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BusinessWeek: Tripling unit sales show Apple TV is more than just a hobby
Wednesday, February 04, 2009 - 10:13 AM EST

"Ever since Apple TV hit store shelves in early 2007, company executives have insisted on calling this curious little box-shaped gadget a 'hobby,'" Arik Hesseldahl reports for BusinessWeek.

"It's time to drop the hobby talk. First-quarter unit sales of Apple TV tripled from a year earlier, in part due to a software update introduced a year ago that lets users rent movies, including some in the ultra-crisp high-definition format," Hesseldahl reports.

Still, "Apple is clearly not exploiting Apple TV to its fullest potential. It remains at hobby status when it should be considered an 'A Team' product," Hesseldahl reports. "One idea already out there: Buy TiVo. Under this scenario, Apple would acquire the digital video-recorder pioneer and turn Apple TV into a DVR."

MacDailyNews Take: How does that help iTunes Store TV sales and rentals? Believe it or not, it might. Being able to record anything on cable / satellite via TiVO offers vastly more content than Apple can offer at this time or during the foreseeable future. And, while the content issue is better than it was, it's also the main issue with have with an off-the-shelf Apple TV: not enough content.

But what if Apple created a premium "No TiVo" tier (major network TV series, newer movies) and instead offered attractively-priced season passes for that programming while continuing to sell and/or rent newer movies, as they do now? That way, you could record a football game on NBC with your Apple TV's built-in TiVo, but you'd have to buy NBC's "The Office." Remember, for your money, you do get it commercial-free. Likewise, you'd be able to record TBS's broadcast of "Animal House" (all cut up and with commercials), but you'd have to buy or rent "Iron Man" until a certain period of time elapsed. Of course, you could also buy "Animal House" in its original form, and without all of those commercials, which some customers would obviously prefer.

Viewers are already conditioned to expect certain limitations (especially with feature films), so Apple might be able to sell the concept. Apple could also offer customers a choice of X number of TV series for a nicer price, letting viewers mix and match. This way, Apple TV owners would get a tremendous boost in content via TiVo and iTunes Store would continue to handle to "premium" content for sale and/or rent. Add in MLB, NFL, Premiere League, etc. season passes and you'd have a killer product for sports fans, too.

Hesseldahl continues, "My take is that Apple needs to allow for the same degree of flexibility around Apple TV as it does for the iPod. Remember that while Apple has sold more than 5 billion songs on iTunes, your average iPod owner only buys about 30 songs from iTunes. The rest come from other sources—existing CD collections, files downloaded from file-sharing networks... The iPod succeeds not only because it has iTunes behind it, but because it works with so many other things. More flexibility for content is a must."

Hesseldahl suggests, "Apple should give programmers the software developers' kit they need to make the device more flexible and useful. Buy the box, and you can buy or rent from iTunes—and if that's not enough, there are hundreds of easy-to-install apps that will let you watch whatever you want from the Internet... That formula may be lurking inside the mind of an as yet unheard of software developer who's envisioned an application that will blow all our minds and make our TVs talk to the Internet in ways we can scarcely imagine. That person just needs a supportive partner to provide the hardware. There is no reason in my mind why that partner can't be Apple. It's time to get serious about this hobby."

Full article here.

[Thanks to MacDailyNews Readers "Judge Bork" and "JES42" for the heads up.]


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Feb 04, 09 - 10:20 am Comment from: breeze

Patience is a virtue..,you have to wait for

Feb 04, 09 - 10:22 am Comment from: cmw

I have an apple tv, and a tivo w/netflix subscription. I do love the Atv, but i don't want to buy shows, ever. So I end up using the Tivo much more than the Atv, I don't care much for music subscription, but film and tv are a different story.

Feb 04, 09 - 10:22 am Comment from: 84 Mac Guy

Hobby my ass!

Apple TV is like the early iPod, floating under the radar while slowly building momentum. Add TiVo capabilities and subscription services for premium channels like HBO and Showtime and it is adios Comcast.

Feb 04, 09 - 10:24 am Comment from: Tony

Wouldn't the makers of Boxee qualify as the "as yet unheard of software developer" who can bring additional internet content to the Apple TV?

I like the idea of Apple buying TiVo, by the way. They're both innovative companies with great quality products.

Feb 04, 09 - 10:25 am Comment from: Abby

Apple TV Rocks. So does Rush!

Feb 04, 09 - 10:29 am Comment from: Gwendo

These arguments and even MDN's take are so US-centric...
Just wait some months until the hardware costs of an Apple-TV come down and Apple can afford lowering the price to impulse-buy level...
Bloodbath! grin

Feb 04, 09 - 10:38 am Comment from: John Gee

All I know is I'm ready to think different about TV, and that DOESN'T include Time Warner or DirecTV, et. al.

Feb 04, 09 - 10:39 am Comment from: Digits McGee

Apple TV Rocks. So does Rush!Limbaugh?!?

