Prediction: AppleTV will NEVER be a DVR

appletv_470.jpgI’ve been reading posts about the AppleTV in anticipation of the device being released (hopefully) tomorrow. One post in particular caught my eye from Apple Insider earlier today. The article’s main focus is on ThinkEquity analyst Jonathan Hoopes’ opinion that the “Apple TV is an ideal conduit for multiple services including DVR, paid-for content, gaming, or advertising.”

His rampant speculation even includes the following quote: “Apple TV can, in our opinion, be easily turned into a DVR with little or no hardware modification and a software upgrade,” he wrote. “We think Apple’s brand, established distribution, marketing power, over 100 million total iPod unit shipments, and 22 million active Mac users would create more than enough energy to propel an AppleTV TiVo-like service to a higher subscription base than TiVo’s current 4.4 million users.”

I have a real problem with this kind of speculation from someone who has a direct effect on if people buy stock in Apple or not. This is rampant, unfounded, speculation that almost has enough completely made up junk in it to constitut it’s own Apple Rumor Generator.

Now, don’t misunderstand…I don’t have a problem with speculation and rumors. I love a good rumor and good speculative posts from bloggers. I love writing (what I feel are) good speculative posts, and commenting on rumors that seem to have some weight to them…but even those have a basis of educated guessing involved with them. This Wall Street Analyst is pulling thing straight of his butt, and people will make investment decisions based upon this information. I don’t think people will take information from a blog as seriously (when making stock purchasing decisions) as they will from a Wall Street Analyst…and if you ARE taking our speculation posts that seriously…STOP IT. We’re speculating…don’t invest your life in the ramblings of a blogger that’s writing at 3:00 am.

Now…having said that…I think Apple is a pretty safe investment. The company is solid, has a rabid fan base, and is growing by leaps and bounds…but don’t buy it based on the idea that the AppleTV will be a DVR and knock Tivo out. The AppleTV will NEVER be a DVR. Want to know why? Well…here’s why I think Apple making the AppleTV into a DVR would be counter productive…

1. Not enough Hard Drive Space – 40 gigs is not enough to hold a signifigent amount of HD content, and Apple knows that. They won’t release a software upgrade making the AppleTV into a DVR if they can’t store enough content to make it worth while. It ain’t gonna happen. Could future AppleTVs ship with larger Hard Drives? Sure…of course they will, but that doesn’t change the fact that the unit they are about ship millions of, will not have enough hard drive space to get the job done.

2. Decreased iTunes Store Sales – If Apple turns their method of playing iTunes content into a DVR, then they’re sales for iTunes content will surely decrease.

3. Angry Hollywood Studios - Hollywood doesn’t like DVRs. They don’t want you to be able to get the content onto a hard drive for free, and they don’t want you to be able to skip through the commercials. If Apple created a DVR product that was in direct competiton to their digital downloads sales, which is what an AppleTV DVR would be, you will see studios less inclinded to deal with iTunes as a distribution method. Not good.

Anyway…enough ranting.

It seems very clear to me what the point of AppleTV is…to sell more iTunes content by getting your iTunes downloads onto your TV. Nothing more, nothing less.

Don’t buy stock thinking it’s going to be doing anything else. It is what it is…and it will be a success based on that, not on what it might someday be in the future.

Comments

  1. Actually, the point of iTunes is to break even while providing “proof” that iPods aren’t full of pirated music.

    iTunes Movies & TV Shows sales are to “prove” that AppleTV won’t be filled with P2P movies and tv shows.

    Apple is a hardware company. Everything they do in the software arena is to sell more hardware.

    The iTunes store is a break-even business.

    They won’t even accept money for prime placement on the main page. Only people who give customers extra stuff (Bonus tracks, booklets, etc.) get on the front page.

    It’s a tool to sell hardware.

  2. I agree that Apple is a hardware company…but the entire point of iTunes is not simply to “prove” that iPods aren’t full of pirated music.

    The point of iTunes is to sell music and video for iPods. Now that is expanding to AppleTV and iPhones as well.

