There has been quite a bitter fight going on for the last 8 years or so (ever since Broadband reared its head) for the ownership of the Device That Lets (Comms and) Entertainment Into Your Home. Various Set Top Boxes (cable, satellite) held sway but over the ‘noughties have had to duke it out with increasingly powerful multifunctional routers, IPTV boxes, ‘net connected games machines, New New STB’s like Boxee and of course MyPCTV (my PC controlling the TV set) which has held sway in Chez Broadstuff for some 4 years now, especially since BBC’s iPlayer came into use.
Next up is the new Apple TV – or more accurately, the Apple Set Top Box That Controls the TV. It is definitely smaller and more stylish the Old Set Top Boxes (no doubt there will now be a rush to be thin, small and black among other STB makers).
But, while the chatterati all ooooh their way to their Applegasms, it is time for us more sanguine types to look at the overall value chain and ask “what has changed”. The old Apple TV was a download and play (iTunes) model, the new one has streaming deals with TV stations and no memory at all. There is no new technology at play here, nothing in the value chain that doesn’t exist already, no new “gee whiz” device – what is interesting is that Apple has done a complete shift of value chain model, from download to stream (because that is what most people like).
The really fascinating bit of this picture however, is if you go up one step in the system diagram. Apple now has a plethora of screens and devices that all interact with each other and with an end to end delivery value chain, from content via aggregation to user device. They don’t own the distribution piece, but they have made deals with Moble Telcos that no one believed possible beforehand. I await similar with TV Co’s (they have already pushed streaming prices down from $2.99 to $0.99). Appls pricing is now coming in at $99, a lot cheaper than most other STB’s that don’t come attached to large bundles of bloatvid.
And that is where it gets interesting. The big prize has always been to control the Home Multi-media Controller, and this Apple TV device – plus the apparent ubiquitous rollout of a new IOS4 operating system across all their devices – is another move in the Apple play to surround and then own that piece of turf.
By the way, I am no Aple fanboi, but I have been using the Apple Value Chain diagram in consulting to clients since iTunes came out, and what amazes me is that no other big player has replicated it as they have stormed moble music, mobile telephony/smartphones, the mobile web, tablest and starting now, Quad Play in the home.
Incidentally, I believe this is a more robust strategy than Google TV, as SAI notes:
Specifically, Google wants to turn your TV into a computer. Apple says people specifically don’t want computers on their TV. Who will win?
Apple made it clear today that it’s trying to complement the gadgets that are already in your living room and hooked up to your TV. Apple TV is an add-on — it’s basically there to provide a few extra streaming features, in addition to your cable box and videogame console.
This is not even a question by 2010, so I think Google strikes out at first base – we set up usage experiments with the MyPCTV concept in 2006/7, its clear that the TV is not a computer, but is part of a complex “4 screen” (TV, PC, Tablet, Mobile) end user world.
But more than that, the real thing Apple has going for it is that end to end value delivery system which Google hasn’t replicated – not in Mobile (albeit they are putting a lot of effort in belatedly with Android), and not in Video.
Oh, and they own the end device – s. Never forget that……………
This does not of course mean they will win – but what they are positionng themselves to do is cream off a lot of early adopters, take massive market share early on with high margins products, make it expensive to roll them back.