Five reasons why Apple TV matters

Steve Jobs admitted it. Apple TV is a hobby. He has stated so more than once. But there are compelling reasons to believe that the newly released Apple TV Mark 2 matters even more than its expected sales (currently estimated at about a million devices per quarter) might indicate.

Here are some of the points that I believe are why Apple TV matters.

Apple skipped PVR and moved straight to content on demand. With the concept of a shared data cloud growing ever more important, a limited storage device that feeds on streamed content offers an exciting peek at our future. Apple's rent-don't-buy model transforms Apple TV into a controllable point-of-entertainment device outside of the iTunes purchase and TiVo recording model that has dominated the last decade. If you want to Netflix your entertainment, Apple TV provides that feature at a great price point, as well.

Click "Read More" to check out the other four reasons.
Apple TV offers iOS-based appliance computing. Back in May, we speculated whether Apple could introduce a closed OS X solution for lightweight desktop systems. The new Apple TV 2 fulfills that promise. Its version of iOS, which is used on the iPhone, iPod touch, and iPad, provides Apple's first iOS entry into the fixed-location big-screen arena. iOS, although newer, is derived from the same foundations as Mac OS X. It wouldn't be hard to extend Apple TV to include lightweight email and Web browsing; the system already has a Bluetooth chip with antenna built in. Although Apple TV isn't intended to fill that market niche, its hardware is perfectly capable of performing in those tasks. After all, you can already surf with Xbox, Wii, Google TV, and with tech from the 1990s for that matter. Why not with Apple's product?

Apple TV could run apps. There's no question that the first generation Apple TV was capable of running applications. It was, after all, a fairly standard OS X Tiger system that, when jailbroken, could execute any Mac OS X applications you threw onto it. But Mac OS X has not (yet) been built with the idea of an App Store, with sandboxed third-party programs that could be run safely without compromising system integrity. Apple TV 2 is built on iOS, which is optimized for this kind of stability. While the original Apple TV was well known for its flakiness (a single bad "frappliance" extension could bring down the entire system), the new Apple TV has all necessary sandbox essentials already built-in. As iOS developer Steve Troughton-Smith discovered, you can already install (but not run) iOS applications that are specified for "Device Family 3," i.e., Apple TV.

Apple TV integrates beautifully with mobile devices. Apple's Remote application and announced (but still upcoming) AirPlay technology both demonstrate how well Apple TV plays with iPads, iPhones, and iPod touches. The Remote application lets you move beyond up and down arrows and menu buttons to a far more sophisticated vocabulary of Apple TV interaction. Anyone who has set up a unit using only the on-screen keyboard will appreciate why typing through your iPad to your Apple TV is better and easier. And then there's AirPlay. With AirPlay, users will be able to stream nearly any kind of media from their device to a much larger display, and they can do so without the hassle of composite/component wires and VGA cords that are so physically awkward. Wireless offers a much easier solution, and it's one that lets you stay on your couch.

It's not the Apple TV adoption rate; it's the iPad adoption rate that matters. With AirPlay in particular, it's less important to look at the Apple TV as its own device. Instead, consider the adoption rate of iPads and think about Apple TV as an affordable, easy to integrate add-on for the iPad. Want to play games or watch videos on a larger screen when you're at home? Apple TV and AirPlay promise the possibility of doing so seamlessly. If Apple can spin the Apple TV as a must-have iPad accessory, its sales should increase proportionately. But that can't happen until AirPlay debuts and developers have a chance to integrate its features not just into media applications (which is all that Apple has promised) but also into games, utilities, and business applications as well.

In the end, Apple TV provides a low-cost supplement to devices like the iPad and an alternative to similar solutions like the PS3. With its high-quality iOS interior, its excellent iTunes and iDevice integration, and its upcoming AirPlay integration, there's no reason you should write off its possible success. And that's why we think that Apple TV matters.
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