Category Archives: Convergence

It seems fairly apparent that AppleTV is nowhere near the runaway success the company’s enjoyed recently.  It’s been called a “hobby” by some, and that’s about as flattering as it gets.  It might actually be the best examples of why…

• Convergence products suck – they are too hard to explain to consumers, too hard to get working properly (yes, you need a computer running iTunes to get content into it, but no, it doesn’t have to be on all the time.  gah!), and they can’t satisfy even their own users all the time due to incompatible networks, formats, codecs, etc.  Sneakernet is a better solution for getting digital media off a computer, as the standalone products violate my “4-boxes in the living room, and no more” rule (which I have not yet written, but will do soon).
• Good UI isn’t enough – it doesn’t matter how nice it looks if there isn’t enough substance to support the product.  Yes, the AppleTV has a better UI than the NETGEAR Digital Entertainer HD and probably any other streaming media device in the past, but it’s still a convergence product (see above).
• Walled gardens are clearly annoying customers – let’s face it, there are just too many content options available today to try to trap consumers into a limited set.  The only reason the iPod was more successful at this game is that it’s main value proposition when it came out was about the ease of ripping and synchronizing, not the iTunes store.

So now let’s take a step back.  Apple makes a beautiful (yet pricey) 30″ LCD monitor – it’s more expensive than the 46″ Samsung LCD I’m considering.  One of the reasons it’s so expensive is the resolution is so high.  They could easily drop it down to 1080p, up the sizes to 36, 42, and 46 inches, and pow, it’s a TV.  Next, they could throw the guts of an AppleTV inside, and you’ve got a great-looking display with built-in media streaming capabilities, and they could probably hit a pretty affordable price point.  My hunch is it would sell better as a $1999 TV set than the $299 box does today.

While they are at it, I’d love to see them apply some Apple-goodness to the EPG, and throw a DVR into it. There’ve been rumors that they’d buy TiVo for years, I hope they don’t.  They can out-TiVo TiVo in my opinion.  Better yet, they should throw in the ability to synch it back to an iPod, or to your .Mac account online (for an additional fee).

That’s a winning convergence product in my eyes.

Important Disclosure: I was born in Montreal, Canada, home of the greatest NHL team of all time as well as the baseball team “that got away” – and yes, I’m bitter.

Sling Media and the NHL just announced (although my friend Om seems to have gotten a bit of an earlier scoop than old JT) that they are working together to enable NHL content within the forthcoming Clip+Sling technology (more from SlingCommunity, refresher details here, beta signup here – don’t know if they are still taking, but it can’t hurt to sign up!).  Now if this were any decade prior to the 90s, I would probably insert nice gloating comments about how much I would use this to show my Habs trouncing their opponents, but, uhm, they, er, kinda, sorta missed the playoffs this year. 

Now granted, NHL’s TV licensing business isn’t quite the same as MLB’s.  Furthermore, this deal isn’t about to change the bottom line for the organization during the 2007-08 season.  But that’s not the point: it’s that they are working with Sling to see what the future holds, not working against them to see how lovely the fresh air was back in the 1970s.  MLB can’t act like the music industry when it comes to Internet distribution, they must make deals with tech companies, experiment, and look to increased revenue through innovation, not lawsuits (refresher on this one here).

While Bettman’s antics over the past 15 years haven’t done much to bring the NHL out of 4th place when it comes to professional sports in the US, he’s certainly enabled his organization to test the waters when it comes to new technology.  It’s not quite enough to excuse him for moving teams to North Carolina and Florida (two of em, in fact), but it’s certainly a step in the right direction.

Disclosure: I’m a former Sling Media employee, but I think the hockey/Canadian disclosure was more important.

So AppleTV is officially shipping, and as I saw on Engadget, Walt Mossberg has already reviewed it.  Some excerpts:

… we can easily recommend it for people who are yearning for a simple way to show on their big TVs all that stuff trapped on their computers.

Apple is hoping that, just as the iPod trumped earlier, but geekier, rivals, Apple TV can do the same by making a complex task really simple.

The review continues on, and Walt gushes about the device quite a bit.  The only competitor he points out is the Xbox 360, which he dismisses because it’s twice the price.  I think this is a dangerous dismissal, as the price points aren’t really the issue in this category yet.  We are in early early adopter-land, which means the people who really want it, are gonna buy it. $299, $399, $599, whatever.  The bigger question to ask is: is this really a market they can dominate?

In 2 years, over 20 million Xbox 360s have shipped, and as The Online Reporter observes, the biggest Apple TV competitor could already be on the market.  Xbox 360 owners who have the Live service tend to love it, my friend (and fellow blogger and now Sling Media employee) Dave Zatz told me he felt the 360 was the best device he bought last year. Also, the NETGEAR EVA8000, which I reviewed last week boasts a more robust feature set at a similar price point.  I read a lot of conjecture about how “Apple TV is just like iPod year 1” but folks, I’m saying now it’s not anywhere close.

When Apple launched the iPod, the category already existed (even if you ignore other mp3 players, people already were comfortable with buying portable music devices).  The problem then was: there was no really convenient way to get existing and new music collections on to portable MP3 players.  I had a Rio Karma, it was great (like really great), but you had to be pretty savvy to get music onto it, and there was ZERO services on the Internet with new content.  In the living room, on the other hand, it’s not just a question of simplicity and furthermore, there’s tons of content out there.  It’s not hard to get “mainstream” video to a TV set, especially in comparison with the challenge of getting “mainstream” music to an MP3 player (circa 1999).

