Roku and Time Warner

Interesting to note that Roku will be able to make available 300 channels to Time Warner Cable subscribers. This means that Roku is becoming a defacto replacement for a normal TWC set top for TWC subscribers.

I have beaten this drum before - a move like this is good for all involved. TWC doesn't have the opex or headaches involved in supporting additional STB's. Actually expenses should reduce as some existing STB are replaced - plus there is no truck roll costs involved when a subscriber adds a Roku box. Roku gets a great revenue opportunity as they get to market to millions of TWC subscribers. For the customer - there are a number of advantages of owning a Roku box that they will now be able to take advantage of. A win-win-win situation.

I also firmly believe that Apple will eventually announce both a new Apple TV box and a relationship with larger operators like TWC. They won't let Roku have all the fun (or all the market)

Apple TV - 5 Reasons Why It Will Crush the Competition

Interesting article giving 5 reasons why Apple TV will crush the competition.

Three quibbles about the article:

1. I think Apple will actually have two products - an Apple TV set top box to be used as a legacy STB replacement for MSO's and other service providers and also an Apple iTV.

2. This iTV product won't crush the competition because there really won't be any. It will be a product unto itself just as the iPhone was when first released. It will be both a TV and computer monitor with built in apps like Siri and other Cuppertino goodies.

3. Still think that videoconferencing will be a killer app for the iTV. This will give Apple entree into the business VTC marketplace which will also allow it to take share in a multi-billion market.

Apple's TV Plans

Brightcove's CEO Jeremy Allaire predicted that Apple will make both a set top box and a TV. Big whoop - I predicted that months ago.

In addition to making my prediction I also explained why that strategy is genius for Apple. Everyone connected to the industry knows that there are billions of dollars worth of legacy MPEG2 set top boxes that would be ripe for upgrading. An Apple TV STB product could help accomplish that with the added bonus that the subscriber may actually pay for the box on their own.

It is the TV, however, that could be the real game-changer. When's the last time you thought of your PC monitor? An Apple TV could be a combination TV / computer monitor and videoconferencing unit. If the product could just grab 10-20% of the markets in those segments then you're talking a product that would be as revolutionary as the iPhone.

An Apple TV would give people reason and incentive to upgrade their TV's at home and their monitors at work. Pure genius.

Apple's Stealth Video Conferencing Strategy

Last week it was announced by an analyst from Piper Jaffrey that Apple plans to release its long awaited Apple iTV product sometime around next November. The new product - not to be confused with the existing Apple TV set top box "hobby" - is expected to come in either 47 or 55-inch screen models. What really interested me was the "news" that the devices would also include both Siri voice controls and FaceTime video conferencing. The units are supposedly going to be priced between $1,200 to $2,000.

If Apple really does this then what they will essentially be releasing is a single codec telepresence unit with unmatched video clarity and some pretty cool features. Can you imagine how cool it would be to use Siri for call set-up and completion? "Siri - call Chris Lynch at the Boston office." Boom - call done. And if no answer there could be a follow-me aspect that would them to ring my cell phone (which Apple probably hopes is an iPhone - maybe exclusive features for that).

There could be some interoperability issues to work out but the VTC market is mature enough so that shouldn't be an issue. The 2011 market for single codec telepresence units was about $1 billion but that was just for new units many going into legacy networks. An Apple product like described above could prompt people to do massive upgrades or put these Apple iTV units into places these units normally don't go. A unit only costing $1,200-2,000 would be peanuts for most businesses - especially when the device can double as a person's PC screen in a small office.

Re-making the videoconferencing market may be the actual goal of the Apple iTV product. Brilliant if it is.

What Was Steve Jobs' Vision of the Future of TV?

Interesting look at Apple and what Steve Jobs may have in mind for Apple TV.

I still say that the idea of Apple replacing set top boxes for the major MSO's is an idea that is vastly under-rated. Time Warner Cable alone probably has 40 million STB's. They would be very glad to help subsidize customers switching out their existing gear for Apple TV boxes. Apple would get a tremendous boost in revenue, Time Warner would increase profits by greatly lowering operating costs and the customers would get shiny new Apple TV boxes with features their existing legacy STB's can't come close to offering.

Why wouldn't everyone involved go for a scenario like this?

Amazon versus Apple Business Plans

Yesterday there was a BBC article on Kindle Fire HD and Paperwhite making no profits for Amazon.

Basically the Amazon model is to sell the hardware at cost so they can make their profits on the content. This seems to be the exact opposite model from Apple who makes great profits from their device sales and, according to the article, runs the popular iTunes "slightly above" break even.

I immediately wondered what impact these two models would have for IPTV. 

Apple seems to be positioning its Apple TV as a replacement for major MSO legacy set top boxes. That could prove to be a brilliant strategy. There are tens of millions of legacy MPEG2 STB's out there. How great would it be if customers voluntarily upgraded their own STB's by purchasing $99 Apple TV boxes on their own? Apple would get the hardware sales, the MSO's would keep their subscribers while being able to offer new services and the customer would own their STB. 

Amazon's model? In terms of IPTV their offering would seem to appeal mainly to cord-cutters. Whereas if Apple isn't making much off the content they they can position themselves as not being in competition with the big cable companies (if they just support the Apple TV STB). Apple's business plan seems to make more sense.

