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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 204061  
Subject: A different look at Apple TV Date: 4/10/2012 11:56 AM
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I figured it out. Well, maybe.

A mistake: Right off the bat, let me cop to an error. A couple days ago I speculated that ESPN was getting about $3 a month from each and every cable subscriber. A bit of research informs me that they average over $5 a month from every household, including yours. And that's just ESPN: Comcast has sports networks. Fox has sports networks. Other regional players have sports networks, most of which are carried on basic tiers, so you are paying for those too. In other words, you are likely paying near $10 a month for "sports" on your cable bill, even if you never watch a minute of it.

The same is true, although to a lesser extent, for any channel you don't watch. Disney. Discovery. The Learning Channel. HGTV. USA. Spike. CNN. And 300 others, you pay for them even if you don't watch. This makes a much sense as going to a newsstand and having to buy "Elle" even if you're never going to read it.

More to the point, cable guys say they're afraid that if viewers were given the choice, around 80% would opt not to pay for a sports tier, so it's the 20% who are driving the requirement for you and me to pay. Not to put too fine a point on it, but is this like requiring me to buy 10 bad songs on an LP to get the two I want? Analogies to the pre-iTunes era, anyone?

Changing the paradigm. OK here's the deal. We have to put away the idea that Apple will make a gazillion dollars selling TV sets. They won't. The turnover cycle is too slow and the manufacturing industry already at a point of cutthroat pricing and technical innovations unlikely to change things a lot. Oh sure, maybe you can have "retina display" on a bigger monitor, but that's not going to induce a wave of purchase on the order that the iPod did to the CD player or that the iPhone did to the clamshell market.

No, what's going to change things is a completely different take on "cable TV." I take you to the future through the portal of the recent past:

Tivo, while a great and wonderful thing, still requires people to navigate menus and laboriously hunt and click for the desired option. In that way it's just like Excel or Pages or any software from, you know, ancient times like the 90's. Apple's Siri does not. You say "Do this" and it does it.

It's hardly prescient to think Siri will be incorporated into Apple TV. The sleek TV unit will come with a remote because hey, everybody's used to it, guys need something to fondle, and Siri needs a microphone close to the mouth, not across the room where ambient noise makes the commands unintelligible. It's not really "a remote" anymore anyway, it's a Siri microphone, and you can have a couple of them included for next to nothing so the second viewing position in the room doesn't have to be powerless as it (still) is today.

Instead of the Tivo hard drive (which fails after a few years,) the Apple TV enables streaming, which works forever. Apple already has the massive data centers, it already has the utility in the little black Apple TV cube which will doubtless disappear into the back panel of the television just as the towers of ancient PCs disappeared into the display of the iMac. (Yes, there will still be cable inputs. Nothing happens overnight.)

We now have better functionality and easier use for the consumer, and the backend support with data centers and iTunes from the company. The other component, of course, is programming. Without the music companies on board iTunes was worthless. Without video product, Apple TV will just be an overpriced screen with a few extra doodads.

The Switcheroo: If the TV set manufacturing industry is cutthroat, how does Apple convince people to "pay up" for a more expensive set? Answer: they don't. They sell the set at a modest margin and push to get the things in people's houses. This is not a new idea: best known is King Gillette's "give away the razors, sell the blades" model, more recently visited by Amazon's "lose money on the Fire, sell more music and video downloads and ebooks."

There are countless billions of dollars flowing every month to Comcast, Charter, Time Warner Cable and the rest of them, most of it for product people don't want. Billions. (90% cable/satellite penetration x 105 million households x $50/mo = do the math.) Remember how I started the post with ESPN? Think of how much money there is to be made by convincing people to "cut the cord" and put an Apple TV in the living room (and the bedroom, and...) , and then buying the programming from iTunes by the each. (Or, as an alternative, by the 'bulk hour', as cellphone data plans are now. "Would you like to buy 20 hours a month? 50? 100? You decide which programs you want, of course.)

"Siri, I'd like to watch Pawnstars now." "Siri, give me a season pass to SMASH." "Siri, yes, I'll pay for the Masters Golf Tournament this afternoon." Recall that these programs, coming through iTunes, are commercial free, on demand, and available in any house with an Apple TV, and you have the makings of the total disruption of an industry. Cable companies' "buy what we sell the way we sell it" withers in favor of precise consumer selection.

Networks begin selling direct to the public rather than third hand, begging affiliates carry their programs and wining and dining advertisers to buy "spots" in some programming that none of them actually would watch, given the choice.

The costs per eyeball are higher by the each, yet lower in aggregate because people stop buying all this crap they don't really want. Networks profit because (at first) it's a higher payment per viewer and a new and improved revenue channel, eventually they eliminate many tiers of redundant costs in advertising agency discounts, sales commissions, and payments to affiliates. Producers benefit because they have the option of a direct pipeline to the public, rather than dealing with the gatekeepers at NBC, Showtime, or AMC. The public benefits because their costs of video entertainment go down and become commensurate with whatever their personal desires are. Want to watch just a little? Pay just a little. What a concept!

