Forget the rumored iPad Pro, what 2014 needs is a better Apple TV

Forget the rumored iPad Pro, what 2014 needs is a better Apple TV

Rumors of a 13-inch iPad Pro were once again making the rounds this week, amped up by talk of a 4K Retina display. I have absolutely no idea whether or not it will ever become a real product, but I’ll happily go on record saying I don’t think 4k resolution makes a lot of sense for a tablet. It’s possible someone might put one out, and it’s definitely possible that there is a market for one, but I don’t think it’s possible for such a product to financially matter to a company like Apple in 2014. Personally, I think Apple could get more bang for the buck if they opened a game store for the Apple TV.

The $99 Apple TV set top box (we have to stop calling it that considering how small it is) is already compelling for YouTube, iTunes, and Netflix access. Add iOS games to the mix and bring forth some bluetooth controllers and I think we’ll see Apple TV volume explode by an order of magnitude.

If we look at comments made by Tim Cook in 2013, they had an installed base of about 13 million Apple TV devices and were on track to sell about 7 million per year. I suspect this pace has already accelerated, and I look forward to Apple reporting an update after the holiday season. So what if they can ramp that up an order of magnitude by making the device way more useful? What if Apple can sell 50 to 100 million units per year? Priced at a hundred bucks, even 100 million units only translates into $10 billion in revenue, which moves the needle very little on a total top line of close to $200 billion.

But I’m much more interested in what Apple can do with that kind of Apple TV volume. Can they leverage their way into content delivery? Can they take on Netflix (or buy them)? Can they roll out new money-grabbing services?

It seems to me the Apple TV is the product with the most potential over the next year, aside from any secret new product categories we don’t know about. It has all the potential of iOS yet, so far, none of the product polish that Apple is really known for. Enhance the remote. Slick-up the user interface. Maybe put a camera in it for video conferencing. Allow iPods, iPhones, and MFi to connect in for multi player games. Sell us access to sporting events where we use our handheld device to pick from multiple camera angles or replays. If you can't work with the cable companies, make them obsolete.

I'm not that creative, and I'm sure Apple has even better ideas then this. But it seems to me, rather than simply making bigger screen iOS devices, making the big screen more useful offers a ton of upside for Apple.

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Chris Umiastowski

Chris was a sell side financial analyst covering the tech sector for over 10 years. He left the industry to enjoy a change in lifestyle as an entrepreneur, consultant, and technology writer.

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Forget the rumored iPad Pro, what 2014 needs is a better Apple TV

45 Comments

Great post. And happy new year.

I have a second gen Apple TV that I got the day it came out. As my current tv serves me well and it is only 720p, I have not upgraded it yet. I keep meaning to pick one up as a second unit, but then time goes by. Last week, I nearly did again, but walked out again, empty handed. I figured this time we are so close to a new unit, even if that "so close" is 8 months away, that I have survived on one for this long.

Adding gaming has to be in the works. Will be great when it arrives.

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So funny. That is exactly me but have a 1 & 2 gen. Although I recently got an iPad Mini retina and its killing me too see how it does with 1080p.

I am holding out on a purchase of an Apple TV simply because of the fact that I am waiting for an update... We need an App Store and support for a NAS/ external hard disk drive on the aTV...

Maybe I'm looking at it different, but I download all of my movies to my desktop then stream from my desktop to my aTV. So I'm basically using it as my external hard disk.

Yeah, but there are two problems. First, most of my HD media and the latest TV shows are in .mkv. So I will have to convert around 1TB worth of mkv. Secondly, I will have to pay double for the internet to stream it back to aTV. I live in India, and my internet is 2 Mbps for 10 GB then 512 Kbps unlimited...

Sounds like you're talking about streaming them from your laptop to the Apple TV... You don't need Internet for that.. Just need WIFI.. As long as you have your Apple TV and that computer or laptop to the same WifI, you should be able to Airplay it no worries....correct me someone if I'm wrong

i think he means just connect your macbook air to your wifi network as opposed to streaming over the internet.

But and it's a big but that won't make AppleTV play you mkv. And that's a problem with appletvs. They need better codec & container support.