Feb 04, 09 - 10:44 am Comment from: M.X.N.T.4.1

Essentially Apple have devoted very little time and money to Apple TV, at least in comparison to its other lines, yet it's still holding its own. I love mine, and with the addition of boxee - much as I dislike the interface - it makes it even better. I can see reasons for not adding support for flash and other formats (which is not to say I agree) but if they allowed other providers to add support, albeit in h.264/aac only then it would sky rocket and only serve to support Mac and iPhone/iPod usage on the web. People like the BBC would surely add support for it.

There are limitations, but if you buy it aware of them and don't expect anything more it's a great product and with Handbrake it has virtually replaced my dvd player.

Feb 04, 09 - 10:45 am Comment from: krquet

It already sounds a bit too complicating for my taste. I think I prefer simpler price system, if not a single price system.

I don't wish to remember which movie will expire when and when it will be available for rent and when it's ok to purchase. I also don't wish to consult a TV/Apple Guide to figure out which game is blacklisted in which zone, and what I can TiVo and what I can't and when. I don't want to figure out which network's (ABC) shows are available for season pass while some other network (Universal/NBC) will only allow certain shows for a certain window of time. It would also not be fun to compete against Cable/Satellite companies as they make a decent profit by renting out the STBs. So, they may block the TiVo move.

I think, until the studios' as well as the consumers' expectations don't mature, I'd be quite content with my AppleTV in its hobby state as it is. I get my box's worth just by watching the iTunesU, as well as all my amateur photography in my drawing room HDTV. And it has been a joy.

Finally, I think Mr. Hasseldahl may have missed Apple's unofficial beta testing by 'allowing' if not encouraging the hackers and the Boxee teams to continue as they have been. For it's part, Apple is looking the other way and making sure the ATV remains simplest device in its lineup to be jailbroken. I think Apple's future plans might be a tad more apparent in that direction.

Feb 04, 09 - 10:54 am Comment from: Big Al

What if you had a copy of HandBrake and a lot of stupid friends that bought almost every new DVD that came out?

Feb 04, 09 - 11:00 am Comment from: Bertie

More likely that the atv will develope into a games console- itunes connectivity, hd movie rentals& purchases etc. Safari and With full download game distribution. Pa semi chip processing maybe a piece of that jig saw. And it's more lucrative in the long run than the movies Market! So why not combine music, movies ad games with extras?

Feb 04, 09 - 11:01 am Comment from: Your Mom BluRay

No, that's Rush Limburger. And he stinks....

Feb 04, 09 - 11:07 am Comment from: Steveeee

When time is ripe, Apple will release a SDK and a game store, that will kill the XBox and PS3 altogether.

Feb 04, 09 - 11:10 am Comment from: ElderNorm

I have to wonder if people are forgetting how psychotic the movie companies are right now with Apple. That kind of thing could be prohibited with current contracts with Apple.

Just a thought.

en

Feb 04, 09 - 11:25 am Comment from: Macintosh

I don't see Apple buying TiVo. In my opinion Apple is all about an "On Demand" only service via iTunes. Free TV Shows with commercials would be OK too, as long as there is an option to buy without commercials.

I also think Apple is weary of any subscription service altogether for reasons I never see mentioned anywhere... Customers always dislike their Cable and Phone providers. They hate paying them every month (probably because they end up with nothing tangible to show for it), and when they pay late or not at all their service gets cut, only causing more dislike towards the provider.

Apple is smart for not starting an MVNO or routing Cable through ATV.

BTW,
Last night on the History Channel a big banner popped up on the bottom of my TV that said "Available on iTunes". I thought that was pretty cool.

Feb 04, 09 - 11:25 am Comment from: Noodle-Armed Choir Boy

MDN Take:
" ... But what if Apple created a premium "No TiVo" tier (major network TV series, newer movies) and instead offered attractively-priced season passes for that programming while continuing to sell and/or rent newer movies, as they do now? ..."

Tiered, eh?
And Apple could price different versions, and call them,
"Starter"
"Home Basic"
"Home Premium"
"Professional"
"Enterprise"
and,
"Ultimate"

Oh, wait, ...

Feb 04, 09 - 11:30 am Comment from: Richie

Just put a stupid DVD slot loading player in the thing and I'll buy it.

Feb 04, 09 - 11:31 am Comment from: big jerk

I love Hesseldahl! What a brilliant guy. He always knows exactly what Apple should do because, duh, the dummies running Apple don't have a clue. Right? Wait, is it possible that Apple's calling it a "hobby" to keep smart analysts off the scent? Is it possible they're taking its development very seriously but keeping it secret? Maybe I'll have to take back what I said about Hessaldahl -- he's not so smart after all. Otherwise, he'd be doing something productive instead of writing nonsense.

Feb 04, 09 - 11:33 am Comment from: thethirdshoe

@breeze

...it.

Feb 04, 09 - 11:35 am Comment from: Lovin it

It's a great product. I use it mainly to look at my photos on my 46" LCD.