Summary: No, Apple doesn't make a lot of money selling TV sets. They make a bloody fortune as the aggregator of programming, selling television shows, movies and sports events with a store that services all comers and a brand that assures quality and an enabled device in the home that people trust. (Couldn't NBC do this on their own? Sure, but so could've Warner Brothers Records, and consumers aren't going to search around for each and every possible provider, that's why iTunes and Amazon do so well and individual corporate websites don't.)

It isn't the hardware that generates the big profits this time. It's the hardware at each end that makes it possible to profit in the middle: between the data center and the living room, it's the software that reaps the profit - selling television programs to the public which is justly tired of a business model which forces them to buy things they don't want just to get the few things they do.

Why do people pay up to get an Apple TV? Because for a few extra bucks, they slash their cable bill by 2/3. Would you spend another $100 on a set if you could save $500 this year and every year forever, on the check you write to Comcast? Would you pay up to have more than one? "Siri, I'd like to finish watching this in the bedroom."

We've seen this movie before: It's the music industry all over again, only this time with pictures, and the potential rewards are inconceivably bigger. Who else is poised to do both ends? Maybe, as a longshot, Amazon. Nobody else, I can think of. Dell? Microsoft? Google? Facebook? LG? Comcast? Who?

Standing in center field with a line drive hit directly at them, is Apple. They just need to raise the glove, catch the ball and change things all over again.
 
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Author: FoolYap Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182750 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 12:32 PM
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"Siri, I'd like to watch Pawnstars now." "Siri, give me a season pass to SMASH." "Siri, yes, I'll pay for the Masters Golf Tournament this afternoon." Recall that these programs, coming through iTunes, are commercial free, on demand, and available in any house with an Apple TV, and you have the makings of the total disruption of an industry. Cable companies' "buy what we sell the way we sell it" withers in favor of precise consumer selection.

Doesn't this scenario depend on the cable companies and content makers cheerfully holding their heads up high while Apple wields the knife? Unlike today's situation with iTunes in the music market, Apple wouldn't be the 500 pound gorilla in the TV content space, and it's hard for me to believe that the TV content makers wouldn't

1) realize Apple would desire to repeat the model with their content, and
2) work actively to thwart this?

What's in it for the content makers, like ESPN? Why would they want a model where they don't get paid unless people actively buy their content?

Unless you're suggesting that Apple would outbid the cable companies for the content they license? Otherwise, I can't see what's in it for the content makers.

--FY

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Author: DutchMark Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182751 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 1:09 PM
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For that to work, rather than the $5 per household per month, the 20% will need to pay $25 per month. Given that it would come without commercials, that might just work. But there are a few big ifs.

For ESPN it would be a big gamble. What if the majority of the 20% balk at the $25 per month? They'll still need to service those through the traditional channel. With commercials, yes. So is ESPN going to fill the extra 25% airtime for those without commercials? For a live game that works, but not for more common sports news sections.

The other problem is all the content owned by the cable cos. How are you going to convince Time Warner to give access to CNN? and again, what are they going to broadcast during commercial breaks.

Lastly, internet streaming works very well if your content sits on your server, waiting to be delivered. Live broadcasts are going to be a challenge for any Internet based solution.

Don't get me wrong, I'd love to have commercial free, a la carte TV. But I see quite a few challenges. If Apple has the answer to them I'd love to see them.

Mark

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Author: corbetti Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182752 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 1:31 PM
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I think they'll find that they are forced to that model as more and more people drop off of traditional cable altogether and use alternative forms of streaming content (or no content).

We are down to three channels we watch - all for our kids. As soon as I can cut the umbilical to our cable provider (1 year contract up in july) i will find me a provider of only high speed internet and go completely to the a la carte model.

10 years is a LONG time - i suspect in 10 years this game will have changed immensely.

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Author: dbsf Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182753 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 1:36 PM
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Been there, doing that...
GH, you've described, almost to a 'T' how we view programming at home right now(and for the last two years). For us the expected evolution of an Apple TV would be to replace our first gen AppleTV, skipping over the last two iterations and replace an eight year old LCD set.

Right now we purchase programming 'a la carte' and are completely happy watching programs when we want, commercial free, as many times as we want. Add to that the Cloud of all our purchases, and that has removed the constraints of having a physical hard drive to store shows.
Sine it's tax time I was able to go and pull out all our iTunes purchases ( me, my wife and two daughters in college). Total cost ( music, video) is just over $1k.
Add to that TED lectures, endless hours of podcasts, movie trailers plus streaming music throughout the house, and this is a pretty good deal.
This next step by Apple will be a significant next step but for us it's more of a consolidation of several devices into one elegant form with Siri as the icing on the cake.
If anything, content providers should be happy,I think there are many more people like us out there that were completely absent (cash wise) from their market.

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Author: 5761796E65 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182755 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 2:04 PM
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For that to work, rather than the $5 per household per month, the 20% will need to pay $25 per month. Given that it would come without commercials, that might just work. But there are a few big ifs.