I think his issue was that he doesn't have WiFi, just a dongle. He could make the Macbook a HotSpot, and connect the AppleTV to that. Could also do Plex and PlexConnect to get the AppleTV to play Plex without a jailbreak, and that would work with the MKV's, not need to convert them.

If you are using a USB Dongle / Mobile Broadband then Apple TV is not for you.

You need to get a home broadband with a Wireless Modem / Router to be able to use Apple TV.

Another option is to get a Mobile Hotspot (called MiFi on few networks, or iModem on others). If you live in India you can probably get a Vodafone MiFi, and use it to connect your Apple TV to the internet. I got one and I use it with my Apple TV temporary till my home broadband is installed, my Apple TV is doing great with the MiFi (Mobile Hotspot) although it only has Wireless G not N.

One last but not really a reliable method is to use your iPhone (or any other smartphone) to create a Hotspot and connect both your laptop and Apple TV to it. Sometimes I do this and it works perfectly too as both my iPhone 5S and BlackBerry Z30 offer Wireless N.

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That's the first time I've heard someone linking the 4k display rumor with the iPad pro rumor. I don't think they are related - but I guess it's possible. I've always thought the 4k display was for the Mac... With that aside, I agree with you 100%. There is a huge potential on the Apple TV that hasn't been explored yet. A television set seems like a stupid idea to me. An improved Apple TV would be cheaper to make and more widely accepted. If Apple wants to compete with Samsung and others, they would be much more successful forcing TVs to get dumbed down and use an Apple TV to get smart - any TV would do. If they added to it an Apple TV category in the App Store, Siri to control all aspects of it, an embedded webcam and live/recorded TV content, this product would be as revolutionary as the iPhone.

You know I read your comment and few times and it got me thinking... I agreed with you up until you mentioned "live/recorded TV content". That requires storage and unless ATV is inline between a TV and a cable source, there is nothing to record. But lets say content licensing is not problematic, what if Apple came up with a media hub (with ports & storage)? Keep Mac, iDevices & Apple TV as they are but has the ability to read (stream) & write to a hosted iTunes hub. That goes against Apple's push for iCloud solutions but this was my effort to keep Apple TV simple.

Anyway that was my brain fart for the day.

I didn't mean "recorded" that way. I meant streaming recorded TV content stored in the cloud like Netflix or Hulu Plus. Apparently, Apple has been trying to close deals with several TV content providers and since it would have to be done via internet, I assume they don't need to be restricted to only live content. From what I've heard, this has been undergoing with struggles. This is a BIG BIG deal. I can imagine this threatens the existence of cable and satellite companies, if it works out.

I wonder if they would have an easier time to lic with DirectTv, Dish & Cox (of the world) as a plug-in device (control the DVR with pass-thru abilities) rather then complete with cable/satellite. So Apple TV looks like a hub/portal that manages other devices and not a competitor/replacement for content. As a professional whom has an income, there isn't a lot that will pull me from DirectTv so pulling the plug is not a priority.

Thoughts & Thanks for your comments.

Games. I get games. But its hard to take an opinion serious when we give emphasis to games. If Apple just hardened core functionality with a few addition I would buy one without thought. Some ideas include: move in the box inline (between the TV and cable box/DVD player). Add a camera and turn on FaceTime functionality, allow Apple TV to stream to any Mac/iDevice. Make a first rate app allowing older iPads to be full featured visual remote. I really really don't care about games and controllers (games can be played everywhere else). Keep the unit lean.

I hear you. When I was writing this article I was thinking about how much fun I'd been having lately with my two young daughters. Santa brought them "Just Dance 3" for our ancient Wii system, and it's totally awesome. I don't game that much, but I think there is a huge opportunity for fun family entertainment, groups of friends, or heck, think about how many New Years Eve parties are going to happen tonight. Enabling iOS games on a big screen running directly on ATV, not via AirPlay, seems amazingly obvious and powerful. And I'm sure there is more to happen beyond games. Much more. I just had gaming on my mind. Games are what brought the App Store to life. I may not play a ton of them, but I understand lots of people do.

