Tech

Apple's Most Important Executives Detail Everything That Stinks About The TV Industry

Jay Yarow

2012-12-26T14:31:00Z

For over a year now, we've been waiting for an Apple television.

And if the current line of reports is accurate, we might be waiting another year before it materializes.

Whenever it's finally released, it will have been years in the making. Apple has been thinking about the television market for a very long time.

We have updated our collection of quotes from Steve Jobs and Tim Cook about the TV market in light of the newest developments in the last twelve months.

We think reading this stuff over helps to illustrate Apple's thinking about how it might approach the TV market, which really seems like its due for a major makeover.

This video of Steve Jobs from 1998 is a perfect look at the challenges of making an interactive TV

In this fuzzy video, Jobs explains what's wrong with "convergence" of the TV and the PC. The TV is used when we want to turn off our brains. The PC is used when we want to turn on our brains. The TV is for leaning back. The PC is for leaning in. How do you make these two gadgets play nice when they're designed for two totally different uses?

And here's a loose transcription of his conversation: "Your television is going to make toast. What is the most successful consumer product in the last 10 years? It's the PC. Here's all these PC companies running around looking for a consumer product when that's what they make! Right?

It's the most successful consumer product of the last 10 years, so naturally we want to combine it with the television. I've spent enough time in entertainment now with Pixar, and with Disney, who's just a terrific company to work with, by the way, is that people go to their television primarily to turn their brain off. I used to think like many of you might have thought that there was this giant conspiracy from the networks to but mediocrity on television and dumb us down, did you ever think that? I thought that. It thought that was giant conspiracy to rob the American populace of their mind if not their soul. I then found out the truth which is far more depressing. The networks give people precisely what they want. The reason people want this stuff. They come home from a long day. They have dinner with their kids and they're fighting and they get them into bed and they just want to turn their brain off for half an hour. Do you ever do that? I mean, I must admit I don't watch much TV, but I can admit I will turn on the TV for a half hour, and it really does turn your brain off. People got to their TV to turn their brain off. People go to their PC to turn their brain on. These things aren't going to be together, they perform completely separate functions. So I think it's as crazy as other combinations you can imagine. And I don't think it's going to happen, you know.

I also think people want to interact with their computers. Keyboards, mice, up close better resolutions, they want to sit back from their televisions. Web TV has been an utter failure so far, so I just do see it happening. Now, sure, everybody would like a better online TV guide, ok. Sony should build in an online TV guide to their TV sets, I grant you that. But is this digital convergence? So, that's what I think of it."

Jobs thought about it, and delivered the Apple TV. Ironically it was introduced on the same day as the iPhone. Jobs said, "We think this is really going to be something really quite special."

It wasn't. The $299 Apple TV box didn't sell very well. But, Jobs never pretended it was going to be a huge seller.

In fact, shortly after he revealed Apple TV, he called it a "hobby."

Speaking at the All Things D conference in 2007, Jobs said, "The reason I call it a hobby, is that a lot people have tried and failed to make that a business. Everyone from TiVo to Microsoft, you know, everybody's tried and it's a hard problem. And so, we're trying. It's a business that's hundreds of thousands of units a year, but it hasn't really crested to be millions of units per year. But I think if we work on it and improve things over the next year, 18 months, we can crack that."

The next year Jobs admitted partial defeat, saying "No one has succeeded yet. We tried with Apple TV. Apple TV was designed to be an accessory for iTunes and your computer. That's not what people wanted."

So what do people want?

Jobs said, "What people wanted was, movies, movies, movies." He made Apple TV a standalone device that could rent movies.

Yet, a few months later Jobs was still admitting the market was tough to crack

On the company's fourth quarter earnings call, he said, "Well again, I think the whole category is still a hobby right now. I don’t think anybody has succeeded at it and actually the experimentation has slowed down. A lot of the early companies that were trying things have faded away. So, I’d have to say that given the economic conditions, given the venture capital outlooks and stuff, I continue to believe it will be a hobby in 2009."

A year later, on February 23, 2010, Tim Cook said, "We have no interest in being in the TV market"

Cook was speaking at an investors conference. He said the TV market was just too small in comparison to the other markets it is in: mobile phones, computers, and tablets.

However, Cook also added, "There's people -- and I'm one of those -- that they're avid Apple TV users, and so, because their gut says something there, we're continuing to invest in this. But today it's just a hobby."

Four months later, Steve Jobs delivered his next great speech on the topic at All Things D's D8 conference

If you want to watch the video, here it is. We're going to peel out the most important takeaways and quotes in the next few slides...

