INdustry: How Apple's Smart Genius TV Could Win Big
Is it a rumor? Or is it now a foregone conclusion? Seems the bandwagon has started to roll on Apple's entry into the Smart TV market.
The question is, what are they going to do? I guess we all expect Apple to enter the TV market with something very different, very competitive and very creative...a better Smart TV...a smarter Smart TV. Genius TV?
So, how might a Genius TV be better than today's Smart TV's? I think there are several really compelling opportunities.
Premium Silicon. Apple isn't afraid to charge a premium for their hardware. Actually, we can be almost certain that Apple TV's will cost quite a bit more per screen inch than current offerings, if only because we know they aren't joining a crowded market to enjoy razor slim or negative margins. One area where TV's kinda skimp is on processing power. With Intel and Broadcom exiting the TV chipset market, most manufacturers are now dependent on Taiwanese chip vendors for their guts. I think we'll see a stronger silicon core inside Apple TV's and that will translate to better applications support--especially for interactive overlays on live TV--and probably better video streaming over the Internet. Also, for those that saw my interview with Zeitera CEO Dan Eakins (see the article published on itvt.com, September 12th), we could see better video processing and potentially earlier support for dynamic ad insertion.
A Real App Market. While the growth of applications on Smart TV's has been reasonably positive, the truth is, Smart TV's are generally very underdeveloped from an application perspective. Traditional TV OEM's have opted for very closed, very controlled application marketplaces and that's, well, a drag for app developers and consumers. Presently, to get an application on a given TV, app developers have to find their way through a challenging set of obstacles that vary widely by TV platform.
Apple certainly could change this dramatically by extending their current iPhone/iPad application ecosystem to their Smart TV. It would lead to rapid and dramatic differentiation of their TV offering. It would justify the large price premium that they're likely to offer. The larger value proposition would cause consumers to spend more time with the applications, and that would start a virtuous cycle of app consumption and app development. It would, in fact, be Genius.
Critical Mass. With a real app market, we could see significant market share shift to Apple. Presently, there are 17 TV manufacturers selling products in North America (I think). We can expect that number to decline as thin margins drive consolidation, but nonetheless, it's a very diffuse market from an application developer's perspective. A big institutional app from Hulu or Netflix has enough financial backing to spread across many devices. But for smaller developers, a diffuse market is really problematic. We can be pretty sure that Apple sees the opportunity to fix this as a pillar of their strategy. And that means that when they come, they will come big and will be playing for dominant market share in a relatively short period of time. If they don't reach critical mass, they'll lose developer support and an anchor source of product differentiation. If they get big, apps will proliferate and differentiation will spiral up. So it's kind of a "win big or go home" situation. It's a big drama, as that will be tough in what is an extremely price sensitive market with truly ferocious--and huge--competitors. Fans will point to Apple's stunning dominance of the tablet market as an illustration of consumers' willingness to pay for Apple--and Apple's ability to win big.
I'd pay more for a Genius TV. Would you?
A Unified Viewer Experience. The consumer experience on Smart TV's varies a bit. But for the most part, Smart TV's tend to have a bifurcated TV viewing experience. Consumers can watch TV. Or they can play with widgets and apps. For the most part, the TV viewing experience is toggled. I believe this is largely why app usage is, so far, anemic. There are good reasons for this, not the least of which is the potential for UI babble if the TV imposes its own UI on top of the onscreen guides provided by cable and satellite. However, I think Apple will probably try to tackle this problem. This could be the "code" that Jobs claims to have cracked. Not sure, but if Apple can find a way to unify the TV viewing experience and productize iTunes and other Internet-based video offerings in a manner that allows consumers to seamlessly move from broadcast TV sources to broadband TV sources, that will be, well, Genius.
Michael is the president and CEO of MediaTech Strategies, a consulting company that helps investors and operating companies develop and capitalize on emerging media technologies. He has over 18 years' experience in the media technology business, including previous CEO roles at Ucentric Systems, where he pioneered the multiroom DVR category and PhyFlex Networks, where he developed a new access network solution for cable. Michael previously held senior executive positions with OpenTV, ICTV (now ActiveVideo Networks), Motorola and Playboy TV. Through his consulting practice, he has provided services to more than 50 companies of all types, stages and size.