Why would ESPN come without commercials? Currently ESPN makes $5 per household plus commercials. With only 20% subscribers, they need $25 per household plus commercials to have the same revenue.

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Author: 0gre Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182757 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 3:14 PM
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You guys are missing some of the point. For people who buy ESPN there likely won't be a ton of value in the Apple/ Ala Carte model. For those of us who don't want ESPN it's a much better bargain. If only the sports fans are paying for the premium cable plans with ESPN then there are fewer and fewer viewers paying for ESPN.

I know a lot of people who would drop premium cable so long as they could get shows like Dexter, Game of Thrones, Lost, or Survivor without more than a small delay (perhaps 24 hours).

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Author: FoolYap Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182760 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 4:19 PM
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I know a lot of people who would drop premium cable so long as they could get shows like Dexter, Game of Thrones, Lost, or Survivor without more than a small delay (perhaps 24 hours).

I don't think anyone is missing that point.

What I'm not seeing, is why would the content providers want to move to that model? They and the cable companies have a pretty solid monopoly on delivering that content to you, the way they want to do deliver it. What's in it for them, to dissolve that model, and replace it with one that's less lucrative for them?

--FY

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Author: 0gre Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182761 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 4:35 PM
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Content providers will switch because they don't want to get left behind when the bus leaves the station. Ten years ago if you wanted to see syndicated programming you didn't have any choice other than purchasing it through cable and one of the networks on cable (which are sold in a bundle with other networks). Now, more and more consumers are getting programming through alternate means, Apple TV, Netflix, Amazon, etc. The more consumers get on board, the more profitable it becomes to service these consumers. Eventually the market reaches a tipping point where these customers are the mainstream media and limiting yourself to the old methods of delivery results in decreasing profits.

Imagine a record company today that insists on selling compact discs only, they wouldn't do very well, or if their music were that exciting, it would be widely pirated. If a company doesn't provide a service that is in high demand, their consumers instead turn to the black/ grey markets to satisfy that need.

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Author: DutchMark Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182762 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 4:44 PM
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Why would ESPN come without commercials? Currently ESPN makes $5 per household plus commercials. With only 20% subscribers, they need $25 per household plus commercials to have the same revenue.

Because I understood from the explanation from Goofy the commercials revenues largely go to the cable co. Reading back though he was referring to 'cable programmer'. Assuming he means ESPN with those rather than the cable co. you're right. 'Cable programmer' is a poor term as it has nothing to do with cable (could be dish) and everything with 'content'.

$25 / mo. for ESPN and still suffer commercials... now that is a hard sell. Again, I'd like to know what it would cost without commercials.

But is the technology there for live broadcasting of popular sports over the internet? I'm not sure how much of what they broadcast is actually live. Where I live we're so many hours behind, there's virtually none. Nearly all the matches are recordings.

Mark

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Author: FoolYap Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182763 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 4:47 PM
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Content providers will switch because they don't want to get left behind when the bus leaves the station. Ten years ago if you wanted to see syndicated programming you didn't have any choice other than purchasing it through cable and one of the networks on cable (which are sold in a bundle with other networks). Now, more and more consumers are getting programming through alternate means, Apple TV, Netflix, Amazon, etc.

Okay, but why would content providers want to help Apple consolidate the present disjoint market, with many players, into one that Apple essentially rules like they with iTunes? Anecdotal evidence is that content providers hate 500 pound online distribution gorillas in this space. Many music studios agitate publicly about how they wish Apple had less influence in that market. Remember Apple's initial one-size-fits-all deal for $9.99 albums? And consider how Netflix was recently not able to renew quite a bit of content they had previously licensed for online distribution.

I'm thinking that if Apple wants to play this game, they're going to need to pay a pretty sweet price to the content providers to get the deals done.

--FY

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Author: DutchMark Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182764 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 4:48 PM
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You guys are missing some of the point. For people who buy ESPN there likely won't be a ton of value in the Apple/ Ala Carte model. For those of us who don't want ESPN it's a much better bargain.

I don't think we miss that point. I must say though that I have my doubts about the 20% who'd pay for ESPN, unless most big games are available through another channel. Maybe only 20% 'says' they want ESPN, but what percentage would actually subscribe to a service that doesn't have it?

Mark

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182766 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 5:17 PM
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What I'm not seeing, is why would the content providers want to move to that model? They and the cable companies have a pretty solid monopoly on delivering that content to you, the way they want to do deliver it. What's in it for them, to dissolve that model, and replace it with one that's less lucrative for them?

They might not have a choice. IMO cable TV is dead, we just haven't figured what the new delivery system looks like. ESPN already has about four "channels" they stream from their website, so they already deliver plenty of content with no cable provider required.

I ditched cable a couple a years ago and rely heavily on Netflix, as well as streaming directly from the individual network's websites. I watch pretty much everything I want to watch. One thing I can't do very well is surf through the channels and look for something interesting. And I usually can't watch a new show on the same night it premiers. Those aren't big issues for me. I should also mention I have a dedicated PC next to the TV, along with a wirless mouse and keyboard so I can navigate the Internet. Not ideal, but it works for me.

