How Steve Jobs Can Fix Apple TV (AAPL)

It’s no secret that Apple TV — the company’s would-be digital hub for your living room — isn’t selling like hotcakes. Late Friday, Macworld published new Apple TV sales estimates from Forrester Research: the firm guesses Apple has sold 400,000 of the gadgets since it went on sale this spring and may sell another 400,000 during the holiday shopping season. But Apple will likely miss Forrester’s projection of selling 1 million Apple TVs this year.

iFlop? Maybe. But it’s not too late for Steve Jobs to fix things. Despite plenty of claims to the contrary, the device still doesn’t have much serious competition. How can the company make Apple TV a winner?

Step 1: Upgrade the software on current Apple TVs. The device has impressive hardware specs: it can play HD video, connect to the Internet, and has a USB port. But in the present tense, most of these features are useless: the video content on iTunes looks bad on a HDTV, and the USB port doesn’t do anything. These quick fixes would all work on current Apple TVs with a software update:

  • Get HD content on iTunes immediately. No one is buying stuff on Blu-Ray or HD-DVD, but we’d happily pay for gorgeous HD rips of Planet Earth that we can watch on our computers and Apple TVs.
  • While you’re at it, get a ton more video content on iTunes, or partner with Netflix (NFLX) or someone who can. iTunes’ current selection (and grainy YouTube clips) won’t cut it.
  • Let people rip their DVDs to their Apple TVs/computers the same way they can rip CDs to play on iPods. Apple TV would be more useful if we could build a decent-sized video library with the media we already own.
  • Open Apple TV to any videos we have on our computers, whether downloaded from iTunes or not.
  • Put a Web browser and an email app on Apple TV, and let us use the USB port for a wireless keyboard/mouse. WebTV was a joke, because the Web was a joke on standard-def TVs. But HD sets are good for lightweight Web browsing, Internet radio consumption, etc.

Step 2: For Version 2.0, re-think the Apple TV as a better DVR/set-top box. Apple needs to add features and keep prices steady. Spending $299 for 40-gig Apple TV doesn’t make sense when a Mac mini with many more features is only a few hundred dollars more. Our wish list:

  • DVR software. It doesn’t make sense to pay Time Warner Cable (TWC) $8/month to rent their cruddy DVR if Apple could give it to us for free. Figure out how to interface with our cable box, and let us store all our video on Apple TV’s hard drive. Then let us transcode our stored content to computer- and iPod-sized files for portable watching. licence TiVo’s software, or build your own. Just get it done.
  • Better yet, get a CableCard slot and tuner so we don’t need a set-top box in the first place. The cable companies will freak out, but they need the competition.
  • Bigger hard drive. Even 160 GB is not enough. Put a 500-gig drive in there, even if it means the Apple TV will get bigger. Don’t forget that you could be replacing our DVD player and set-top box, which both take up a lot of room.
  • Ditch the tiny remote. It’s not very functional. Give us the Hillcrest ‘Loop’.
  • Make this entire package $300. Or better yet, $200.

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