At Apple the gadget, not content, is still king

September 1, 2010

At Apple the gadget, not content, is still king. Nearly every day brings a new contestant in the emerging battle for the attention of the American couch potato. Netflix, Amazon, Hulu and YouTube all want to serve up content. While Apple also rents out video, its new TV device allows users to stream rival services. Unlike the other players in the fast-moving video web arena, Apple’s still all about the hardware.

Apple used to call its TV efforts a hobby. That’s no longer the case. It latest gadget, which allows Internet video to stream on television screens, is smaller and appears easier to control than Apple’s first entry to the field. And the increased content available — ranging from Netflix’s film library to Hulu’s collection of television shows — makes it far more useful. By chopping the price to $99 the device is also far more affordable.

While there has been much talk about consumers cutting out cable TV, the evidence has been slim. For most, it’s just too complex to engineer a move to web-only media, and the savings can be illusory for those who want to watch new programs, particularly without commercials. But Apple’s new device, and its plan to rent shows from two networks for a cut rate of 99 cents a program, makes the prospect more believable.

Of course, consumers may give the device a cold shoulder. Apple TV can’t store programs for later viewing like a Tivo or a cable operator’s DVR box. And there are lots of rival devices and companies competing in the market. But Apple’s skill in engineering easy-to-use hardware and its willingness to tap rival content distributors with a combined gigantic trove of videos could make it a winner.

First, it might be able to sell quite a few of these devices for a nice chunk of revenue. More importantly, it could increase demand for other Apple products and make these devices more useful — the so-called “Halo effect”. The gadget can, for example, stream pictures and video from Apple’s mobile devices onto a television.

It’s not far-fetched to imagine customers buying the relatively cheap Apple TV, liking it and then buying a Mac that works well with it. The iPod, iPhone and iPad all showed a similar pattern. Apple’s hoping for yet another re-run.


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It has no PVR functions at all and it’s pay-per-view – yup, it’ll sell like hotcakes. Commentators that are blinded by Apple media blitzes are just plain sad…

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Steve Jobs is a genius

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