Apple TV Won't Become A Cable Box

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Apple’s Apple TV set-top box needs some work: The gadget is expensive, has a limited feature set, and is not very popular.

And don’t count on junking your cable box and replacing it with an Apple box.

In a conversation with Caris & Company analyst Robert Cihra, Apple CFO Peter Oppenheimer “pretty much killed” the idea that Apple TV would Apple would try to integrate cable tuning/decoding into Apple TV. He says it “just doesn’t fit Apple’s business,” Cihra paraphrases in a note today.

This makes sense. While Apple was quickly able to jump into the mobile phone business in a big way, cable is trickier. Why?

  • Cable companies all use different tech, and the Tru2Way standard is not going to be mainstream for years. (Cable tech upgrades move at a snail’s pace.)
  • No cable company covers the whole country, and they all use different tech, so Apple would need to establish many relationships, not just one nationwide deal.
  • There’s probably no way Apple will be able to strong-arm a cable company to letting it call the shots the way it did with AT&T in wireless. (And AT&T is busy using Microsoft tech for its U-Verse TV service.)
  • Most customers have never bought a cable box before — only rented it — so the cost would be a huge surprise if Apple tried to sell it direct-to-consumer. (An Apple set-top box with DVR could cost $500 or more.)
  • If it tried to sell boxes to cable companies, for them to distribute, competing with Cisco and Motorola as effectively an enterprise technology provider does not sound like the way Steve Jobs likes to “delight” people.
  • International markets are all different, so more headaches.

Sure, it’s possible that someday in the future, the cable industry will have their act together, with a single, smooth technology platform so a company like Apple could design an awesome set-top box for the masses. (The cable industry could certainly use the help — most cable user interfaces are awful.) But that’s not going to be a reality any time soon. So Apple is best off staying away.

What should the company do with Apple TV? Skirt the cable guys and make it the best Internet video receiver in the world. This could be as a set-top box the way it is now — but with many more video sources, and perhaps with Blu-ray, to truly replace your DVD player — or as a platform built into high-end TV sets.

Related: Apple TV Keeps Getting Worse

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