Like I said ... I'm not that creative. I love your ideas. Who has others?

Yup, I have a 3 year old so Im soon to be playing more games. Apple TV is a $99 device that competes with the likes of Roku and Google (whatever) along with Chrome (whatever). As a developer Im all about making quality products to pay the mortgage. An app store is a great idea for Apple TV although the interface as it sits today does not handle app management well. Also an App Store requires the Apple TV to have defined storage vs now its a simple streaming device. To bring games in is problematic. At the least, maybe the unit can stream a game from the iTunes library from a Mac or PC and mirrors the capabilities of games played on an iPad (single player only). But you can't take a $99 device and compete against a $299-399 Sony/MS console. Multiplayer possibilities also add complexities (ports, unit size increases, heat management, cost).

I have high praise for Apple's decisions remaining focused and thinking/testing things out before releasing product. Im sure they've had this conversation many times already as they've talked out does adding toaster functionality to a refrigerator make sense or do they lets the toaster/gaming devices do their own thing...

Good luck with that dancing my friend.

Great comment.......tips cap
-while I, like most others have been dying for an app store on ATV, I never thought about it from the angle you went with. Storage/heat management/etc.... are def things that never crossed my mind. Nice to read an insightful post from someone on "the other side" of these things (devs).

On the point of games i think you'd be looking at a much larger box then. And Xbox One and PS4 are large for a reason and it's not simply the hard drive. It's got fans, heatsinks, and it has graphics chips and fans to pump out the images. honestly i think they'd have done better if they from scratch 6 or 7 years ago planned to launch a fully competing console system. but looks to me that the players have been cast already. Regardless, i think adding games makes this a much bigger box. That being said. i have no interest in apple gaming so it doesn't make it more appealing to me over other options especially considering a huge part of gaming is social, that's why xbox live is great, and so until they have that same social gaming infastructure which game center isn't it's a tough ask

Agree... It's time to take this service to the next level. I'm sure they are working on some things we will have to just wait and see how it goes!

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Interestingly a lot of the ideas mentioned in the article and comments are in the XBox One. Not everything and not exactly as described in every case, of course. But the basic premise is exactly what Microsoft built and it works really well. Apple would do well to mimic Microsoft - with gaming downplayed to simpler IOS level apps.

Great article! I love my Apple TV(s) but agree with your thoughts on what would make the experience much better. When I think about Apple's content strategy, I can't help but think that acquiring Netflix, Aereo and access to more live sporting events would give them an amazing base for the future.

I'm not sure games would make that much of a dent in sales. With significantly less processing power than consoles, and *no* local storage for media assets, an Apple TV will only play games that are going to look and play far worse than games for the competition.

Of course, that does not mean it couldn't sell - consumers often accept "good enough" in one aspect if the rest of the package is compelling, but it seems unlike Apple to attack a market with something they *know* will be inferior, or as an afterthought, like the update to the existing Apple TV described here. They will go after it in a big, unexpected way, or they will stay out.

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I think apple's plan is obvious. Next year, it will produce 4K thunderbolt displays at multiple screen sizes to replace the old thunderbolt displays. Then, they will separately sell a new Apple TV box (with features mentioned above) that would be compatible with all other TV models. Then, for people like me who bought a Sony 56" 3D tele (that was expensive) we would still be able to experience Apple TV and all it's features next year without the need to wait 5-7 years for my sony tv to become obsolete. In fact, I think bloomberg ran an article a while ago saying this.

AppleTv is great with its own content but it does not play well with Airplay at all. Google to see all the people struggling with loading content errors, there is some sort of HDMI or network problem in the device. i would love to watch CBS shows on it through my iPad as it is free that way, but it's impossible currently due to the errors. Please fix this first!

i might be wrong, but i think some of your Airplay issues has more to do with the website blocking the signal than Apple "fixing" Airplay. CBS is notorious for blocking content. If you notice they are pretty much the only Network that does not allow their content to be played on Hulu+

Thanks Michael, but I don't think that is it. CBS shows play fine on my iPad without Airplay. They also play fine on the TV if I mirror, but then the picture is crummy as it looks like a little iPad screen (as it needs to match the screen on the iPad I guess). Only showing the movie in HD on the TV through airplay fails. My internet is a great connection too, 120Mbps down, 23 Mbps up. Seriously, do the Google - people are having all kinds of trouble with it, with different shows/stations.