Now I’m not dismissing the product, nor am I dismissing Apple’s ability to move their marketing muscle into the living room.  But this certainly isn’t a slam dunk.  Take a time out to read Thomas Hawk’s list of why he isn’t interested in the “dongle”, then go check out Phil Swann’s reasons why he thinks Apple TV will “bomb”.  If you aren’t too saturated, I’d also stop by WIRED’s fair and balanced thoughts on why it “rules and sucks”.

Here are some of my specific problems with the product (note that I haven’t used it hands-on, so I have no comments about it’s user interface, which is probably great):

• No YouTube support.  This is a very questionable move at this stage of Internet/video/PC/TV convergence.  The EVA8000 does it, and after a few days using it, it’s a very fun application. 
• Widescreen-only.  I love the HDTV market, and about one third of all new TVs sold are flat (which implies widescreen), so that’s a lot of screens (I’ve read before the number of households is in the 20 million range, but cannot find that source to quote here).  But this is the kind of product decision that creates returns, something I have a feeling Apple doesn’t have to deal with in other categories.  Also, there’s a distinct lack of HD content offered at launch, which makes this even more… ironic?
• A computer must be on all the time.  One thing I like very much about my Sonos and EVA8000 setups are they work directly with my networked hard drive (aka a “NAS“).  With the Apple TV, I need a PC/Mac on all the time, and while this is clearly a growing trend, it’s a requirement I don’t like in a product this expensive (it’s one thing for a $99 media adapter, it’s another at $299). UPDATE: I was corrected (by Ben at EngadgetHD), I misread the usage with it’s internal hard drive.

Is it a good product?  Probably. After all, Walt is a pretty picky guy, and even though he clearly has an affinity for Apple products, he seemed impressed (although he didn’t really talk about video quality in the review, which is an interesting omission).  Also, Apple does tend to make the product experience great, and I’ve got to assume that heavy iTunes customers are going to think this thing was sent down from the stars above.  As Sonos’ worldwide PR manager Thomas Meyer said to me, “Mr. jobs is definitely going to do this right.” 

My hunch is they’ll do a very good job appealing to that core market, but have a tougher time getting beyond.  I don’t think they’ll be as strong in the HDTV segment as they want to be, as even enthusiasts such as Ben Drawbaugh (contributing editor at Engadget HD) who thinks “it’ll be awesome” (and has blogged about wanting one) doesn’t think it’ll be all that useful for HD content.   If I were Apple, I’d be doing everything I could to get associated to HDTV, as betting on the future is more important than the past.

I’d guess they can out-market a company like NETGEAR in this space (but will probably drive them unit sales for some of the reasons I stated above). I think they’ll probably be the #1 leader in “digital media adapters” by the end of this year, and can probably move over 100K units in 2007 alone.  That said, I don’t think they are positioned to utterly dominate the living room the way they do in the portable space. 

Almost a year ago I wrote a review of MovieBeam, wherein I described it as a good, but pricey product.  Since then, a few promos to get the box for $49-149 were offered.  Endcaps at Best Buys were installed.  A few other influential people tried it out.  But it doesn’t seem like much has helped get their sales going. 

When I was first sent a unit, I was told Ethernet support would come by the Summer (of 2006).  It didn’t.  Furthermore, the movie selection over the past few months has mirrored what I typically see on United flights: a few good movies I missed in the theaters supplemented with a list of things I would never watch (although I did get a full 23 minutes into Snakes on a Plane before shutting it down).  This combined with a fairly non-competitive price point was a bit of a circle of doom, in my eyes.

Zatz reported today that Movie Gallery (an East Coast movie chain) is buying them (for under $10 million – ouch), and I wonder what they will do.  Here are the “big” options I see:

• Keep it running as is, tie in the Movie Gallery brand. 
  This is probably the worst option for them.  The current service just isn’t compelling enough against all the new VOD, IPTV, and HD options from a huge variety of players (including Joost, which I’m now trying out – more on that soon).
• Shut it down, leverage the MovieBeam brand for a new IPTV service.
  Not bad, as the name does have a nice ring to it, and they have already cleared a huge hurdle of IP distribution rights.  $10 million isn’t a bad deal to get all the relationships with Hollywood in the IP arena (which is virtually completely different that running a video store).  Not bad, but also probably doesn’t have enough legs for longevity.
• Switch the model into service-based, compete with Netflix.
  This might be the most obvious and logical model for the company.  By using the box, they can offer a subscription service with no need for mailing anything.  Granted it still uses the same datacasting system, but with their access to content libraries combined with a huge customer base, offering it up as a $9.99/month (free loaner box) package could be compelling.  Also, the HD content is a nice plus here.
• Do the above, but add Ethernet for live streaming and community features.
  If the MovieBeam box was able to stream content live, as well as give me a nice suite of personalization and community/social features, I think we’re in the money.  Especially if I can access huge libraries of content, manage my ‘queue’, select movies to watch with friends, etc.  Also, this opens up the notion of partnerships with Joost or even TV studios for new service opportunities.

Now nothing they are going to do will help improve the performance of the remote/box, but that doesn’t mean they can’t spin out a new unit in the next year.  I hope they look at this as a chance to innovate and differentiate.  I hope they see the potential of what could be done in a “digital home gone right” scenario. 

Nobody’s done it right yet, but the Xbox 360 is close, and Apple TV could be a good shot.  We’ll see if MovieBeam comes back with a vengeance, or just fades into the obscurity of interesting convergence ideas gone wrong (where it enjoys the wonderful company of the Audrey).