Feb 04, 09 - 11:44 am Comment from: ralph from berlin

apple has a clear long-term startegy at work here. i think they see the future in content you buy or rent without ads from itunes. they will expand the content over time until they reach a critical mass and they will allow more video-internet-channels to be available besides youtube.

the tivo aquisition doesn't make much sense. apple is developing products they can sell everywhere in the world not specific products for specific markets. believe it or not there is a world outside of your beloved country and apple is making roughly 45% of its revenue there. they want to sell the same AppleTV box in the us and in albania or burkina faso.

but wow about a real AppleTV instead or in addition to the AppleTV box? isn't apple all about integration and simplification? how about a TV set in 42" with built in AppleTV functionality and even a sourround sound bar. the only device you will ever need in your living room, watch live tv or buy premium content from itunes. i would buy such a tv in a heartbeat. and if you want to keep the TV you have, just buy the box.

that would make a nice 4th leg on the apple-chair.

Feb 04, 09 - 11:45 am Comment from: Demon

Apple TV is already away of thinking differently about your TV. The interesting thing here is Apple does not restrict the content you play on the Apple TV. Ripped DVDs work great. Streamed and downloaded podcasts work fine too. Apple is keeping the Apple TV a hobby for many reasons. One, by keeping it listed as a hobby speculative sales figures are not added to Apple earnings. Two, it keeps the would be competition guessing what as to what Apple has up it's sleeve for the Apple TV. Three, by making moves slowly Apple can better manage customer perceptions and guide customers to new ways of thinking about their TV and the content that they slow on it. (if Apple had put Safari on the first Apple TV the punters would have claimed it to be Web TV and pronounced it a failure). If Safari were to show up in the third version release of the Apple TV software the same punters will call it a smart though late move and claim that Apple should have added Safari from day one.
As for DVR a built in DVD or Blu-Ray drive with the Apple TV I don't think it's likely as the Apple TV is a product to inspire customers to start thinking differently about their TV. And when the Customer and Apple are ready Apple TV will no longer be a Hobby and will become a regular Product.

What the Final TV well be, do, or look like is anyone's guess.

Feb 04, 09 - 12:12 pm Comment from: Macintosh

The Remote App could use another update or two for the TV. It only does partial navigation... It's probably quite a task to get it doing full navigation so I guess I'll have to wait.

Feb 04, 09 - 12:16 pm Comment from: Poo

One word. Boxee. Officially support boxee, and you've the the iPhone of set top boxes.

Feb 04, 09 - 12:56 pm Comment from: Volt

Still a ways to go

Feb 04, 09 - 01:33 pm Comment from: Famous Grouse

Buy TiVO? That's the dumbest idea I've heard in a long time. The whole point of Apple TV is to allow you to obtain content from an Internet connection with no need for the monthly charges associated with Cable TV or satellite.

Feb 04, 09 - 01:43 pm Comment from: Pete

It would be better of Apple got a deal from broadcasters to stream TV programming. I would drop my satellite TV provider if I could watch EPL games live and record them too.

Feb 04, 09 - 01:48 pm Comment from: Stenar

I think Apple TV sales tripled because a lot of computer geeks bought them to install Boxee.

Feb 04, 09 - 01:56 pm Comment from: Robbie

Wow, they went from selling 5 units to 15. This product still is a giant loser.

Feb 04, 09 - 02:03 pm Comment from: DRM sucks

"But what if Apple created a premium "No TiVo" tier (major network TV series, newer movies) and instead offered attractively-priced season passes for that programming while continuing to sell and/or rent newer movies, as they do now?"

I agree with most of this article, but his part is straight out of Microsoft. Dude, Apple like simplicity because consumers like it. Forget tiers. Add DVR capability to Apple TV. Let the consumer decide whether to DVR or buy a commercial free version of the show. There will continue to be change on how consumers get content as DVRs continue to become more common and the ad supported model continues to adapt. Apple should position themselves to deal with whatever outcome, and both selling content and having DVR hardware is the best way forward for that.

Feb 04, 09 - 02:13 pm Comment from: vanfruniken

If only there would be content for AppleTV in countries such as Belgium, those sales would take off here too.

iTunes doesn't even show movies and TVshows in the Belgian store, even though many of those are produced in the US. Still, two organizations, one to compensate the authors, and another to compensate the performers/producing outfits, seem to be in the way, even though compensation could be provide through the same mechanism that works for the US.

Feb 04, 09 - 04:41 pm Comment from: Sarasota

Adding Tivo-like capabilities (and OTA) would be incredible. If you are already paying for cable or satellite or have access to Hulu, why would anyone pay for a TV show on iTunes?

Feb 04, 09 - 05:03 pm Comment from: jcw3rd

The whole ipTV idea is in trouble as long as ISPs continue to throttle bandwidth. I was really getting into video Podcasts and purchasing past seasons of shows I like. Then my ISP changed my plan from 'unlimited' to 5 Gigs a month. You can't download many shows at 5 Gigs a month.

It sucks.

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