How could Apple (AAPL) get more people to buy its Apple TV set-top box? By making it cheaper. At $230 (or $330 for more storage), it’s an expensive bet. Especially in a recession, and especially when you can watch Netflix (NFLX) and Amazon (AMZN) streams on a $99 gadget.
How can Apple make a cheaper Apple TV? For one, by getting rid of some moving parts, like its hard drive.
And it looks like a reported new iTunes upgrade could make that possible. Apple is preparing a feature for iTunes 8 that lets movie renters stream a movie straight off of Apple’s servers — instead of downloading it to a computer or Apple TV hard drive.
What does this mean? Potentially:
- A cheap Apple TV with no hard drive. A video equivalent of Apple’s cheap AirPort Express wi-fi device, which lets you stream iTunes audio to your stereo, perhaps?
- Over-the-air (or at least wi-fi) streaming to iPhone, iPod touch, and other devices, such as the iPod touch HD tablet we’re envisioning.
The downside: Streaming requires an uninterrupted, reliable Internet connection. So it’s not going to replace iTunes downloads entirely. Won’t help for taking your laptop on a plane or taking your iPod touch in the subway.
Apple still refers to its set-top box business as a “hobby,” but said December quarter Apple TV unit sales tripled year-over-year. Apple is smart to continue investing in Apple TV: With a combination of consumer electronics and media experience, Apple could be in one of the best positions to challenge the cable industry’s lead.