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Apple TV: What It Can't Do

By Pam Baker MacNewsWorld ECT News Network
May 14, 2007 4:00 AM PT

Apple TV came advertised as a convenient way to connect a computer to your TV -- and do it in HDTV, no less -- but critics say the device has clearly missed the mark.

Apple TV: What It Can't Do

To be fair, Apple has never promised anything contrary to the specific complaints lodged by detractors. Still, the question remains: Will consumers accept Apple TV, worms and all?

The Million Mark

"Apple TV will sell a million units because there are that many people out there who love Apple enough, and have already spent money buying back episodes of 'Battlestar Galactica' from iTunes, that they will see the ability to view that content on the TV as a bonus," James McQuivey, principal analyst with Forrester Research, told MacNewsWorld. "But beyond the 1 million units, the Apple TV will struggle until it opens up the box to the Web-streamed content that all the major networks are putting online for free."

Specific sales numbers are not in yet, since the units only began shipping in March, so there's not much to measure Apple's early success -- or failure -- by. "It's too early to get a read," Mike McQuire, vice president of research, media advisory services at Gartner told MacNewsWorld. "But users are pretty much limited to their libraries, and some think the 40 GB hard drive is too small. A lot of Apple's success will depend on how fast people get bored with the selection of movies compared to how soon Apple will upgrade and integrate the product."

There's also the download hassle to consider. "The biggest drawback today is the fact it doesn't do direct downloads," Michael Wolf, research director, Digital Home, ABI Research told MacNewsWorld. "I expect this is something that the device will do later as Apple updates its software, but relying on the PC is not the best way for Apple to get iTunes penetration in the living room."

Perhaps the critics are complaining too soon. "Apple TV is simple to use, simple to understand and Apple was very clear with its promises, as the company has always been," says McQuire. "As usual, Apple will integrate new functionality and features over time. Apple fans know this; they are not likely to be disgruntled."

The HD Disconnect

Patience may not be enough to overcome Apple TV's immediate shortcomings, however, even among fans. "The problem is, while the iPod delivered what people expected from music and more, the Apple TV doesn't deliver what people expect from video, especially the high-quality video they expect to see on their 47-inch LCD screens," laments McQuivey.

The HD disconnect is a serious drawback. Curiously, despite its lack of high-definition output, Apple TV will not connect with non-HDTVs, at least not those without HDTV-style inputs. The lack of support for many video and audio codecs is disappointing to many.

"Another major drawback is the device doesn't support some popular media formats such as Windows Media and Flash," says Wolf.

Apple Plus

Even so, the sleek device offers some definite pluses. "Now, what Apple did right was to include a hard drive," says Wolf. "Media adapters so far have largely all relied on the PC for the storage of content, and while the Apple TV does require the content be downloaded to the computer first, it can store content locally."

"The device also uses Apple's own OS X as well as an Intel processor, all for the price of (US)$299," Wolf added. "It also has 802.11n and HDMI, so it is stacked with the latest networking and digital interfaces."

Apple, the Explorer

That, of course, is the source of the rub -- Apple TV can clearly do more than Apple will allow it to do. So, why doesn't it?

The restrictions are due in part to the company's marketing strategy. "The Apple TV is the result of Apple's ambitions to do to video what they did to music -- that is, come in and dominate the space based on the sale of proprietary hardware that locks customers in and keeps margins high," points out McQuivey.

Others, however, think Apple is playing an even savvier hand. "Apple is exploring the living room -- watching to see how users use content in order to determine what features will be most important in the future," says McQuire.

Such knowledge is critical to becoming the ultimate living room king.

"Apple's plan is simple and brilliant. Early adopters are a relatively small part of the overall market. Gather user information first, and then hit the market with the 'wow' factor of advanced features to get the lion's share of the market," says McQuire.

Wow or Ugh?

Although Apple is renowned for its ability to create plenty of the 'wow,' it may have a tougher go of it this time around. One glaring problem is self-competition: the latest wave of iPod docks, such as the DLO HomeDock, offer remote navigation, allowing you to watch your iTunes movies and TV shows without leaving the comfort of your sofa. Such product beg the question: Why bother with all the networking hassle to use Apple TV, essentially a stationary iPod at this point, if you already have an iPod and a dock?

Another set of competitors are already perched on television stands across the country. The convergence set tops and DVD players, such as those made by Gateway, Amoi, GoVideo and Buffalo, among others, can also stream digital media over a home network, although none of them have quite made it to viewing nirvana as of yet. Still, this group is familiar to mainstream users.

Gamers, the group most likely to adopt a PC-to-TV gadget, already own one or more of the latest generation of very powerful, very versatile consoles, such as Microsoft's Xbox 360 or Sony's PlayStation 3. The Xbox 360 can stream recorded and live TV programming -- including HD -- from Windows XP Media Center and Windows Vista Premium/Ultimate PCs and download from premium content sources such as Movielink, Vongo, and CinemaNow services. One can buy a separate HD hard drive for direct downloads, or skip the $200 expense and opt for Xbox Live Video Marketplace. One can also play CDs and DVDs on the machine.

The PlayStation 3 is capable of functions similar to those of the Xbox 360, though Sony has yet to take full advantage of that. It already has a 60 GB hard drive, built-in networking, full 1080p HD support, plus it can play Blu-ray discs and DVDs.

Add to that stiff competition by the highly seductive Sling Media SlingCatcher, which can mirror the display of any computer on the home network. It will be out in a few months, and the company is promising that anything on your PC can be beamed straight to your television.

Cry Me an iTune

About the only thing Apple TV's competition can't do is access iTunes. However, that is proving to be less than an intimidating competitive edge. "The iTunes store isn't selling much of what people want to see -- especially new release movies that are easy to find at Blockbuster and are playable on the $99 DVD player you already have connected to your TV," says McQuivey.

All in all, Apple TV has a lot to measure up to.

"The competition in this space is much stiffer for Apple, with the main competition coming from game consoles as well as carrier set top boxes," says Wolf.

Still, it's been a mistake in the past to count Apple out. Surely something miraculous is up the old company sleeve?

"It will be interesting to see what else Apple does to TV," says McQuire.

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