  3. You are correct. No DVR.

    I think Steve Jobs is trying to kill FM with the iPod and NTSC with the AppleTV. CDs and DVRs feed Apple hardware, so they can live a while longer.

    Soon, everything will be delivered via IPv6.

    The iPhone is the trojan horse for VOIP.

    Cable TV, Broadcast TV, Satellite TV, AM/FM/XM/Serius, GSM, EDGE, and the 3G networks… are all left out of Apple’s plans. Google and it’s city-wide WiFi efforts are in Apple’s back pocket, and vice versa.

  4. I think you might be right. I wrote this the other day on Blackfriar’s blob…

    Hmmm… I’m guessing that Apple is helping Miglia create a “Made for Apple TV” recording device that sits beneath the Apple TV unit. Apple likely recognizes that a lot of people want a living room media device that records, but may not be able to create one without upsetting the TV networks and movie companies that it’s courting for content. So, instead, Apple quietly provides the information that Miglia needs to tightly integrate a recording device with iTunes. It could be the beginning of a new third-party ecosystem – one that Apple hopes will take off like the one that surrounds the iPod. Just a thought.

  5. I totally agree your taking on this. Key market is HD programs sold through iTune. which Apple is aiming. It is already a huge opportunity for Apple to be the winner in the digital living room.

    By the chance, Apple just changed the web site for AppleTV ordering:
    From “ship by mid-march” to “Ships: 3-5 business days”. It means Apple will release AppleTV tomorrow…

  6. By that logic, Apple would never have allowed iTunes or iPods to play MP3s. After all, every MP3 installed on an iPod is a possible lost sales from the iTunes Music Store.

    In other words, your argument has already been proven wrong in other areas. What makes you think it applies in this area?

    Apple’s customers are us, not Hollywood. If we demand DVR on the Apple TV often enough and loudly enough, you can be damn sure we will have it.

    Also … have you ever seen how *heavily* most DVRs compress TV content? Trust me it’s about 10 times more compressed than a typical DVD or HD-DVD/Blu-ray stream. 30GB isn’t a lot but it isn’t as little as you’re saying, either.

  7. DBL –

    I don’t think that comparison holds water due to the differences in the times in which the devices were released. When the iPod came out there was no system in place for people to purchase content online and download it. MP3s were a necessary part of the iPod to make it successful, and to help create an ecosystem for online purchases.

    And we may be Apple’s customers, but we’ve been demanding lots of the thing often and loudly (non DRMed tracks in iTunes for example) and I’m pretty damn sure we don’t have that. Why? Because the studios won’t allow it.

    Apple may get us a better deal than most other online stores, and Jobs and Co. may be able to throw around some weight because of iTunes success, but as long as the studio system exists, and they are the ones producing the content, they will ultimately have more weight in the development of these products than we do…why?

    Because if they leave…we stop buying. Until that changes, and there is enough Independent content out there to make an AppleTV a viable purchase for the average users, the studios will be able to put their foot down on certain issues. I feel that DVR is one of those.

  8. People miss the whole point of Apple TV. Apple wants your computer, not some remote box, to be the hub of your digital life. Apple TV is merely a means to remotely control the content on your household computers so that you can view it remotely on your television. It does the same thing for video as Airport Express does for music.

    As soon as Apple starts adding features, like DVR, the computer becomes less of the digital hub. Apple would prefer you use a product like the DVR provided by El Gato to record the content onto your computer, and then access it using Apple TV.

    I agree that Apple respond to customer wishes, but only in cases where it makes business sense. I think Apple would add a DVR to Apple TV if it made business sense and customers really wanted it. Here, however, it goes counter to its long terms goal of making the computer the digital hub. It also would further piss off Hollywood companies, which already do not really like Apple, and in turn could pull music, video, and movie content from iTunes. Regardless, of customer wishes, I just do not see it making business sense.

  9. I think Terrin makes a good point when he says that if Apple TV would feature DVR, it would be so that the recorded content is stored on the PC (ehrm… Mac). That way, the Mac would be the hub of the digital household and the user gets DVR.
    I wish this was true, but it doesn’t make sense fo Apple to allow users to record stuff for free that they could also buy from iTunes.

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