Digital Living Room The Apple TV cheese stands alone. For all the nifty new functionality built into iOS 5 and Apple’s new multi-device iCloud platform it appears that very little of it will find its way into Apple TV. About the only new reindeer game Apple TV will get to join in for now is Photo Stream, which automatically syncs and downloads your 
photos to all your registered iOS devices, including the Apple TV set-top. For everything else — including your own home videos — Apple TV is on the outside of the iCloud looking in.
I’m starting to believe Steve Jobs when he describes Apple TV as a hobby, rather than as a strategic business for Apple.
Why the iCloud dis? One large reason, of course, is that Apple has not secured rights to store iTunes video downloads in the cloud, let alone make multiple copies of them across multiple devices. Without sync-able video, why sync with Apple TV?
But video is not the only application Apple TV is capable of supporting. It runs iOS so it ought to be able to run other types of App Store apps. Now that apps, documents and other types of content can be synced via iCloud, why not let Apple TV in on the fun?
In part, I suspect, for the same reason Apple hasn’t enabled the App Store on Apple TV. As I’ve noted before, navigation and integration remain significant limiting factors for Apple when it comes to the TV. The iOS UI is geared entirely for multitouch inputs on a touch-sensitive screen. Most apps would need to be completely re-imagined and rewritten for limited, point-and-click navigation to work on Apple TV.
While it’s possible for Apple TV owners to mirror their iPads or iPhones on the big screen through the set-top box using AirPlay, Apple has yet to figure out an elegant way to interact with the TV from across the room without using a second screen.
Integrating cable or satellite service into Apple TV also remains out of reach, as does making it portable on an iPad or iPhone outside a subscriber’s home WiFi network.
That inability/unwillingness/indifference to integrating Apple TV into the iCloud platform has left Apple’s living-room flank exposed just as competitors are marshaling their forces there.
Contrast Apple’s isolation of Apple TV, for instance, to Microsoft’s announcements at E3 this week. With the integration of Bing into the Xbox 360, along with the Kinect interface, Microsoft is making genuine strides toward solving the problem of TV navigation at a distance. As shown in the video embedded below, Xbox owners will now be able to use voice commands to search for and retrieve movies, games, music and TV shows from multiple content sources by leveraging Kinect’s voice-recognition capability.
At the same time, Microsoft announced the first integrations of live TV services into Xbox will be coming in the U.S. in the fall. Microsoft already has deals in place to bring live TV to Xbox in the U.K., France and Australia.
At least one high-profile analyst thinks U.S. MVPDs should leap at the chance to integrate their services with the Xbox. In a June 1 blog post, BTIG Research analyst Rich Greenfield wrote:
If a cable operator’s goal is to drive revenue and reduce capital expenditures, than letting others leverage their FAR more innovative set-top boxes/remote control interfaces and treating cable video services simply as an “app” on these platforms makes perfect sense.
[snip]
The faster cable operators can enable IP-content on the TV, in conjunction with their package of live television, the more important a fatter broadband pipe will be to the average consumer (demanding faster speeds, means more ARPU for ISPs). We see no reason for cable to invest cap/ex in new boxes (video is a mature biz, not a growth biz); rather they should be working with any and all companies that can integrate their cable video product with IP-enabled services (XBox 360, PS3, Tivo, Roku, Boxee, etc.), as long as consumers are required to keep taking both video and data products from cable operators.
Win-Win-Win. If a BSkyB-XBox model plays out in the US among MVPDs, we see it as positive for MSFT, positive for cable operators and most importantly, positive for consumers, who increasingly expect to access content wherever, whenever and on whichever platform they want.
Unlike Apple, moreover, Microsoft is integrating its living-room device into its broader OS ecosystem, at least at the UI level. The new Xbox Live dashboard will look a lot like the new, touch-compatible Windows 8 UI when that’s introduced sometime in 2012, which in turn looks a lot like the Windows Phone UI. Microsoft announced at the D9 conference last week that it will also bring that UI to a new generation of tablets. So at some point, it’s conceivable that applications and services will be portable among Windows-powered mobile devices, desktops and the Xbox 360, with Kinect standing in for a multitouch screen in the living room.
This is not a prediction that Microsoft will win the battle for the living room. Or even that Microsoft will actually pull off such a multi-dimensional integration.
It is a prediction that, in leaving the living room door open, Apple will find competitors to its media platform strategy building strongholds there.