Amazon.com Prime, in addition to free shipping, allows unlimited streaming of their movies and series. That's only $80/year which is way cheaper, or you can rent them for a small fee. Google+ has something similar (haven't quite figured out how it works yet), and of course, so does iTunes.

The way I see the world going is that cable is dead and our content companies will be Netflix, Amazon, Google+, or iTunes, and we'll be paying a subscription fee to them, instead of to Comcast.

Now, the thing that is standing between this really being practical for lots of people is the interface. Enter Apple TV. That's a better solution for for the way I watch TV than what I'm doing now.

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Author: dsbrady Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182767 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 5:22 PM
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But is the technology there for live broadcasting of popular sports over the internet?

It's worked for March Madness and other events. It's still a fraction of the viewership, but it is getting more and more feasible.

dsbrady

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Author: dsbrady Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182768 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 5:25 PM
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ESPN already has about four "channels" they stream from their website, so they already deliver plenty of content with no cable provider required.

Unless it's changed, I believe that in order to stream ESPN, you have to subscribe to specific cable and/or satellite providers (and, last I checked, DirecTV [which we had at the time] wasn't one of them).

(I just checked, and it does still seem to work that way)

dsbrady

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182769 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 5:27 PM
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But is the technology there for live broadcasting of popular sports over the internet? I'm not sure how much of what they broadcast is actually live.

You bet. I regularly watch my college football team live on ESPN over the Internet. I even watched the Superbowl over the Internet. For some reason, they didn't stream the halftime show, but I'm cool with that.

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182770 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 5:28 PM
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Unless it's changed, I believe that in order to stream ESPN, you have to subscribe to specific cable and/or satellite providers (and, last I checked, DirecTV [which we had at the time] wasn't one of them).

(I just checked, and it does still seem to work that way)


You're right. I just checked and it seemed to work that way for me too.

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Author: dsbrady Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182771 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 6:13 PM
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You're right. I just checked and it seemed to work that way for me too.

I don't think ESPN would get a lot of people to pay $25/month for all-access to ESPN, but they might be able to provide streaming packages and a la carte events. Now that we've dumped our TV provider, I would gladly pay ESPN for some streaming, like a season pass to all Duke basketball games they air for, say, $50. Alternatively, maybe $5/game.

But, I'm done with cable/satellite, so if that means we don't get to watch Duke games on cable without going to a sports bar, so be it.

dsbrady

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Author: 0gre Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182773 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 9:23 PM
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Okay, but why would content providers want to help Apple consolidate the present disjoint market, with many players, into one that Apple essentially rules like they with iTunes?

Look at it this way, changes are coming to the way programming is delivered/ paid for, it's already happening. How are we going to jump the gap from the current model to the new one?

I can't say whether Apple is going to be on top or not. I suspect they have as good a chance as anyone because right now I don't see anyone else out there with the money and capability of putting this together. The few players out there don't seem to have their stuff together right now.

Amazon: Maybe the biggest potential threat? They have a distribution system with a fair amount of video content and they've shown they are alert enough to find niches and sell tablets when no-one else could.

Microsoft: Maybe.. they have the software know how and the xBox sort of demonstrates their ability to put together a hardware platform. On the other hand, Microsoft has been fiddling with this for years they could/ should have rolled out much of this on xBox and/ or their media center edition. A MS branded TV with xBox integration could very well serve as a console/ gaming system in the same way Apple seems to be going.

Sony: Has the TVs, they also have the huge advantage of owning a lot of content themselves. Add in the smarts from the PS3 and... there is a lot of possibility, but they haven't been firing on all cylinders lately.

Google: They tried TV, Logitech said they will never make that mistake again. Google is still working on a TV solution and they have some industry support for their video efforts but ... they burned a lot of bridges in round one.

Tivo: The one hit wonder of the tech world? They've been digging at electronic delivery for some time but haven't made much progress.

Samsung: They are great at finding cheap ways to do stuff, but to date I haven't seen a ton of marketable innovation from them. They also don't have any partners or a distribution system.

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Author: Conehead Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182775 of 204061
Subject: Re: A different look at Apple TV Date: 4/10/2012 10:34 PM
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I very interesting theory, and one that I've thought about as well. Just like music players and phones Apple is jumping to lead a parade that was just starting to form before they jumped in. But with an elegance and disregard for the status quo that crystalizes the entire concept.

Search for cable subscriber growth on Google and you'll see a bunch of articles about how cable subscriptions are down. (By one account they lost a million subs in 2011.) Many people I know, especially young people, have cut the cord and now just torrent the shows they want. The correlation between Napster and iTunes is just too obvious. People don't want to pirate the content. They feel loyalty to the content makers. But the way that cable providers operate it's just too expensive and too inconvenient to "play by the rules". If Apple (or someone) could just make a way that it could be cheaper and more convenient to buy direct.

