Not Digging the latest Apple TV rumor

Apple TV Digg founder Kevin Rose got the blogosphere buzzing over the weekend with a brief blog item claiming Apple’s revamped TV set-top, now rechristened iTV, will arrive in September, at the previously reported price of $99. Rose didn’t reveal where he got this information, but “from what [he’s] told,” iTV will feature a full panoply of “Video sharing/streaming/recording apps, interactive news apps, and of course games,” and will “change everything.”

Hmm. Not impossible, I suppose, but even for Apple announcing and delivering such a revolutionary device by September, at this point, would be quite a feat.

For one thing, Apple has only recently gotten its supply chain issues worked out sufficiently to meet runaway consumer demand for the iPad, and it’s still dealing with fallout from revelations that its senior supply-chain executives was taking illegal kickbacks from vendors. Those are not the best conditions in which to try to roll out an entirely new product.

Moreover, unless Apple intends to be the only seller of iTV boxes — and the $99 price point, if real, would suggest it’s aiming at broader distribution — you don’t drop a brand new product out of the sky on retailers in September. If you want retailers to allocate shelf space and open-to-buy for your product you had better tell them about it before the first delivery trucks arrive. And if Apple had secretly been telling retailers about iTV months ago it would have been tough even for Apple to keep that quiet until now.

I also wonder where all those “video sharing/streaming/recording apps, interactive news apps, and of course games,” would come from all of a sudden. Developers are still figuring out how to configure iPhone apps for the 10-inch iPad screen. Developing apps up to work on a 52-inch HDTV is going to take some doing and some pretty fancy new tools, especially if developers can’t use Flash of the Flash development environment, as would seem likely. Those tools may come, but not by September.

More critically, there is no compelling business case at this point for content owners to make their programming available on anything like the terms Rose seems to be anticipating:

With Apple’s iAds, content producers (eg. ABC/NBC/etc.) can directly monetize and distribute their content. This will eventually destroy the television side of the cable and satellite industry, as your only requirement to access these on-demand stations will be an internet connection. Say goodbye to your monthly cable bill.

It is not in the interest of ABC/NBC/etc., to destroy the television side of the cable and satellite industry. It’s the foundation of a very lucrative, dual-revenue stream business model for them. Some day, maybe, there will be a case for letting it go. But not by this September, or next September, or the September after that. Not when the networks are still able to lock in 10 year, guaranteed carriage deals with pay-TV providers.

As I’ve spelled out elsewhere, I think Apple does have a path to a meaningful living room presence. But any new set-top box Apple could bring out this year or next will be a modest update of the current Apple TV–an evolutionary step that will fall far short of “changing everything.” It will likely have an app store, featuring streaming apps from Netflix, Hulu and a few others, will integrate iTunes’ VOD offerings and perhaps a way to display Facetime video on the big screen. At $99, Apple might even sell a few.

Further reading:

Digg Founder Says Apple iTV Launch in September Will ‘Change Everything’

How Will Apple’s Touch Based Operating System Translate to the TV?

An In-Depth Look at the Google TV Interface

In the Living Room, Hooked on Pay TV