And here's a loose transcript we jammed out watching this video: "The problem with innovation in the television industry is the go to market strategy. The television industry fundamentally has a subsidized business model that gives everybody a set top box for free, or for $10 a month. And that pretty much squashes innovation because no one is willing to buy a set top box. Ask TiVo. Ask Replay TV. Ask Roku, Ask Vudu, Ask us, Ask Google in a few months. Sony's tried, Panasonic's tried, we've all tried. So, all you can do is add a box onto the TV system. You can say … I'll add another little box with another one You end up with a table full of remotes, cluster full of boxes, bunch of UIs. The only way that's ever gonna change is if you really go back toy square one and you tear up the set top box and design it with a consistent UI and deliver it to the customer in a way they're willing to pay for it. Right now there's no way to do that. So that's the problem with the TV market.

We decided, do we want a better tv or a better phone? The phone won out because there was no way to get it to market. What do we want more? A better tablet or a better tv? Well, probably a better tablet. But it doesn't matter because there's no way to get a tv to market. The TV is going to lose until there is a viable go to market strategy, otherwise you're just making another TiVo.

That make sense?

It's not a problem of technology, it's not a problem of vision, it's a fundamental go-to-market problem.

There isn't a cable operator that's national, there's a bunch of operators. And it's not like there's GSM, where you build a phone and it works in all these other countries. No every single country has different standards. It's very 'tower of babble-is', not that's not the right word. Balkanized. I'm sure smarter people than us will figure this out. But when we say Apple TV is a hobby, that's why we use that phrase. "

"The problem with innovation in the television industry is the go to market strategy. The television industry fundamentally has a subsidized business model that gives everybody a set top box for free, or for $10 a month. And that pretty much squashes innovation because no one is willing to buy a set top box."

But, couldn't Apple work with a cable operator for TV like it did with AT&T for the iPhone? No says Jobs.

"There isn't a cable operator that's national, there's a bunch of operators. And it's not like there's GSM, where you build a phone and it works in all these other countries. No every single country has different standards. It's very "tower of babble-ish", not that's not the right word. Balkanized. I'm sure smarter people than us will figure this out. But when we say Apple TV is a hobby, that's why we use that phrase."

And yet ... Jobs and Apple took another crack at it with a new Apple TV

When he revealed the $99 Apple TV he revealed some more thoughts on the TV market. Here's what Apple had learned after four years in the market:

"The number 1, 2, and 3 thing they want is they want Hollywood movies and TV shows whenever they want them. It's that simple. It's not really that complicated. They want Hollywood movies and TV shows. They don't want amateur hour, they want professional content.

And they want everything in HD. The HD revolution is over. It happened, HD won. Everybody wants HD.

They like to pay lower prices for content, right. The lower the prices, the more they're going to watch.

They don't want a computer on their TV. They have computers. They go to their wide screen TVs for entertainment, not to have another computer. This is a hard one for people in the computer industry to understand. But it's really easy for consumers to understand.

They don't want to manage storage. When you buy a bunch of movies and tv shows you have to manage them cause to don't want to just throw them away, you just bought them. And so you have storage management problems. Your hard disc starts to fill up, what are you going to do? People don't want to think about managing storage, they just want to watch movies and TV shows.

And they don't want to sync to a computer. Most of them haven't even figured out what that is. They want to pull some content off their computer, but they don't want this syncing stuff, it's too complicated.

And they want whatever hardware we have to be silent, cool, and small."

The Apple TV sold well, but it was still a hobby. Rumors circulated about an Apple television, but we didn't hear anything until ...

The quote that had everyone in a frenzy: "I finally cracked it."

Here's the excerpt from Walter Isaacson's book that got the world freaking out:

And he very much wanted to do for television sets what he had done for computers, music players, and phones: make them simple and elegant. “I’d like to create an integrated television set that is completely easy to use,” he told me. “It would be seamlessly synced with all of your devices and with iCloud.” No longer would users have to fiddle with complex remotes for DVD players and cable channels. “It will have the simplest user interface you could imagine. I finally cracked it.”

That quote was published in October 2011, and since then Tim Cook has talked about TV a lot.

Apple TV is a "hobby," but ...

"Apple doesn't do hobbies as a general rule. We believe in focus. And only working on a few things," said Cook at an investor meeting in February. Apple believes there is "something there" so it's still doing an Apple TV. "If we kept pulling at the string, that we might find something that was larger," said Cook.

Cook on the state of TV: "I would say most people would say this is not an area in their life that they're pleased with."

Source

What would it take for Apple to get into the TV market?

"We would ask, can we control the tech? Can we make a contribution in this area? Can we make a product that we would want? Those are things we would ask about any new product category."

And this is the quote that people the most fired up from Cook...

Speaking to NBC, Cook said, "When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years. It’s an area of intense interest. I can’t say more than that."

What did we learn here?

Clearly Apple is interested in doing something with television. If it happens, don't expect a massive disruption of how you currently watch TV. It will be a subtle upgrade to what we already do with TV. As Jobs pointed out, the core function of a TV is not broken — people like mindless entertainment. What does need to be fixed is the experience of getting to that entertainment. As Cook points out, watching TV still feels the same as it did 20 years ago. How can Apple upgrade that experience? Hopefully we find out sooner than later.

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