Apple TV - The market challenges

In Hacker News discussion "TV will be Apple's Undoing"

TV won't be Apple's undoing but it also isn't obvious that they can win big there.

It is a complicated business with a number of interlocking players at different levels and vested business interests. It is also a global business with rights packaged up at a very national level and sold with exclusive deals.

While the biggest MSO's in each country (cable, satellite and terrestrial operators depending on the market) have the scale to lock in key content/channels to exclusive deals it will be fairly hard to break into the market in a devastating way. At the moment they have the scale and the revenues to do exclusive deals with the content creators (that they don't already own) to keep a large proportion of their customers from leaving. They (not the content creators/owners) are the big bullies in the market and would be hard and expensive to topple.

An AppleTV (including screen) if it does happen will need to be a good enough content offer for most people or it will not be a massive success. If they still have to use their cable box it can't be a game changing user interface because you are looking at the STB interface most of the time.

It's not impossible for Apple but it also won't be easy, particularly to go global. It will cost money to get content which might break Apple's principles and set a bad precedents for them. They also can't go that expensive because while I'm sure the UI will be better Samsung/Sony and some of the others really aren't that bad and the cosmetic designs don't leave that much room for minimalist improvement.

The business case for Apple is far from clear for me at this point but it would be a way to take the war to Samsung that would cost Samsung far more than a billion dollars even for an Apple relative flop. The collateral damage might kill Sharp unless they supplied the panels and would be another knife in Sony/Panasonic/Toshiba that they could do without.

batista > Funny, the said the exact same thing about mobile...

Nearly true but I think the situations are really different - the rights packaged up and sold with exclusive deals didn't apply in a relevant way and there wasn't the same level of complexity.

Carriers were essentially indistinguishable from a customer viewpoint. There was no significantly different content depending on which carrier you used or at least nothing that you would care about if you had an iPhone. This does not apply between broadcast platforms. The exclusive deals any carriers had for content were small scale apps or information services not multi-billion deals for packages of content for particular countries.

Apple played divide and rule between the carriers brilliantly working with a single operator in each country. In some countries that might work for TV where there are well balanced alternative platforms but in others it won't work because there is a dominant player who won't give up control and the challengers are too weak to help Apple much.

In TV there are the content originators (movie studios, sports leagues, independent production companies), one level of aggregators that commission and purchase from the originators and bundle it into channels and another level of aggregation by the service/delivery/billing platforms (MSOs). And then it is sold to the customer. These divisions are not clear and ownerships ofter cross levels.

In mobile it was fairly simple with carriers being the clear centre of the business, buying and subsidising phones and running the infrastructure. There were a couple of platforms running across different phones such as BREW and JavaME but they were more feature tickboxes than major market players.

This doesn't mean it was easy for Apple but the fact they had at the time a truly revolutionary product and reality distorting leader AND there was level competition between the carriers meant that they could pull off an amazing industry changing deal. They had to pull off this deal once in each country not with dozens of different rights holding players (they don't need them all but one deal per country would only be enough with the dominant MSO and probably wouldn't be on good terms as the MSO would know that there is a risk that Apple would want to cut them out when they were big enough).

I also didn't say that it was impossible for Apple to break into the TV market in a massive way but I certainly don't think it is easy or that there is a clear route to massive success. I certainly don't believe it is possible at their current margin levels for either hardware or content but it will be interesting to watch.

I used to do what was really a Business Development and Product Planning role for Sony's European TV Business so I have met with many cable, and a few terrestrial and satellite operators in Europe to persuade them to make their content available over their networks to consumers TVs with CI+ (think European CableCard but not quite such a broken model). Later I worked with many channel operators to bring them onto Sony's Internet TV platform so I do have some understanding of the TV business.

MS Surface Pricing Strategy

[Original Hacker News comment.]


Initial price is critical because initial reviews and overall reputation will be based on that. Nexus 7 shows that pricing cheaper doesn't harm the product perception if it is clearly a good product.

The other issue if pricing is deliberately set with particular reference to the iPad is that it might need readjust everything when the next Apple product arrives.

The main thing they need to do is show that it a really great product. If it is better than the iPad at three things but there is on dodgy aspect that is what everyone will hear about.

Who is the target market for the Surface? Those who would otherwise get a Netbox/laptop? Existing iPad owners? Current Windows users with no tablets? Mainly business?