Personally, I'm pretty satisfied with the current Apple TV offerings. We've cut our cable about 6 months ago and rely solely on Hulu+, Netflix, iTunes, Blu-Ray and Antenna for all our H.E. needs. I just purchased a new Plasma TV from Panasonic (since John Siracusa has me worried that better tech might not be available when my 8-year-old Panasonic Plasma dies) And I really don't want to replace that until OLED becomes affordable or something even better comes out. I still have my Gen 2 (actually Gen 3 if you found the first Apple TV as having two models) and it's 720p. I just don't see buying a Gen 4 right now. Seems like something is in the works that might just be ready sometime after CES in Jan.
As for what Apple could do right now to improve it?
I'd say the biggest issue Apple needs to overcome with their current offering is connectivity to other devices (i.e. TV, BD, HT components, etc.). The Remote would be the first place where I'd start if I were working on improving the current ATV. There has to be a way to create an easy to use remote where it could control every device and control it through a software interface from the ATV. I'm so sick of shuffling remotes. I'm finally down to two remotes. My receiver remote turns on the TV (which is usually set to HDMI input for the ATV) and my ATV remote. I would love it if the next remote could have something as simple and powering on all devices needed, selecting inputs and adjusting volume. Even if that was all the revision we see in the next ATV, it would be a very welcomed addition in my household. Next would be a native remote that made typing in information easier. Or perhaps an "Auto-fill" option that you set it, and forget it.
The next big thing is the UI. Right now I have about 60% of the on-board Apps hidden from view because there's just too many of them, and too many that I don't use. Most of them are *channels* per-say. There has to be a better way to organize apps. Heck, if they just make the App icons square like on an iOS device, you could make better use of the huge displays that lot's of people have.
There are also a lot of redundant apps too. For example, The Podcasts App lets you stream podcasts from the iTunes store, but it doesn't link to your Apple ID and sync them, like it does on any other iOS device. Why not? You currently have to go and stream them from the "Computers" app...(which as a side note, the app name is plural, but you can't link multiple devices to it...like two different Computers at the same time)...and stream your podcasts from your computer that way. This is the same for the TV, Moives and Music Apps...with the exception of the fact that you can stream your purchases or iTunes Match through those apps.
But this goes directly back to my point that many of the Apple Apps are redundant and confusing. Why not treat the ATV like any other iOS device? You enter your Apple iD, set up iCloud sync, and all your apps, movies, music, TV, Podcasts are all there, just like on your other iOS devices. Seems like a very logical next move for the ATV, and it seems to me like a very easy change to make. Just treat is like it's a huge iPad.
The next move to make would be an App store. Games would be the most obvious. It was games that launched the iTunes store into it's 6 and 7-figure downloads that you see today. Just think of all the other great apps that you could download to control things like your A/C system (Nest, anyone?). There are many possibilities to apps for the TV but games are the most obvious. If apple just created an API to allow 3rd party controllers, even better. Just think about how many wireless D-Pad controllers are out there now that could easily work via BT or IR.
I won't even get into SIRI, it's just not there yet and I see it as a nightmare to work flawlessly. Anyway that's my thoughts for now. Thanks for the post!

when i go into Podcasts app on the AppleTV and subscribe to something it logs into the iTunes account and then those podcasts also appear in iTunes on my Mac Mini.
I've never had to use the Computers app on my Apple TV for Podcasts. But i went in there given your comments above and mine is the opposite. The newest podcast i have in there is from October so i'm not sure how get that to sync, but as i said it's not an issue for me as the Podcasts app works fine.

ok i figured out why the last podcast is from October. It's the last one i downloaded in iTunes on my Mac Mini. I've switched off auto downlads for podcasts on there as i just use the Podcasts app on the Apple TV.

