Forward: A couple good friends shared Sisir Koppaka’s thoughts on the iPhone announcements last week. These are certainly the most forward-thinking opinions I’ve read since Tuesday.
The value of the M7 in game controller scenarios should be obvious. Today the iPhone and Apple TV have a well understood relationship; one device controls what the other displays. With the 5S, that controlling device is capturing more data about how it’s being manipulated, which has the potential to enrich its relationship with the other. Today’s console controllers are providing the channel for player input, and the massive box underneath your television processes everything. What if your gaming controller could balance the compute load for your console? And if you already own that powerful gaming controller, could the complexity (and therefore price) of the console come down?
Apple’s interest in gaming should be obvious at this point (look no further than this being the third consecutive infinity Blade demo). The framework Apple provides for game development has shown itself to be quite sufficient, and the remaining hurdle continues to be delivering something that matches the living room consumption experience. We all know that some would say this hurdle is self-imposed, as the current Apple TV could provide a reasonable coming experience tomorrow, if Apple felt like releasing the bits. But to match the visual impact of an Xbox or a Playstation, you’re going to need more horsepower; pushing a 64-bit compute architecture into your ecosystem is a great bit of advance planning, even if you haven’t got the silicon to match yet.
Now following the console kings would mean shipping a smarter hockey puck, build some hand grips (which might really just be a reference design for the Belkins and the MadCatz of the world to open up a new product category that owes 30% of its revenue to Cupertino), and make the world happy.
Apple is smarter and hungrier than that.
To borrow a phrase from Gruber, there’s too much smoke for there to be no fire behind the rumors of Apple building a television. There are too many scenarios a complete appliance can enable that a set-top box cannot: Room-to-room FaceTime, ambient PhotoStream sharing, and a Siri-empowered living room are the first things that come to mind here. Not to mention all the things that iOS devices are so good at (and traditional TVs are so poor at) that we forget how important they are: playing music with the screen off, turning the screen on when the system determine’s it’s necessary, and politely notifying the user of things happening in the background, without detracting from the current activity.
But televisions are expensive and an Apple Television would be even more expensive, right? People don’t replace their televisions often enough for Apple to sell at a sufficient volume, right? The margins on televisions aren’t fat enough for it to be financially worthwhile, right?
First, we’ve seen time and again Apple demonstrate their basic intelligence; they may be arrogant when entering new categories, but they aren’t stupid. They’re willing to hit a price point that the market will respond to if they choose. So the idea that an Apple Television would be overpriced is a non-starter.
Secondly, Apple has succeeded at capturing relevant share in music players, computers, phones, and now tablets, and they’ve sold products from each of these categories to the same people. Each time they enter a new category, every one of their customers is new again (not to mention more likely to agree with the value proposition). They won’t be bothered by someone only buying a television every five years if they’re likely to buy a computer every three years, a tablet every 24 months, and a phone every twelve.
And finally, while the margins on traditional TVs aren’t great, this is the opportunity that is simultaneously ideal for Apple while being shit for the incumbents. Ever consider that part of the reason the margins on TVs are so bad could be that the product isn’t compelling on its own? TVs need ESPN and HBO and Xfinity and Xbox and Blu-Ray and universal remotes before they’re interesting. Apple is the only company that has already sold you allow those capabilities, so their entrant will appear more immediately valuable than any other, and that perceived value is where margins are born.
Not if, but when it’s announced, the Apple Television will be many things. It will have the elegance, power, and refinement of the new 5S or the coming Mac Pro. It will be deliver the incredible and sublime experiences iOS keeps close in our pockets and our purses. And it will immediately understand its relationship to the investments we’ve made in iTunes, iPads, iPhones, and Macs.
Do you think it won’t sell? Do you believe the margins won’t be there?
Last week’s announcements were the silent starting gun. A 64-bit core, and task-specific chips, and a GUI overhaul are fundamental strategies for such a product. And because it’s the experiences Apple doesn’t build that keep iOS (and by extension Apple) at the forefront, developers are now beginning to build experiences that are ready for the big screen.