Which I think they pretty much already have. I know that there are a lot of people who watch more TV than I do, so the numbers won't hold for everyone. But I save $60 a month when I "cut the cord". That's a lot of content I could buy from iTunes. And the reality is that I don't even really buy that much. Between Netflix streaming and over the air, there's only a couple gaps to fill.

There's lots of interesting things to consider.

Will it change the business models of networks? If I can pitch a show directly to iTunes, why do I need a network? We may already be seeing this with things like the "The Guild".

Will it change the number of episodes produced? If I pay by the episode, will they be incented to make more? Or will the added pressure for quality result in a higher production cost per episode and therefore fewer episodes per season?

If commercials become less important, does that reduce product placement or increase it?

And most of all, what will be thing that crystalizes this into a mainstream product and not just a "hobby"? Surprisingly, much of the content is already there. (I think that just like the Mac only nature of the iPod meant that the music industry was more willing to experiment with the licensing model on iTunes, the small number of Apple TVs is giving Apple more freedom here.) My current guess is some sort crossover with iOS, likely also including content and apps. There's already been discussion of how good the Masters coverage was on iPad. What if that could be combined effectively with apps on Apple TV? Much has also been made of the way TV has been trying to embrace social and "interactive TV". Nothing seems compelling yet, but perhaps there is a way.

Anyway, lots to think about, but I don't doubt that Apple has some interesting ideas they are exploring. And, perhaps more importantly, I have reasonable faith that Apple won't ship something just to ship something. They'll ship when they have something the can change the market.

--CH

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Author: Philipo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182780 of 204061
Subject: Re: A different look at Apple TV Date: 4/11/2012 6:15 AM
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"They might not have a choice. IMO cable TV is dead"

No one told that to Comcast - quite profitable - increasing dividends & doing share buybacks. Aside from owning the delivery pipe to many they're buying content to play both ends. Despite denying they're losing CATV subscribers their actions show they really do get it.
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Author: AdvocatusDiaboli Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182782 of 204061
Subject: Re: A different look at Apple TV Date: 4/11/2012 9:57 AM
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This will put tremendous pressure on the cable companies, which, as I understand it, also tend to be ISPs. How high do you think is the risk that they will demand money from Apple, threatening to obstruct their delivery of content (or simply slowing down the itunes store experience a bit).
This is basically the fear of the proponents of net neutrality.
Are you aware of any such developments?

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Author: AdvocatusDiaboli Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182783 of 204061
Subject: Re: A different look at Apple TV Date: 4/11/2012 10:15 AM
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They and the cable companies have a pretty solid monopoly on delivering that content to you, the way they want to do deliver it.

-----

I think the ones benefiting from that arrangement are the cable companies, not the content providers. The cable companies are the monopsonists (from the viewpoint of the content providers). Most likely, selling their content via alternate means will yield a higher profit margin.

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Author: Philipo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182784 of 204061
Subject: Re: A different look at Apple TV Date: 4/11/2012 11:42 AM
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"I think the ones benefiting from that arrangement are the cable companies, not the content providers."

It's symbiotic as much as content providers use Hulu+, Netflix, & Amazon et al to peddle their wares too - the monopoly ended with release to video as a viable option if not with multi cable/fiber provider options (at least in metro/greater metro areas) and multi satellite services.

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Author: mauser96 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182787 of 204061
Subject: Re: A different look at Apple TV Date: 4/11/2012 11:53 AM
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a la carte service will shift power from the cable companies to the consumer. Would providers prefer that their content be in the hands of the fickle consumer or the monopoly cable companies? Probably the former.
I believe it was Geoffrey Moore who gave me the concept that most big innovations, new paradigms, are likely to be successful only when they attack a broken process. Music was broken when few paid for the product. While most dislike their cable provider and dislike bundling even more, they put up with it. So I'm not sure that TV delivery is "broken".
I know that I gave up many premium channels in favor of Netflix and the internet. Likely this will become more widespread in the future.

A key question may be not how the cable companies would respond to an iTV, but how would content providers benefit?

Thanks to all for the posts on this thread. It's hard to figure out exactly what Apple has in mind with television. It has to be a lot more than just a TV with an Apple label, something beyond the present Apple TV. (which I really like as a port to Netflix but the other features are less useful)

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182789 of 204061
Subject: Re: A different look at Apple TV Date: 4/11/2012 3:53 PM
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B:

Is there some reason you posted this in table data format without line returns?

It makes the post 4 feet wide, and wrecks the whole thread in "whole thread" mode.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182798 of 204061
Subject: Re: A different look at Apple TV Date: 4/11/2012 9:00 PM
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A panoply of responses:

What's in it for the content makers, like ESPN? Why would they want a model where they don't get paid unless people actively buy their content?