I would love to buy Apple TV something between 60 - 80 inch. I have only one problem with the system. I live in a country with old content, many apps like Netflix and others are not available.
Recently we got an update and I have Bloomblerg and Korea tv. Both useless and I wish I could remove the icons.

this week I went to check Philips 60" 8708 tv, And I have to say. all those so called SMART TV's are useless slow piece of ............

Apple make something in January!!!!

you can "hide" the apps you don't want on the current ATV.
I don't remember exactly where but it's in the settings menu.
Try "accessibility" or "Parental Controls".
once you find it you can "hide" apps by selecting them show/hide.

Roku, WDTV & Plex are better than AppleTV in a couple of core areas.

Those areas are where i'd start improving AppleTV.
Apps? I'd match Roku in apps offerings.
Codec support? WDTV will play many more formats without transcoding. Playing your own media is simply a pain on an AppleTV unless they are all in a narrow range of formats.
Interface? I think plex's interface does some nice things in that you it will download info about your media like covers. Overall the apple interface is fine. I'm not saying Apple's interface is worse overall but there are some areas where they could improve.

I'd make sure it had snappy menus, support for large capacity usb drives, no lag when dealing with large local or networked libraries. Additionally, i'd match google music and allow 20k free uploads to itunes matching service. That would give people access to their music through a AppleTV regardless of whether they are in the apple ecosystem. I'm not so paying for things like itunes match offer nothing i can't get from google music for free.

Sadly i don't think apple cares about these areas. they don't care about me playing my own music or movies, all they want is to sell me their movies. So i don't think they'll improve the networking, the codec support. I kinda get the impression that the people at Apple only watch netflix and buy a movie on itunes. The Apple tv is great for that. But I do neither and use my player to play my own large media library. Thus sadly i think i may always be auditioning other players. But truth is Apple could have long ago made a box to end all boxes. Why they chose not to I don't really understand. Seems a no brainer to me.

The Apple TV is also Apple's most US centric device by far. Apple have always offered more to their US customers, but with ATV, the difference is astounding. While US customers get most of the big US streaming providers on ATV, elsewhere, we get next to nothing.

Take the UK for example. The biggest streaming services here are the BBC iPlayer, and Amazon LoveFilm. Neither is available on UK ATVs. Other big UK services, such as 4OD, ITV Player, and Demand 5, are also absent on the ATV.

The gaming issue I feel isn't such a big issue, as the console market is well established, and recently got off to a great next-gen start with big numbers for the PS4 and XO. Casual gaming came and went on TVs with the Wii, leaving just the hardcore with their next-gen consoles. Would there be a market there for Apple to fill? Personally I doubt it.

I feel the best course of action for the Apple TV, would be to open up an SDK and an app store, and give it a visual refresh to bring it in line with iOS7, as the box has never had a pretty UI and it desperately needs some attention.

I would never be happy if a new Apple TV comes to live. I just got mine 2 weeks ago and still enjoying it.

Maybe after a year I would be ok with a new Apple TV only if it offers something that deserves the money. For me 1080p is perfect, not in a hurry for 4K.

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"... rather than simply making bigger screen iOS devices, making the big screen more useful offers a ton of upside for Apple."

Apple TV is probably a huge part of Apple's product and revenue plans. And I'm not convinced Apple needs an actual large-screen television any time soon. It's a cut-throat industry full of hard-core competitors, each of which learned how to survive by destroying weaker opposition by hook or by crook.

How much money could Apple really make by selling a TV set? $10 billion? $20 billion? And is it really worth all that risk just for a small bump in revenue like that? Isn't there a better, more-profitable way to disrupt the television industry? I think adding a few features to the Apple TV set-top box is enough, in terms of end-user television hardware.

To really take over television, Apple needs bring their massive mindshare to the TV space. Apple's products and services are deeply embedded in popular culture around the world. They lead consumer awareness in many markets, and they'll want to lead consumer awareness in the television space. If they can figure out a way to disrupt the television industry and rebuild it in their own image (the way they rebuilt the entire music industry with iPod and iTunes) then they will spend whatever it takes. If they can't figure it out (or if they find that it isn't worth it) then they won't bother spending too much time and/or money on it. They won't throw billions down the black hole of "wannabe" the way Microsoft has done, repeatedly, over more than a decade. (See Bing, Zune, KIN, Windows Phone, Windows Vista, Windows 8, Windows 8.1, Surface RT, etc.)

