Why Apple's iTV Will Fail, With or Without Google

TechCrunch has a post out saying that Google (GOOG) is reportedly in talks with Apple (AAPL) to allow Google Video to work with the new iTV widgety thing that I've decided to call the iDongle. You remember the iDongle of course -- that little gadgety thing that Apple thinks they will be selling for $300 next year.

I previously wrote about the $300 iDongle here suggesting that someone needed to check Steve Job's pipe because he's probably pretty high if he thinks people are going to pay $300 to have the privilege of buying less than DVD quality movies at $10-$15 each when you can get a monthly subscription to Netflix (NFLX) for far less than the cost of two movies a month from Apple.

So will Google Video become the long tail savior for the $300 iDongle? I don't think so. You see the problem has to do with people's expectation of picture quality and Google's picture quality sucks. Can Google Video be successful on a PC? Sure. Can it be successful on a handheld device or laptop or even a cell phone? Probably. We've grown to accept mediocrity in terms of picture quality on the PC, cell phone, handheld device, etc. But YouTube, Google Video, and the whole host of other companies can't afford to store and serve HDTV content yet and this is what people want on that new fancy plasma sitting in their living room.

Now I know what some of the Appleheadish types will say. C'mon it's Steve Jobs. He's a marketing genius. If anyone can do it Apple can do it. Apple is so damn cool it makes me want to melt down in a puddle of tears as I weep translucently at how amazingly magical their ultra hip marketing department can name things. How nobody cares about HDTV and how people will accept inferior sound quality over at iTunes, so why not with movies.

Let's talk more about picture quality. First off, there is a much more perceptible difference between standard definition TV and HDTV than there is between an iTunes file and a CD track. Our eyes in general are more acute sensory tools than our ears.

If you let someone hear a CD track and an iTunes track and ask them to rate each on a scale of 1 to 10 you will get very little difference between the two. If you show someone a show in HDTV though and then in non HDTV you will get a much wider differential.

Second, people are all about what is sexy with their plasmas. Seriously, CES was out of control this year when it came to HDTV sets and HD and Blu-Ray DVDs. In fact I'd go so far as to say that in my opinion high quality content and the sets that show it where the number one thing going at CES back in January. It may feel like early adopter stuff still, but take a walk through Costco and you will see that HDTV sets are selling like hotcakes.

Third. More and more HDTV content is being produced and delivered every day. And with HDTV PVRs from TiVo and soon Media Center and even cheapo PVR HDTV offerings from the cable and satellite boxes, there is going to be a lot of competition in the "what should I watch on my fancy new HDTV set" sector.

By the time Jobs and Co. get around to actually releasing the iDongle (even if they don't have HDTV sets yet) people will not be that interested in paying $300 for something that won't do HDTV.

Note to the Appleheads: While Steve Jobs may in fact be a marketing a genius there comes a point when Eskimos will no longer buy ice. $10-$15 for a poor picture quality movie is a bad deal. Yes, idiots overpay for things. Yes, there are a lot of idiots out there and yes Steve Jobs may be able to use the Obi Wan Kenobi trick voice with some, but I predict this thing will flop hard. You read it here first.

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Comments

[Todd Kelly:]

You do realize that the thing was merely previewed, right? No one knows what it will do, certainly not you. It was shown with an HDMI connector - why have that if you won't output 1080p HD signals?

While I admit it's uncertain this device will be iPod-like in its following, I want to see what it actually can do before I pass judgement.

I imagine a Wireless N interface and streaming HD videos. We shall see who's right.

2006 Sep 19 11:27 AM

[Christopher...:]

Davis, I believe the iTV product has a HDTV connector in the back. The new wireless standard is designed to transmit HDTV. That's where Apple is headed.

Apple will put "near DVD quality" movies on the web for the first couple of months to drive holiday sales of the new iPods. Early adopters and people who travel for a living will d/l a ton of movies. I'd rather pay $13 to d/l "Pirates" to watch on a flight than to buy a bunch of magazines on the airport newstand.

When iTV is ready to ship, Apple will upgrade the video (for free). iTV will be a huge product next holiday season.

PS - Near DVD quality is not that far off from DVD quality...

2006 Sep 19 11:34 AM

[Vince DePaul:]

I concur with Todd Kelly. Mr. Freeburg's a bit ahead of himself. Much like a petulant child he's ranting and raving without merit about a product that won't be available until early next year at best. Learn to be patient David Freeburg. Maybe you should cut down on sweets and caffeine.