I think if they want to hit the non tablet owning consumer they need to offer better product than the Nexus 7 at pricing just a bit higher. I don't think that they can match price with the iPad for that market unless people are treating it as PC replacement (which is dangerous ground for Microsoft but may be the correct self disruption move in the innovator's dilemma.


Starting a CS degree without programming experience

[Hacker News Comment]

But you do study Philosophy, Medicine, Economics, Archaeology and Anthropology and many other subjects without having studied them before. The subjects that are not (or are rarely, or badly) taught at school often expect people with little existing knowledge but a strong interest and an enquiring mind. Computer Science falls into this category. Also if you think of Computer Science as being primarily about programming rather than the maths, theory and science of computing I don't think you fully understand computer science.

I chose to do Computer Science because I wanted to properly understand computers. I had essentially no programming experience although I had tried a couple of times but hadn't found the right way in, (QBasic by Example didn't work for me and I didn't discover K&R or a C compiler which I think would have worked better for me). At the end of my degree I was definitely not a great programmer but I could program in Java and ML (taught in the degree programme) and C/C++ and the WIN32 APIs self taught and used for my final year (significant scale but poorly structured) project.

There people on the course (at a very famous university) who really couldn't program at the end of the course but knew the material and official answers well enough to get good degrees. There were also many that started with good programming skills but it was certainly possible to learn enough in the three years to be able to start work and do useful programming and build experience.

Something that surprised and disappointed me at University was how few people seemed to really try to take advantage of being there and learn generally within and beyond their subject rather than being course and exam focused (not just CompSci but all subjects).

Am I a great programmer? No, but I've only spent 15 months within a professional development team, another couple of years on demo level and proof of concept software in an R&D environment and the last year self retraining in iOS and Rails development following five and half years in Product Planning and Business Development.

Who should you hire? I don't know but some simple programming tasks I. The interview stages are probably a good idea. If you want someone who is just a programmer maybe someone incurious is a good bet if they have the skills you need now but whether they are self taught or university educated I think the big question is whether you want someone to fill a particular role now or for the future growth potential that they have. If you are only interested in the fully capable now rather than the trainable (and mouldable to your company way) you may miss out onbetter long term bets.


Samsung

[Hacker News comment]

They are a copycat but one with brilliant industrial design capabilities (not just a nice product but efficient to assemble), a ruthless competitive streak, most complete supply chain of any CE company (screens, semi conductors and god knows what else). They buy their way into retail with high dealer margins and slightly different models for each retailer/carrier so that the dealers/carriers push them until they are dominant.

They also form part of the supply chain for most of their competitors so they can gain an information advantage.

In the TV market I think where they really took the lead in product development was with the ability to redesign the panel packaging to use it as structure for the TV and then to design for thinner a thinner bezels.


Youview Predictions

[Comment on Hacker News]

They have spent $100Million (£70M) on this platform and while it is probably better than Google TV but its not going to have a major market impact (even in the UK) as a whole but it might have some nice features worth borrowing.

The main thing preventing it having an impact is that is essentially the wrong product. The market for >£200 digital boxes is just too small and completely dwarfed by the TV market. Samsung, LG, Sony and Panasonic will each sell many more TVs each year than the total size of the >£200 PVR market and even if only 30% connect to their Internet platforms they will all still be bigger platforms and more attractive to content than Youview (despite its greater flexibility).

The other problem is that Youview is two and half years late (originally named Project Canvas and planned for November 2009) and it has missed virtually the entire country completing the Digital Switchover (analogue switch off), 3 Christmas sales peaks, 1 World Cup (soccer) sales peak, 1 Euro Cup (soccer) sales peak and now will be going on sale at the exact time the Olmypics starts without the retailers having time to get ready. Also gadget spend is increasingly moving to tablets rather than TV boxes at the moment.

I also have very serious doubts about UK retailers ability to sell this. Most can't get TV aerial signals OR even Internet connections into the TV areas of their stores. Most PVR type products sit on shelves not connected to TVs and can't be demonstrated.

It has two chances of any traction: BT and Talk Talk, (significant Telcos) will use it for their TV platforms. Talk Talk hasn't even entered the market yet and BT has been trying for years almost giving away boxes with phone service but has little over half a million subs(may be slightly old figure) compared with 10M using Freeview (OTA), 10M using Sky (pay satellite) and 5M using Virgin (cable). If they make a competent go at the market and heavily subsidise it the total Youview platform could conceivably reach 1M.

The other chance it has is if a profile can be developed suitable for TVs (without HDD) and a major player in the TV market can be persuaded to include across their range they could really ramp up the numbers.