Why does NBC sell episodes of their TV shows now? It's additional revenue, over and above the legacy model of "We put it on TV and sell advertising." In the longer run it's where the market is going anyway. The train has left the station, it's not coming back to the 1950's. Or even 1990's.

or ESPN it would be a big gamble. What if the majority of the 20% balk at the $25 per month? They'll still need to service those through the traditional channel. With commercials, yes. So is ESPN going to fill the extra 25% airtime for those without commercials? For a live game that works, but not for more common sports news sections.
The other problem is all the content owned by the cable cos. How are you going to convince Time Warner to give access to CNN? and again, what are they going to broadcast during commercial breaks.


Some of the channels will continue to have commercials, since it would be cost prohibitive to run side-by-side channels: one with, one without. Live channels (news, sports, maybe weather) would work this way. Prescripted drama, comedy, etc? No additional costs to put it on a server and sell it without. (The cynic in me says commercials will creep back in over time, as they have on some DVDs and formerly "commercial free" channels like AMC.)

[ESPN, to be fair, is a special case. The programming rights are actually held by the teams or leagues in perpetuity. ESPN owns nothing, really, not even their own broadcasts, which instantly become property of the league. So all discussion of this has to put "sports" to the side for its own (highly convoluted) thread.]

What I'm not seeing, is why would the content providers want to move to that model?

Basically, because they have no choice. It's going there now. Cable subscriptions dropped last year, and more than the year before that. (Two years ago they said "Oh, it's the economy." Last year? Uh, maybe it's the cost?)

But is the technology there for live broadcasting of popular sports over the internet? I'm not sure how much of what they broadcast is actually live.

It's already being done, everything from snooker to soccer, and major league baseball and more. http://www.stream2watch.me/

Okay, but why would content providers want to help Apple consolidate the present disjoint market, with many players, into one that Apple essentially rules like they with iTunes?

They wouldn't, and if they see Apple growing as big as it has in iTunes they will surely try to encourage competition, or even start up services themselves (as they did with music, and as publishers did with books. Meanwhile iTunes and Amazon reign supreme. It's about getting a critical mass of users (read: TV sets) in place who are "locked in" to a particular system. Hence the below cost pricing of the Kindle Fire. (If) When the Apple TV comes out, I won't be surprised to see them continue the low-price add-on dongle version, complete with most functionality, because selling into the market one TV set at a time will be slow going, and getting there first will be critical.

I'm thinking that if Apple wants to play this game, they're going to need to pay a pretty sweet price to the content providers to get the deals done.

I don't know. Does Apple pay "a pretty sweet price" to Warner Music to sell the music? Does Amazon pay up to Random House to sell their e-books? I'm sure there will be some loss-leader deals (iTunes & the Beatles, for instance), but overall Apple is offering a distribution channel for content owners. Some will jump at it. Some will not. The networks will probably pay up to keep the Superbowl *exclusive* on one of their networks. This is not going to change overnight, just as AOL didn't own the world in 1994 and Amazon didn't put Borders out of business in 1999. But you could see where it was going if you just turned on the flashlight.

Maybe only 20% 'says' they want ESPN, but what percentage would actually subscribe to a service that doesn't have it?

Research in the industry, which I have not seen but have heard rumored, says if sports were segregated into a separate tier, only 20% would buy it. From the current BusinessWeek: "Yet the prospect of bundling all sports programming into its own pay tier is a nightmare to many in the cable industry. David Bank, analyst at RBC Capital Markets estimates 80% of basic cable customers would decline to pay for sports..."

Unless it's changed, I believe that in order to stream ESPN, you have to subscribe to specific cable and/or satellite providers (and, last I checked, DirecTV [which we had at the time] wasn't one of them).

Yes. This is sometimes known as "restraint of trade." ;) The cable guys tried this in the 80's when satellite television came around: the MSO's made the content companies sign "exclusive" contracts, thinking that without CNN (etc.) nobody would subscribe to satellite. No subscribers, no birds in the air. No birds in the air, no content provider competition. And nobody could afford to both launch the satellites and start up a competitor to CNN, Discovery, HGTV, Food, etc. to put themselves on equal footing. DoJ (or FCC, I forget) stepped in and said "uh uh" and the nascent satellite companies were allowed to contract for the same programming at fair market rates.

I suspect they have as good a chance as anyone because right now I don't see anyone else out there with the money and capability of putting this together. The few players out there don't seem to have their stuff together right now.
Amazon: Microsoft: Sony: Google: Tivo:Samsung:


Excellent thumbnail analysis. I'd say Microsoft could: they have a lot of XBoxes hooked up and know about server farms, but they're always 5 years behind, and that will be too late. Amazon could jump on this, but they lack the "TV set" end. Who is going to get sweaty to have an Amazon branded TV in the house? So they have to sell on price, where Apple sets will move on cachet (and, of course, there are already somewhere north of 5 million of the little black boxes in the wild which isn't a lot, but it's a start.) Heck it's twice the number of households that subscribe to TiVo!

"They might not have a choice. IMO cable TV is dead"
No one told that to Comcast - quite profitable - increasing dividends & doing share buybacks.


No one told that to Borders in 1999 either. How many newspapers woke up in 1999 and realized that their business was gone? Suddenly this guy was picking off the classified, this blog was super serving sports fans, that website was doing the news, and before you know it the great and powerful and in most cases local monopoly newspaper franchise was starting to wonder about the future.