So much can change in the tech world in months. In addition, this iTV product will evolve as the HDTV market penetration grows and bandwidth improves.

And for the record, no one thought a legal music download service would work either.

P.S. Enjoy your free Zune products.

2006 Sep 19 11:35 AM

[Jack Docus:]

Davis might be a little too quick to judge an unfinnished product (not even beta yet).
As a hint for future application, the product does have an HDMI connector. Also, you cannot compare "rental" price with a "purchase" price. How is Davis so certin that Apple is not going to offer also a rental service, which will be very competatice with other similar companies

2006 Sep 19 11:46 AM

[Frank Z:]

Piracy worked in Microsoft's favor and it will do so for Apple. It already has worked in Apple's favor with mp3 and DiVX is the key to Apple's success this time around. The unspoken secret is that Apple knows that most of us are getting good enough quality by downloading DiVX rips of DVDs and TV shows. We're just tired of having to sit at our computer to watch them. The iTV solves that problem. I have an media hard drive enclosure that hooks to my HDTV already and it's still such a pain getting the files on the thing. It's nice to know that all I'll need to do is enable a share on my drive and use a remote to watch these DiVX files on my HDTV. The quality is better than VHS or broadcast TV which for most people is better than just fine. Who really needs to see the detail of Reese Witherspoon's pimples? All of this talk about the HiDEF is a joke, DiVX/MPEG4 is the way to go. And using them as a weapon Apple will crush the pundits once again.

2006 Sep 19 11:47 AM

[Lee Chen:]

As a owner of buying $20K Plasma in 2000, $10K per speaker, do I want to have HDTV/BlueRay? Absolutely; but I will also take less quality video/audio from iTV device for reasons: (1) people wants to own CD, DVD and will pay "reasonable" more to own; in addtion to renting occasionally. (2) people wants to sit with remote control on hand to flip thru movies, songs and videos easily and quickly. It is simply not something you can do with any device today (I have a $1K media server that is collecting dust because it is so difficult, tedious and time consuming to add/edit CD) and it is even difficult to play. (3) It is nice to buy once, and be able to watch movie on your video device (I travel a lot), let your kids watching their favor movies with their friends with remote controls (not touching my computer) and quickly changing movies (does that sound familiar)? (4) "near DVD" quality is good enough for 95% of us if you can have other conveniences you cannot get it today. Similar to why people having cell phone; Cell phone quality was and still is not as good as line phone; but it gives you something you cannot get from the line phone.

2006 Sep 19 11:49 AM

[holycow:]

Do you think that everyone thinks that a stream of payments to NetFlix for movie selections is a good deal. I mean I rarely find good movies, perhaps 1% of the movies made and I do not want to pay for poor movies. So Netflix simply does not interest me, but a solution such as what Apple is proposing does.

Now I don't care if its Apple or not, but it just has to work and work well. I don't care if the movie is $12.99 or $14.99, I would like to be able to burn it to DVD and I hope the industry will recognize that. I don't steal movies or music.

I would prefer HD quality, so lets see what the movie industry and Apple can do. Perhaps the rumors that the next OS X version will have bit torrent may help improve download efficiency. Lets give it a chance and see what happens.

2006 Sep 19 11:52 AM

[kurt leonard:]

You sound like a PC trying to run Apple software. Am I the only one that remembers the Origame from Microsoft. Now, that was a flop. Do you catch my zune. Are you and Herb Greenburg friends? He was wizzing on Apple @ 58 a share. The stock has since been revised up, with buy and strong buy ratings in the majority....it is @ 74/share. My advice to your readers is don't let one product a company sells determine your decisions; up or down. Make your decisions on the fundementals of the company and with your belief in that company. Stay strong people. So Mr Freeberg please continue using your PC and keep hating on apple and those who own them. When you and others like you stop complaining about Apple, that is when I'll sell the stock....maybe!

2006 Sep 19 12:03 PM

[D L:]

What is DVD quality? I believe that 640x480 is actually higher than DVD quality and that is just the downloaded files you can play through the iTV. Your own library can be stored at higher reslution. Your review is not based on anything other than your distaste for the product (or Apple) and not on any real infomation.

2006 Sep 19 12:26 PM

[Dan Martin:]

Wow! You must be a really good advisor with your ESP talents. Being able to review something that doesn't exist yet is way beyond my limited ablilty. Oh, BTW, people don't buy want they need or the best values, they buy what they want, right now.

