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Tim Cook's Apple

Where Does The Apple TV Go From Here?

Despite its rocky history, it could one day be Apple’s most important device.

Where Does The Apple TV Go From Here?

[Photos: courtesy of Apple]

It’s fair to say that the Apple TV is the device that’s had the hardest time finding a place as a "must-have" in Apple’s ecosystem. It’s always seemed to be more of an accessory to Apple’s more popular Macs, iPhones, iPads, and iPods than a standalone gadget that was designed—as the others were, for computers, phones, tablets, and music players, respectively—with a clear vision to show consumers and competitors what the gold standard for a digital media player should be. And you can mostly blame Steve Jobs for that.

Back in September 2006, when Jobs first showed off the then named "iTV," he called the device a "hobby"—that is, something you do on the side, but don’t necessarily have the desire to turn it into something bigger. Clarifying his remarks about the device the following year at the D2007 conference, Jobs said:

We're in two businesses today. We'll be very shortly in three businesses and a hobby. One is our Mac business, second is our music business, third business is the phone business—handsets. And the hobby is the Apple TV. The reason I call it a hobby is a lot of people have tried and failed to make it a business. It's a business that's hundreds of thousands of units per year but it hasn't crested to be millions of units per year, but I think if we improve things we can crack that.

In other words, the original Apple TV is probably the only device Apple ever released where Steve Jobs didn’t have a clear, grand vision for what it was supposed to be. For years after its original January 2007 retail launch, the Apple TV languished when it came to the regular feature improvements and hardware updates that Apple’s other devices saw on an annual basis. Between its unveiling in 2006 and the launch of the newest, fourth-generation Apple TV in October 2015, the Apple TV only saw one dramatic hardware change (over nine years!), from the first- to second-generation Apple TV, and just one major software change, with the advent of the fourth-generation Apple TV and its tvOS operating system.

Granted, Apple was a bit busy during that time changing the technology sector as we knew it—from revolutionizing the industrial design of PCs to defining what a smartphone should be to releasing the first tablet that caught the public’s imagination. However, because of that lack of attention to its "hobby," the Apple TV got left in the dust by other competitors that were doing innovative work in the digital media player and home entertainment space, precisely because Apple was not.

Those innovators included Netflix, which was one of the first to see that the iTunes model of à la carte renting and purchasing of individual properties was not the future of home entertainment. Streaming was, and Netflix made sure its services were included on as many connected home entertainment devices as possible. Roku was the first to realize users wanted to customize their home entertainment experience and launched its app store, allowing users to select and install from thousands of channels on their Roku devices, including games and apps. Later, Amazon designed the first digital media player remote with built-in voice search.

And that brings us to the fourth-generation Apple TV. It’s a device that borrows heavily from its competitors’ improvements. Its brand-new operating system, tvOS, is designed to be a new platform for which developers can make channels, apps, and games. Its Siri Remote is a beefed-up version of the Fire TV remote. But perhaps the biggest change comes from Apple itself. With the advent of the fourth-generation Apple TV, the company has stripped away the "hobby" label and promoted it to a full-fledged device; it now even has a permanent, prominent spot at the top of Apple’s website.

The thing is, the Apple TV still isn’t a product that many people feel they need to own. It’s true that during the company's most recent financial earnings press call, it revealed its "best ever" quarter for Apple TV sales. But since Apple doesn’t break out individual Apple TV sales figures and lumps the device into its "other" financial category (which also includes mice, keyboards, and Apple Watch bands), it’s unknown how many have actually been sold. One would think that if the numbers were mind-blowing, Apple would want to brag about them.

What that suggests is while the Apple TV sales may be on the upswing, simply adding an app store and Siri-based remote isn’t going to make it the next must-have gadget. So what will it take for the Apple TV to become the digital media player of choice? It's got a steep hill to climb: Currently, the Apple TV sits in fourth place behind Roku, Google’s Chromecast, and Amazon’s Fire TV.

Here are four things Apple could do to make its TV device the next gadget we treasure as much as our iPhones. Any one of the following probably wouldn’t be enough on its own, but taken together, these improvements could turn Apple TV into the industry-defining device it’s never been.

The latest Apple TV software includes Siri integration throughout. TV show pictured: Mr. Robot.

1. Make Apple TV A Cord-Cutter’s Dream

To many, especially millennials, the thought of having a traditional cable television subscription is right up there with having a landline. You have it out of habit, but would ditch it in a heartbeat for something better. Apple knows this, which is why it’s been trying for years to negotiate with cable providers and content producers to ink the multiple deals it would need from various parties to turn the Apple TV into a live-television service.

There are rumors that Apple is hoping to offer a live-television subscription service to cord cutters for $30 to $40 a month, perhaps allowing them to choose channels à la carte instead of paying for more expensive traditional cable-TV packages with hundreds of channels they’ll never watch. However, Apple’s streaming television service vision has come to a halt. The primary barrier is Apple itself, according to the Wall Street Journal. The paper cites Apple’s "assertive" and "hard-nosed" negation tactics, with the company’s iTunes chief Eddy Cue refusing to budge on his company’s demands.