This will put tremendous pressure on the cable companies, which, as I understand it, also tend to be ISPs. How high do you think is the risk that they will demand money from Apple, threatening to obstruct their delivery of content (or simply slowing down the itunes store experience a bit).

This would put "net neutrality" on the front page of every newspaper in the country.

I believe it was Geoffrey Moore who gave me the concept that most big innovations, new paradigms, are likely to be successful only when they attack a broken process. Music was broken when few paid for the product. While most dislike their cable provider and dislike bundling even more, they put up with it. So I'm not sure that TV delivery is "broken".

TV delivery is surely broken. Was book publishing broken? There were multiple publishers and multiple national retail chains along with thousands of independent bookstores, and you could get most bestsellers right at the supermarket. Prices were discounted heavily, alternate formats abounded. Yet Amazon crushed them. Were newspapers broken? They delivered to your door and cost 1/5 the price of a magazine for twice the content. Just because "they put up with it" doesn't mean it's not ripe to be disaggregated. And I am quite sure it will be; the question is how, and by who? I see Apple as primed to take an important role in the space.

Oh, and the math. The average cable bill is $86 a month (I did some more research.) And there are 105 million households. And 90% subscribe to either cable or satellite. Seriously, take out the calculator and look at they size of the market. And be sure to multiply the monthly by 12. The number is astonishingly large. You take 10% of that and you're wealthy beyond imagining.

And I don't think Comcast (et. al) can do anything about it, absent "slowing down the electrons." It's already happening, albeit gradually, but then trains always start slowly before they pick up momentum. We've been spoiled with the fuss and fandango over the iPad and the iPhone, but it isn't usually like that. Oprah wasn't OPRAH at the beginning, and aol wasn't AOL when it started, and Starbucks was just a couple of coffeeshops and Microsoft was a few guys in a crappy strip mall in Arizona once. Apple is already *Apple* and people will trust it, buy the TV, and realize the benefits - and tell their friends, who are already primed to believe the story because Apple is a positive and "cable" is a negative.

Or at least it could work that way. I can't guarantee it, of course, but I can see a path that allows it to happen.

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Author: 0gre Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182799 of 204061
Subject: Re: A different look at Apple TV Date: 4/11/2012 9:14 PM
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Keep in mind that regardless of whether they only sell 100 'TVs' this year, Apple has shipped over a hundred million iPads and iPhone which act as portable seats on their video network. People can and will use their iPads for viewing their favorite programming where-ever it's convenient.

Apple doesn't even need to ship massive quantities of 'TVs', they already have a critical mass out there. Content providers who cater to those 10s of millions of people are going to be able to profit from them, those who don't will be left behind. The obvious, huge advantage Apple has here is they are a single platform with a massive, captive userbase.

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Author: Philipo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182805 of 204061
Subject: Re: A different look at Apple TV Date: 4/12/2012 9:04 AM
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"Is there some reason you posted this in table data format without line returns?
It makes the post 4 feet wide, and wrecks the whole thread in "whole thread" mode."

Blame TMF - I added no html formatting (I too hate it when in that form - and I hate the no ability to pull one's own post nor repost it without having to change the content cause it thinks it's a dumplicate and other charming TMF message board quirks).
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Author: platykurtic Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182808 of 204061
Subject: Re: A different look at Apple TV Date: 4/12/2012 11:46 AM
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Microsoft: Maybe.. they have the software know how and the xBox sort of demonstrates their ability to put together a hardware platform. On the other hand, Microsoft has been fiddling with this for years they could/ should have rolled out much of this on xBox and/ or their media center edition.
They have. The Xbox is already more than capable of what Goofy posted & with Kinect already has a lot of the 'Siri' advantage too. It still needs a 'global search through Kinect' update (software) but you'd have to think it's coming - after all it's a no-brainer.

The Xbox also appears to have a larger selection of TV & movie streaming than iTunes.

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182815 of 204061
Subject: Re: A different look at Apple TV Date: 4/12/2012 2:23 PM
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FWIW --

Blame TMF - I added no html formatting (I too hate it when in that form - and I hate the no ability to pull one's own post nor repost it without having to change the content cause it thinks it's a dumplicate and other charming TMF message board quirks).


FA your own post and they're pretty good about deleting it.

add an extra '.' and it won't be a duplicate

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Author: DutchMark Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182829 of 204061
Subject: Re: A different look at Apple TV Date: 4/12/2012 4:55 PM
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By the way, did anyone see the ad by Samsung with the guy operating his TV through gestures? If you ask me, the perfect demonstration why it will never fly.

Mark

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Author: monkeywobble Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182837 of 204061
Subject: Re: A different look at Apple TV Date: 4/12/2012 9:11 PM
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It will be interesting to see how cable carriers react to becoming dumb pipes.
Thankfully when they started trying to cement themselves in place the
net neutrality advocates fought hard and had some powerful backers.