2006 Sep 19 12:48 PM

[James LeMay:]

I agree that the product may not be ready for prime time - yet. I downloaded one movie from iTunes: 13 hours later (I have DSL), I had "Flightplan" - chosen from a limited selection, 640x480 resolution, not burnable to DVD, without DVD extras, and for about 10 dollars.

Still, I would not judge the final service from this first experience. I expect it will improve and grow quickly. Selection will improve as iTunes did (I want a vast searchable variety), resolution will improve (as the HDMI connector hints), perhaps I will even be able to get the DVD extras as well. Perhaps hackers will provide the DVD burning feature I think is my right. After all, if digital media that can be streamed to a screen, it can be recorded and captured and written...

So I will await the future, and I applaud Apple for taking a first step.

2006 Sep 19 12:49 PM

[jbelkin:]

Some of your concerns are correct but you are jumping the gun a bit - we don't really know what's lined up and exactly what it will do. But also keep in mind a product does not have to sell the exact same numbers as an ipod for it to be successful ... Apple is generally prettygood about maintaining their margins so I can't imagine there's nearly $300 worth of parts & chips in this thing - more like $90 worth so if Apple can sell a couple hundred thousand, that's a fine start and PROFITABLE. Whether that leads to more itunes sales, right now - it's just speculation just like NO ONE would've predicted the ipod would sell 75 million (as the count will stnad by 2006) - if all I said to you was Apple was coming out with a portable mp3 player and a store, even most reviews on the day of release was not that kind ... you're absolutely right in addressing all your convcerns and/or what you would like to see this device do but let's not condemn it based on knowing some of the specs - and it's different from jumping the gun on the Zune because while there are many PC to Tv streamers out there, none has captured the real attention of people ...

2006 Sep 19 01:12 PM

[Edward Murrow:]

Davis Freeberg is a Netflix shareholder which means the author of this article has a financial stake in iTV not being successful. 'Nuff said...

2006 Sep 19 01:24 PM

[Tom B:]

Final Cut Pro is HD. AAPL is not just a computer company; they own the DV market. They own the downloadable music market. I do NOT claim to understand the TV/movie marketplace, but I know APPL PROBABLY does (Jobs has lots of Pixar experience). And they don't NEED to succeed in this arena.

I would hold or accumulate.

2006 Sep 19 01:50 PM

[Michael Whi...:]

Nice rant. Ill-informed, but passionate. I like that. I presume you don't follow these things very closely or you would have noticed that in the 8 months Apple has been delivering video, they've already DOUBLED the resolution of their offerings. My advice: If you're going to go on crazy diatribes, direct them towards things that exist.

2006 Sep 19 02:13 PM

[Jasper Georgia:]

what are you talking about. have you not read anything on this yet?

2007 Aug 30 04:59 PM

[Puggsly:]

Too many assumptions, too few facts.

1) 95% of broadcast TV is not HD.
2) SD TV is no where near DVD quality.
3) iTunes at current quality provides excellent quality TV.
4) There is no reason to believe that higher quality broadcasts will not be made available in the future.
5) The iTMS is not the only content that will be able to be streamed to the iTV device.

I plan to pre-order one and may cancel my DirecTV and purchase all my TV from now on. No commercials, and I own all the shows for my own re-runs. Think about how much you spend each month for TV and you could buy a lot of TV.

2006 Sep 19 11:53 PM

[peter02l:]

You won't convince anyone by throwing insults at them. If you like to call people who pefer to purchase their movies in a different way than you idiots, then I suggest you pick a different forum, like AM radio, to express your opinions.

2006 Sep 20 03:44 AM

[John Doe12:]

I have been following Apple Computer and using Macs for over 15 years. I am always always amazed by people like the Author of this diatribe (Thomas Hawk). How is it that they keep their jobs constantly bashing Apple when time and again Apple proves them wrong and keeps innovating and making the computing world a better place? When Apple releases the iDongle and sells millions of them where will Mr. Hawk be? Will he write another column online and say how wrong he was? I doubt it. Thomas Hawk, yet another Apple basher who will fade out when Apple Computer, Inc. proves them wrong yet again.

I'll wait for the "I was wrong column" but I won't hold my breath.

2006 Sep 20 11:25 AM

[Daniel Dilger:]

RoughlyDrafted Magazine offers some commentary on the iTV:

Why Apple Will Change TV
www.roughlydrafted.com...

Apple’s iTV: Clues in USB
www.roughlydrafted.com...

Apple’s iTV & The Case of the Missing DVR
www.roughlydrafted.com...

2006 Oct 06 02:29 AM