Many have questioned why Apple doesn't have a Netflix-style streaming service yet.

2. Make Apple TV A Netflix Competitor

If Apple can’t use the Apple TV to upend the cable TV industry—and win over millions of new users in the process—it could reach critical mass by giving Netflix a run for its money. Given that Apple has been negotiating content rights for over a decade for movies and television shows to buy and rent through its iTunes store, this seems like a no-brainer. In the past, Apple wasn’t perceived as a subscription-services company, but that’s all changed. Now it offers two subscription services: Apple Music and iCloud storage.

If Apple combined its new skills with subscription services and its experience with acquiring content rights from film and television studios, and launched an on-demand streaming service through the Apple TV, the device could become a must-have for the 71% of adults who say they use a streaming service. As for original content to compete with Netflix and Amazon Instant Video's (Emmy-winning) offerings, Apple is already acquiring TV shows to distribute.

If Apple did go down the on-demand streaming route, it’s conceivable they could also offer tiered packages like traditional cable companies, yet instead of packages with different levels of content, Apple could offer its streaming service as a stand-alone monthly option or group it with its Apple Music and iCloud storage services to get people to buy into all three.

The gaming capabilities of the fourth-generation Apple TV have been criticized by developers.

3. Make Apple TV A Gaming Platform

If consumers can buy one device that does it all, they generally won’t buy a second device that just repeats some of the features of the primary device. Right now, this is a problem for the Apple TV, since most of the media features it offers are already available on games consoles like the Xbox One and Playstation 4: Netflix, apps, music streaming, you name it. Games consoles do almost everything the Apple TV can—plus they play the most advanced games on the market.

With the release of the fourth-generation Apple TV, the company has turned the digital media player into a casual games console. However, many games developers have criticized everything from the box's lack of graphics power to the rules on requiring games to be compatible with the Siri Remote (though this is changing with the next version of tvOS)—which, when compared to the controllers of Xbox and Playstation, is like using an Atari joystick to play modern games.

That means all those who own a Playstation or Xbox still have no good reason to buy an Apple TV, even the fourth generation. If Apple could improve the Apple TV’s gaming capability and graphics, they could make inroads into the whopping 48% of homes in the U.S. that own a games console.

Could the Apple TV become the center of your digital life?

4. Make The Apple TV The Platform Of Your Home And Life

Perhaps the most dramatic move Apple could make to transform the Apple TV into a killer device coveted by the company's hundreds of millions of users would be to turn it into a dual-purpose platform that serves as the central hub of your home and life.

In the next decade, our homes will become as smart as our devices, and the company that can make a product that enables a "smart home" is guaranteed to sell tens of millions of that product. Amazon and Google have already announced that they are working on this. The Amazon Echo and its Alexa software are designed to be your always-on personal assistant at home, as is Google’s newly announced device, Google Home, which uses Google’s AI-based Google Now software.

Yet these two products are ignoring a major factor in people’s buying decisions: We generally want one device that does it all instead of having to buy multiple components. This was the cornerstone of Steve Jobs’s maxim when unveiling the original iPhone in 2007:

Today, we’re introducing three revolutionary products of this class. The first one is a widescreen iPod with touch controls. The second is a revolutionary mobile phone. And the third is a breakthrough internet communications device. So, three things: a widescreen iPod with touch controls; a revolutionary mobile phone; and a breakthrough internet communications device. An iPod, a phone, and an internet communicator. An iPod, a phone . . . are you getting it? These are not three separate devices, this is one device, and we are calling it iPhone.

That merging of devices is something Apple could do again with the Apple TV. An entertainment center/set-top box and a games console and the central brain of your smart home. Not only would this evolve the Apple TV—let’s call it Apple Home—and take the best features of your living room’s current devices, it would also add in a smart Siri AI assistant that could serve as the JARVIS of your home, communicating wirelessly with speakers throughout your house to allow you to control every aspect of where you live—from smart lights to calling up a movie on any screen in any room—with just your voice.

The Apple TV, unlike Apple's more mature devices, has yet to lead a revolution.

Apple Home would be the Apple TV evolved, just like the iPhone is the iPod evolved. And more than just being a central command hub for your home, Apple Home could be the platform of your life, securely storing all your personal photos, documents, and information on a secure enclave chip—much like how your Apple Pay credit card info is stored in your iPhone—and dishing out that digital data only to your approved devices at your command. This secure element could even be the game-changing feature of the ultimate smart device, ensuring that all of your most valuable data is stored locally, not in the anonymous cloud, where it is vulnerable to hackers around the world.

A device that does this—that allows you to access and control every aspect of your digital life, from entertainment to communications to security to your home—could very well be the most important device Apple ever produces.

Of course, all of this is mere conjecture. No one knows what Apple has planned for future Apple TVs. Maybe it will go beyond the possibilities mentioned here. Or maybe it will slowly die out, just as other promising Apple devices, like the iPod Hi-Fi, have. But one thing is certain. If the Apple TV is going to become a device that goes from selling a few million units a year to hundreds of millions, it’s going to need to undergo a rapid evolution to thrive.

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