three free months of Netflix (a $24 value). Essentially, with the Chromecast, users are getting a Roku or Apple TV for just $11.

Granted, there are some drawbacks — owners will need to pair a tablet or smartphone to the device to use it. This means that users who like to tweet or browse the Internet on their tablet while also watching TV will be out of luck.

Nevertheless, at such a bargain price, it’s almost guaranteed to sell well, which should benefit the search giant.

Chromecast owners who want to send videos from their laptop to their TV will need to be using Google’s Chrome browser. And while the device supports iOS, reports indicate that it will favor media purchased from Google’s Play store, rather than iTunes or Amazon.

Microsoft’s Xbox One Is as Much of an Entertainment Hub as It Is a Gaming Console

Microsoft’s Xbox One costs roughly 14 times more than Google’s Chromecast, but it offers some major features that the Chromecast lacks. Owners of the Xbox One will be able to control their cable box using just their voice. Voice commands like “watch HBO” or “watch The History Channel” will replace the traditional (and often confusing) TV remote.

The Xbox One also has Skype connectivity for video chat, and integration with the popular streaming apps. Microsoft’s entertainment division has historically been a small part of the business. But with the Windows operating system in decline, and the company reorganizing itself to focus on “devices and services,” Microsoft may put more focus behind the Xbox in the years to come.

Don’t Count out the Cable Companies

And then there are the cable companies. While many may have written them off as mismanaged, lumbering giants just waiting to be displaced, that’s far from the truth.

Comcast announced its X2 platform last year. The cloud-based cable box is, in many ways, the Xbox One light. Like the Xbox One, it includes voice commands, which can be given to the box right from the remote. It’s integrated with web apps, and allows for a more personalized experience, with the ability to offer programming suggestions based on a subscriber’s taste.

I think it’s unlikely that Comcast will be able to match the experience offered by a dedicated device like the Xbox One or Apple TV. However, if it’s “good enough” and free to existing Comcast subscribers (about one-fifth of cable subscribers in the US), it could limit the demand for expensive smart TV solutions.

It could also help differentiate Comcast from its competitors. AT&T and Verizon have expanded into Comcast's market, and the X2 platform would give it something to keep its subscribers from switching.

The Apple iTV

That brings us back to Apple’s rumored iTV. Without actually seeing the device, it’s difficult to know where it stands, or how successful it will be.

Still, when Steve Jobs told his biographer Walter Isaacson that he had “cracked” the TV problem, he was speaking about a very different world. In 2011, the smart TV landscape was much different than it is today, and as more devices like the Chromecast, Xbox One and Comcast X2 platform become available, there’s less of a problem for Apple to solve.

That doesn't mean that a dedicated Apple TV can't be successful. Just that the market for such a device is rapidly shifting. When Apple finally shows up, it will be a very crowded market.


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Comments

nunyadang
Nunyadang - 2 months ago

Nice article, thanks but you are mistaken on one of your key drawbacks of the Chromecast

"This means that users who like to tweet or browse the Internet on their tablet while also watching TV will be out of luck."

That is untrure. I am a very frequant user of my Chromecast and you most certanily use your phone or tablet for other things while you are Chromecasting a video.

wes
Wes - 2 months ago

Please top perpetuating the myth that the Chromecast is in any way the "equal" of a Roku or AppleTV. It's just not. It's a replacement for an HDMI cable between your laptop and TV, and a pretty poor one at that. The performance sucks streaming from my late model MacBook Pro, I ended up giving up and just plugging the MBP into the HDMI cable normally used for the AppleTV. I have the Chromecast, AppleTV, and a Roku 2 all. We use both the AppleTV and Roku in different rooms every day, and have used the Chromecast twice. One and a half times, actually, since we ripped it out and switched to the HDMI cable halfway through the superbowl. The Chromecast is now a paperweight, and that's about all it's good for.

I can see a Fire TV in our future, maybe Christmastime. Skip lunch a couple of days, add the $14 you save to the $35 you'd pay for the Chromecast to get a Roku 2, you'll be much happier about it.

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