Apple announced the New Apple TV yesterday, showcasing Siri, the App Store, and a new remote. All of this was overdue, necessary, rumored, even expected. But the real story is in what comes next.

The initial focus of the Apple TV, and the accompanying editorials and reviews, seem to be focused on the device as a target for the “casual gamer,” but this is a very short-sighted view. It’s no coincidence that Apple described their new iPad Pro as containing a “console-class” GPU.

Benchmarking Apple’s recent offerings to the current console offerings shows a significant gap between them. From a CPU perspective, the iPad Air 2 Geekbench score has only 57% the performance of a PS4, and its GFXBench score on the Manhattan test is less than 50% of the current console offerings.

But put that in perspective – the iPad Air 2, a year-old device running on a battery, provides approximately half the performance of the latest generation of console gaming devices, and at a similar price point. What happens when you remove the power and cooling limitations present in a tablet?

The new Apple TV is also using last year’s CPU/GPU from Apple – the A8. This is likely a compromise Apple made to focus CPU foundry capacity on the iPhone 6s. As the latest generation components are often supply-constrained, Apple would dedicate their supply on meeting sales goals for the new handset, and as production yields improve, move that component down the product line. So what would that mean for next year?

If the next generation of Apple TV includes the A9 CPU and GPU, it would likely be on-par with the current generation gaming consoles. And with an annual Apple upgrade cycle, how long before it eclipses their capabilities? With consoles having a 4-7 year release cycle, it is without question that Apple TV has the ability to surpass the current generation’s capabilities before their next refresh.

The next concern is storage required for today’s immense games. With Batman: Arkham Knight weighing in at 45GB on the current consoles, how can the Apple TV with its meager 32GB base offering hope to compete? Further, Apple is limiting Apple TV apps to a ridiculous 200MB, this excluding any “real” games form ever making it to that platform. What is Apple doing here?

What they are actually doing is fixing much of what is wrong with console gaming today. By looking at what Sony and Microsoft did wrong with their recent console launches, Apple has developed an entire set of APIs to greatly improve customer experience even for huge, content-rich games like those available today. The core application and associated assets (images, maps, music) is limited to 200MB. Then, the application can request additional assets, called on-demand resources, to be downloaded as needed. These assets are temporarily stored on the device, and can be deleted if the system needs more room. This allows that 32GB of space to be used very efficiently for games that are currently being played, and allows the game to download quickly so users don’t have to wait hours and hours for installation.

Consider again Batman: Arkham Knight. Of that 45GB of total space required, how much of it is needed at any time? The game takes approximately 15 hours to complete, and if you go through the extra levels, it takes 25 hours. If you never play the extra levels and additional content, there is no need to ever download them. While you are playing the first levels, the operating system is downloading the next levels in the background so they are ready when you are. When you move to level 3, level 2 can be safely deleted, ready to download again if your little brother decides to play. When bugs are found, the patches will be smaller. When new levels are added to the game, they are available when the player needs them. The entire experience is streamlined to make use of the local device storage and the cloud, seamlessly.

Apple has completely changed the music and video retail industries. They have completely changed the handheld gaming market, and the cell phone market. They are positioning themselves to change the TV market, and if I were Sony and Microsoft, I’d be worried they are going after the console market as well.

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In the current incarnation of the Apple TV, Apple has created an install base of tens of millions of incredibly powerful devices, essentially a stealth army of living room soldiers awaiting orders. Here are some ways Apple could leverage the existing devices to transform the living room experience, without trying to sell a 40” or larger TV set.

Apps

Apple has historically taken a very evolutionary and iterative approach to supporting third-party applications on their platforms. The initial release of the iPhone did not allow third-party apps, and in fact did not open that capability up until a year after the initial release. During this time, Apple developed their API and accompanying tools internally, allowing them to mature before making them available to outside developers. From that initial support in iOS version 2, Apple has added more and more functionality to developers, with each new iOS release providing additional capability.

Similarly, the Apple TV platform initially had all ‘channels’ as built-in applications, but over time has expanded to allow third-party content dynamically. Due to the limited flash memory on the Apple TV (8GB), it is unlikely to support full App Store functionality in the current hardware incarnations. Rather than allowing applications to be run locally on the Apple TV, there are two possible options: Apple will allow applications to be run on the Apple TV but will cache them, either on a local devices (Mac) or via the cloud.

The second, and more likely, option based on current hardware is to continue to utilize and refine AirPlay, requiring an iPhone/iPad/iPod or Mac to actually “run” the game while utilizing the Apple TV as the conduit to display video on the living room TV.

In order for Apple to support native apps on the Apple TV, more flash memory will be required, and with the size of the current install base of Apple TV’s, it would be very atypical of Apple to obsolete all of those devices in such short order. A more likely scenario would be to ship 2-3 generations of new Apple TV devices with larger flash storage before opening up ‘native’ application functionality.

Channels

As recently profiled on Apple TV Hacks, Apple has built a very structured method for dynamically deploying new channels to the Apple TV. This is a huge shift in the Apple model for content deployment, which on the iPhone/iPad requires an update to either the operating system or an app. By basing the Apple TV channels on dynamically-generated web content, the core Apple TV menu is more like the iTunes store where content can be added and removed at will without any user interaction.

