Why the Apple TV failed
By Charles Jade | Published: December 10, 2007 - 11:45AM CT
Way back in 1993, the first black Macintosh was a repackaged Performa LC 520 that came with a remote control—one that could control volume—and possessed a singular feature. The Macintosh TV let you watch TV using its cable-ready tuner, but not while you used the computer. It was an underpowered machine lacking expansion options, and it was canceled after a year. Fast forward 15 years and history may be repeating itself. Macworld reports on estimated numbers for the Apple TV in its first year.
“In addition to the 400,000 Apple TV units we estimate Apple has sold thus far, the company will be lucky to sell another 400,000 in the year-end holiday rush, short of our one million estimate,” said Forrester analyst James McQuivey.
Considering the level of interest, it will likely take more than luck to sell another 400,000 Apple TVs by Christmas. While "nearly half of all online adults" surveyed have heard of the Apple TV, only about 5 percent know—or apparently care—what it does, and fewer than 3 percent intend to purchase one. In contrast, Apple will likely sell 25,000,000 iPods this holiday season, but then there is no shortage of easily-available audio content. Not so with video for the Apple TV.
Forrester analyst James McQuivey previously noted that NBC Universal made up 30 percent of the video content at the iTunes Store. A year after the Apple TV went on sale, there will likely be less content available for purchase, which may be why Apple appears to have agreed to higher prices for movies. However, a lack of content is only part of the problem. People buy music and they rent movies. Nearly a year after the introduction of the Apple TV, there are rumors that rentals may be coming, but what about visual quality? The Apple TV is designed with HD in mind, but video at the iTunes Store isn't even DVD-quality.
If it isn't clear—and apparently it's not at Apple—the problem with the Apple TV is that its fate is ultimately in the hands of the content owners, not Apple. Those still thinking Steve Jobs will work out a deal with the movie studios like he did with the music labels need to understand that is exactly why he won't get such a deal. The best Apple can hope for in 2008 is high-priced, low-quality content, but that isn't going to save the Apple TV because it never should have existed in the first place.