Could Turnaround Be Fair Play and Smart Play for AT and T and Verizon?

Interesting report that AT and T and Verizon may be looking to add cloud based gaming capabilities.

Most people have been talking about more and more video services being ported to game consoles like X-Box, Wii and PS3 enabling cord cutters and potentially cutting into MSO revenue streams. What if the MSO's turned around and eliminated the need for game consoles by porting the games to the MSO's cloud. Gaming on demand instead of video on demand.

Here's another thought - what if this is the strategy Apple is looking at for their new Apple TV? They could upgrade the box so that it is both a replacement for existing MSO set top boxes and also a replacement for the customer's game console. A STB with Kinect-like functionality? There would be a huge market for Apple game console.

The thing holding most MSO's back from offering new features and functionality is the huge sunk investment in existing MPEG2 based STB's. Imagine if the customer - on their own - replaced those old boxes with new Apple TV boxes! Wouldn't that be most welcome by the major MSO's like AT and T and Verizon?

Smart TV's or Dumb Screens?

Very astute article about Smart TV's. The question is asked - "Who needs an Internet set top box like Roku or Apple TV if the functionality is integrated directly into your TV?" This question can basically be answered with another even better one - "Who is going to buy a $2,000 Smart TV that can be obsolete with the next new app or firmware release when they can buy a box for $100 that can be replaced as needed?"

If you understand the two questions then you'll also understand why Apple is not going to be getting into the manufacture of TV's - smart or otherwise.

How to Move from MPEG2 STB to IP Consumer Boxes

Once upon a time if a business wanted phones to make calls they had to buy a proprietary system and handsets. Whether it was a PBX, hybrid or key system from Lucent, Mitel, Ericsson, Nortel or others - it was proprietary. And expensive. Then came VoIP.

Anyone who was around at that time can recall the key word that was always attached to anything IP - "ubiquitous".  As pretentious as the word and description was it did come true. IP has become "ubiquitous". Well for everything except cable set top boxes.

MSO's and smaller cable companies have invested billions in MPEG2 set top boxes. They don't want to go to the expense of switching out those boxes just so the customers can enjoy MPEG4 HD programming and other IP based services. And the customers don't seem to want to foot that bill either. Surprisingly the answer to this conundrum may turn out to be relatively simple.

If a game console or box like Apple TV or Roku can accept the encryption client from the MSO to insure content protection as well as accepting the EPG and data - then the switch-over from proprietary MPEG2 based STB to IP based consumer product could be for the most part painlessly achieved.

I think Apple understands this which is why the next version of Apple TV will probably more closely resemble a traditional STB (but with cloud based DVR functionality). This is not much different than Cisco back in the day getting into the VoIP handset market. It should be noted that the VoIP handset didn't replace the traditional TDM-based phone overnight but the VoIP handset market was much more profitable.

How many people do you know selling PBX's today? In ten years the same thing will be said about people selling QAM based systems and set top boxes.

Apple TV - Out of the Box Thinking

People keep trying to predict what Apple is going to do regarding Apple TV - or iTV as some people want to call it. I don't believe the speculation that Apple is going to get into the manufacture of televisions. And people who speculate that Apple will get into cloud based DVR - what do you think iTunes is if not a giant cloud based library for music and video?

Having said the above - I will jump in and add my speculation to the bunch. What if Apple makes a deal to provide VOD services for CBS - who other than trying to drive people to the CBS website doesn't seem to have much of a strategy in place. You could buy a season pass for a CBS show on iTunes for say $1.99 and Apple and CBS could split the money. Make a show available the day after it first airs and then take it off a month or two after the last show in the series airs. This would be a big incentive for people to purchase Apple TV and it would be a new revenue stream for CBS. And if CBS doesn't like the idea - Apple could just use their huge hoard of cash to buy them.

How's that for thinking outside the box?

Apple TV

I really don't understand the people who think that Apple will actually start manufacturing TV's.

But 70 inch iPads that are massive media centers sure sound sexy. Imagine big screen Apple TVs running the iOS touch interface. Now that's something worth paying for.

I see a big flaw in that idea. Touch screen TV's? So I'm supposed to get off the couch just to touch the TV to change the channel? No - I could use my iPad as a remote but I'm not going to care about a touch screen. I could use Siri to voice my commands but Siri could be built into Apple TV. It doesn't need to be an actual TV.

A la Carte TV

Peter Kafka has a new article where he argues that it is most likely that Apple TV will go along with the current content arrangements to get along. He mentions two scenarios that would create a more a la carte  environment but he misses the most likely - Congressional action.

A la carte TV may come to Canada and will be through legislative action. Of course the content producers would spend millions lobbying against such action in the US but can you imagine how popular it would be? Everyone - Democrats and Republicans - have to pay for channels they don't like.

Apple TV and Hulu Plus (Continued)

Here's some additional thoughts on Hulu Plus being added as a channel to Apple TV:

Hulu Plus Quietly Comes to Apple TV

Interesting report of Hulu Plus being added as an app to Apple TV. As the report points out there has been no official announcement. Interesting.

If you combine Hulu Plus with the video enhancements of Mountain Lion OS and any other enhancements being worked on - then you start to wonder if all of these things could be soon combined and productized into an new Apple iTV?