As Apple signs contracts with the content providers, there is little delay in adding content and no user actions required. Apple, through a hashing/signing function, still retains the “approval” mechanism they have built in to the iOS and Mac app stores, but the content providers have the ability to modify their content at their will.

iBeacon

One of the more interesting technologies being deployed in ball parks, stores, and even cars, is Apple’s Bluetooth-based iBeacon. Essentially, iBeacon allows compatible devices to broadcast a signal that tells you how close you are to the iBeacon.

For homes with multiple Apple TV devices, this could allow the remote app on an iPhone to work on the ‘nearest’ Apple TV or Mac, rather than requiring you to select the device you want to control, as it works today. For any wide-scale adoption of a true living room experience, the act of launching the remote app and picking which device you want to control is very non-Apple like. With iBeacon, this experience could be streamlined and close to 100% accurate.

In short, Apple has a very capable install base and the potential to make significantly more use of that install base through software updates. Many of the other predictions for Apple TV, whether they be app support or an actual TV set, require significant hardware upgrades which would make the current install base worthless. The real key is to figure out how Apple will leverage what is already in place to transform the living room like they did music sales and handheld gaming.

Also read: Where is Apple taking the TV in 2014?

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The post Opinion: How Apple can improve the TV experience without the “TV” appeared first on Apple TV Hacks.

Yesterday Apple released their 2013 Q4 numbers and spoiler alert – they sold a lot of stuff. Specifically, they sold a lot of iPhones, iPads, iPods, Macs, and iTunes content, providing specific sales numbers for each of these categories. What wasn’t detailed is how many Apple TV’s were sold.

Very little is done without a reason at Apple, and the lack of clear communication surrounding the Apple TV may well be strategic. The last announcement of Apple TV sales was in May 2013 at the D11 conference, when Tim Cook stated that 13 million had been sold, with half sold in the prior year. Eight months have passed, and assuming the sales have held somewhat steady, it’s difficult to see how Apple can justify calling a product that has sold in the neighborhood of $2 billion a “hobby.” So why the silence?

Perhaps it’s time for Apple to “disrupt” the television space. If that is the plan, they are doing it in a classic Apple way, quietly building an installed base of around 20 million Apple TV’s. While that number pales in comparison to the number of iPhones, iPads, and iPods, it is a fairly significant number of larger screens. Let’s put it in perspective:

The top 5 US cable companies are:

Based on market share (numbers of subscribers)
Currently – January 2013 (numbers are approximate)

1. Comcast Corp.: 23 million
2. Time Warner Cable: 12 million
3. Cox Communications: 4.595 million
4. Verizon: 4.592 million
5. AT&T: 4.3 million

[source: Wikipedia]

Apple now has nearly the power of Comcast in terms of subscribers to their television service, and just like they did with music, they are going to the content producers instead of the retailers. Think of PBS, ABC, Disney, and HBO as analogous to the music labels, and Comcast and TW are today’s Blockbuster Video. Give the customers what they want, at a reasonable price, and remove players that add no value.

Everyone hates their cable company. Everyone. They are “safe” today for one reason and one reason only – most of the content producers are contractually tied to only offer much of their content only to paid cable subscribers. That is why most of the Apple TV “networks” require you to sign in to AT&T or COX before you can view live content, although we are seeing a trend to offer more and more content without this login requirement where possible.

As Apple reaches critical mass, they will have the same negotiating power that Comcast has, and those contractual handcuffs will fall by the wayside. The content producers will quickly realize that, in order for them to survive, they can’t ignore 20 million TV’s and 700 million smaller iOS screens that Apple brings to the table. Those numbers make Comcast seem pretty insignificant in comparison, and if they aren’t scared, they should be.

The other disrupting force in this market is Netflix. By provoking exclusively on-demand content, and branching out into original productions, Netflix has grown to 33.4 million subscribers, certainly giving HBO and Showtime pause. Netflix is able to build a direct relationship with its customers, and leverage rapidly evolving technology to satisfy their early-adopter customers and support 4K years before the cable TV companies will have upgraded their infrastructure. The combination of Apple TV and Netflix will force HBO and Cinemax to make changes to their business model, and that combined pressure will become an unstoppable force forward.

Apple has created a premium market and product suite for entertainment. Music, movies, books, and casual games exist on large part with Apple as one of, if not the, primary market and source of revenue for many developers and content producers. To date, Apple has limited Apple TV gaming to AirPlay from another iOS device or, more recently, OS X. So the final interesting possibility here is the A7 chip and it’s 64-bit capabilities. Few would argue that the iPhone 5S and iPad Air are unable to make full use of this chips possibilities, primarily due to power and space concerns. When these constraints are removed, the gaming possibilities of this platform become very interesting as well. Rumors are circulating, as they have before, that Apple is going to release an Apple TV SDK and open the platform to developers.

Apple has been quietly adding select content providers to their Apple TV ecosystem. This has allowed them to accomplish a few specific goals: stay under the radar of the cable providers, allow the device to gain more marketshare and approach that “critical mass,” and mature their API in infrastructure. There is a very big difference between selling a 4-minute song and streaming live video to tens of millions of devices. But don’t think for a second they they don’t have a plan and that they will, as they have done time and time again, disrupt an entire industry in the guise of releasing a product.

It’s what they do.

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