Apple can and will spend enormous amounts of time and money on disrupting the TV industry. And they'll get a bigger payoff than they did from the music industry. Probably by a factor of 10 over the long run. The key isn't *how much* they spend. They key is *when* they spend it. It's clear that Apple has been working long and hard and spending cash on 1. the technical infrastructure for streaming content to Apple TV, 2. the advertising platform that will replace the legacy (easily skippable) TV spot, 3. content deals for current and future Apple TV hardware, 4. the rental and purchase infrastructure for monetizing content, and 5. end-user hardware with the correct screen aspect-ratios (16:9) for current HDTV and next-gen "4K" UHDTV.

Point by point:

1. The infrastructure - iTunes Festival is the best proof-of-concept for Apple's TV infrastructure. World-wide live and archived streaming of very popular musical acts. Handled high loads flawlessly, delivered content to any and all Apple devices that Apple currently ships (with screens.) That's all you need. Live streaming plus archived streaming. Boom. Done.

2. Advertising - The first time I saw iAd on my old iPhone 4, I instantly said "This would look great on TV" to myself. I still think so. I'm convinced iAd was created with television in mind from day 1. And Apple could use it in far more intelligent ways than simple video playback of commercials. iAds are interactive, so they could be far more engaging. And, unfortunately, Apple could make them non-skippable. Guaranteed "impressions." (Unless Apple offers both a free service with iAds and a paid subscription service without iAds.)

3. Content deals - This is right at the heart of the matter. The more deals Apple signs with the content providers, TV networks, and other television industry incumbents, the sooner they'll be able to start the TV-disruption-ball rolling. Of course, there are many old-school TV incumbents who will do anything to stop that ball. I think there are only two reasons why entrenched incumbents would sign with Apple: money and/or desperation. If Apple can present a highly favorable business case, they'll sign to make money. Or if the television industry slides into the same black hole of piracy that the music industry fell into in the late-90s / early-00s, they'll sign to save their lives. Just a matter of time either way. Of course, that could take quite a long time either way. Deal-signing may be the only reason why Apple hasn't already remade television the way they remade music.

4. Rental and purchase infrastructure - iTunes may be inappropriately named for a TV-killer, but its content monetization engine is nearly perfect. Rentals, purchases, secure transactions, gift cards, iCloud interoperability, whatever. It's all there. And all that purchase-enabling power is spilling over into brick-and-mortar retailers, with iBeacons potentially morphing into automated point-of-sale devices for use with Touch ID-capable iPhones (etc.) And yes, Apple already lets you rent or buy movies and TV shows. QED.

5. End-user 16:9 screens - Have you noticed how many Apple device screens have exactly the same aspect ratio as your HDTV set? My new 21.5" iMac has a 1920:1080 screen, which is exactly HDTV (aka "1080p") resolution. iPhone and iPod touch have 16:9 screens too. 27" iMac? Thunderbolt Display? Yup. All 16:9. The Apple products (with screens) that are not perfectly 16:9 are the iPads, MacBooks, and iPod nano. Apple has made their biggest-screen products and smallest-screen products (excluding the iPod nano) exactly 16:9. Probably not a coincidence. (Just for completeness: the MacBook Air 11.6" is only a few pixels off perfect 16:9 and the 13" MacBook Air and all MacBook Pros are 16:10.)

All the technical pieces are in place. Just a matter of time until Apple gets enough contracts signed, whether or not 4K is widely adopted.

Update: And what about Siri and gesture-based control of the Apple TV? Simple matter of programming after adding a Siri mic and iSight camera to the Apple TV box. Easy. Little if any infrastructure work. Apple has acquired PrimeSense, the small ($350 million) company that worked on gesture recognition for Microsoft's Kinect project. Apple could add that to Apple TV at any time, as they see fit.

I think the Apple TV can benefit from an unique App Store specifically for that device as well as having a safari web browser built into it.

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