I've got to think cable companies would be looking to the mobile operators for clues.
Tiered pricing based around bandwidth already exists and caps are becoming
more common.

Of course we also should consider what's good for the consumer in this
case might not be good for the provider. Disney can(and does)mandate
where their content is deployed in cable carrier offerings. This allows
ESPN to do more targeted ad sales and kick some of those slots back to
local carriers ( http://www.fiercecable.com/story/disney-cable-affiliates-can... )
as a revenue source. Then again maybe there is a case to be made for even more targeted
advertising or selling of content for a premium price to remove all ads
Even for live events, content distribution over the internet should be a
solved problem. A company with the resources of DIS should be able to
afford the services which can handle this for them.

What I don't get is the idea that you make a whole new TV set. Why? What
makes such a compelling case that people will rush to order a new set?
I have one of the hockey puck size AppleTVs. Honestly I didn't see the
point but my wife bought it on impulse ( not going to happen with a fullsize
flat screen ). In my book this is a pretty compelling case for an add on unit.
It's a pretty decent little package, but you wouldn't know that if you never use one.
We also have a
Comcast DVR and a TiVO. Admittedly these are all different generations
of hardware but the AAPL product is
head and shoulders above the rest. Ease of use is tip-top.
Personally I don't care where my content comes from but I do care that
it is easy to acquire.
I really think the NFLX model of releasing an entire season on content
will be interesting to watch. Unless shows are actually being produced
the week you view them it doesn't make sense to me why they need to be
doled out in weekly allotments.

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Author: TheCrusader Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182839 of 204061
Subject: Re: A different look at Apple TV Date: 4/13/2012 12:51 AM
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I don't see why you are saying that Microsoft are 5 years behind in Australia you can already get cable TV over the Xbox.

However the commercial model is unchanged, that is the bundles and pricing are the same as if you had the cable TV box, so for whatever reason the commercial model has been left undisturbered.

Regardless perhaps Apple can disrupt the market dynamics but to do so and do so quickly then this could be done via an enhanced Apple TV external box.

Apple will bring little if any addiotnal value to panels that can not also be achieved with an affordable external box, cord cutting is not enough and likely to be a fallacy given that many panels are connected to external sound systems any way. Sure you are adding another box, but the ability to use an iDevice as a remote would be enough incentive for many people to buy one even if that is all it added....

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Author: 0gre Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182840 of 204061
Subject: Re: A different look at Apple TV Date: 4/13/2012 1:37 AM
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And if the Apple TV supports AirPlay you wouldn't have to have cables for speakers either.

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Author: 0gre Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182841 of 204061
Subject: Re: A different look at Apple TV Date: 4/13/2012 1:40 AM
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Apple TV + Airplay

http://www.apple.com/appletv/airplay/

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Author: Philipo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182846 of 204061
Subject: Re: A different look at Apple TV Date: 4/13/2012 8:34 AM
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"FA your own post and they're pretty good about deleting it."

Yes, I'm well aware of that option after 15 years participating in/on TMF discussions.

"add an extra '.' and it won't be a duplicate"

I was playing catch up & hadn't gotten though all the posts let alone back to my own - I didn't add formatting so I didn't anticipate such an issue....nor the spanish inquisition (that got recs? whatever & insert requisite python response). And yes, I'm aware there's a preview & if there was an option to have it enabled by default I'd pick that....course again that would assume TMF gives a $#)^ about letting us manage this or improving the experience (they don't).

Slow news day I guess....
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Author: DutchMark Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 182853 of 204061
Subject: Re: A different look at Apple TV Date: 4/13/2012 3:38 PM
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Apple TV + Airplay

I don't know if this changed with AppleTV 3, but AppleTV 2 doesn't do Airplay when plugged into a network. And TV over WiFi is not going to work for everyone (like me, too unreliable). So that combination is a non-starter when trying to replace cable IMO.

Mark

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Author: killtone462 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 183644 of 204061
Subject: Re: A different look at Apple TV Date: 5/17/2012 1:04 PM
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They would start slow. Probably a movie delivery rental system like netflix, then slowly adding tv content. Once people embrace the system Apple will have to work something out with expensive providers and live tv. If costomer demand is great enough, providers will have to evolve. If this accually happens, it will be a long process. People love something new, as long as Apple can make the tv's "Apple affordable"

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Author: Philipo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 183665 of 204061
Subject: Re: A different look at Apple TV Date: 5/18/2012 8:59 AM
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"They would start slow."

Aka it's "just a hobby" ;-)

"People love something new"

Well some do...some hate change (and other crossing the chasm type observations). Since the cable co's pour hundreds of millions into hardselling switching with cost incentives it would seem there's a lot of reistance to change for some demographics. The good news for Apple is that boomers & even x-genners are getting older/less relevant and are heavily influcenced by their kids who are technophiles & change entertainment products & services without wincing.

"as long as Apple can make the tv's "Apple affordable""

Yeah, they know their audience and safe bet is pricing isn't on a "why" list becuase it doesn't need to be.
B

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