The best approach weâ€™ve seen to this problem, and the best approach weâ€™re likely to see for some time, has been Microsoftâ€™s efforts with Xbox 360. I want to explain why I think Microsoft is beating and will continue to beat Apple in this space. Then I want to outline what Apple would need to do differently in order to beat back Microsoft, Sony, Google and all other contenders if it wants to conquer the living room.
“This problem” Carmody is referring to is, in the words of Steve Jobs:
The problem with innovation in the television industry is the go-to-market strategy. The television industry fundamentally has a subsidized business model that gives everybody a set top box for free or for $10 a month. And that pretty much squashes any opportunity for innovation because nobody is willing to buy a set top box. Ask Tivo. Ask RePlay TV. Ask Roku. Ask Vudu. Ask us. Ask Google in a few months. Sony has tried as well. Panasonic’s tried. A lot of people have tried. They’ve all failed. So all you can do is add a box on to the TV system. You can say, “Well, gosh, I notice my HDTV has a bunch of HDMI ports on it. One of them is coming from the set top box, I’ll just add another box with another one.” Well, you just end up with a table full of remotes, cluster full of boxes, bunch of different of UIs. And that’s the situation we have today. The only way that’s ever gonna change is if you can really go back to square one and tear up the set top box, and redesign it from scratch, with a consistent UI, across all these different functions, and get it to the consumer in a way that they’re willing to pay for it. And right now there’s no way to do that. So that’s the problem with the TV market. We’ve decided what product do we want the most: a better TV or a better phone. Well the phone won out, but there was no chance to do a better TV cuz there was no way to get it to market. What do we want more: a tablet or a better TV. Well probably a tablet, but it doesn’t matter because if we wanted a better TV there is no way to get it to market. The TV is gonna lose until there is a viable go-to-market strategy. Otherwise you’re just making another Tivo.
That’s the fundamental problem. It’s not a problem of technology; it’s not a problem of vision; it’s a fundamental go-to-market problem.
Like Apple did with phones working with a wireless carrier, how about working with a cable company? Jobs:
Then you run into another problem, which is there isn’t a cable operator that’s national. There’s a bunch of cable operators. And then it’s not like there’s a GSM standard where you build a phone for the U.S. and it also works in all these other countries. No, every single country has different standards, different government approvals, it’s very… balkanized. So I’m sure smarter people than us will figure this out, but that’s why when we say Apple TV is a hobby, that’s why we use that phrase.
So the problem for Apple, and others in the same situation, is the go-to-market strategy and it seems working with cable operators is not a viable solution. Carmody thinks Microsoft has the best answer so far with its Xbox 360. On Black Friday Microsoft sold more than 960,000 Xbox 360s and 750,000 standalone and bundled Kinects in the U.S. That’s a 78% attachment rate, which is quite impressive. But then here’s Carmody, out of left field:
But it suggests to me that Xboxâ€™s growing popularity has less to do with Kinect than we might think. The emerging market isnâ€™t being driven by the attraction of new user interfaces.
So let me get this straight. If we assume all 750,000 Kinects were bundled, to make the math easy, then only 210,000 Xbox 360s without Kinect were sold during Black Friday in the U.S. That would have been disappointing news. The reason why Xbox 360 sales was great news for Microsoft is precisely because of the 750,000 Kinects. Kinects are bought for one purpose: To connect it to a Xbox 360 and to experience the wonders of not having to fiddle with a device and using only your body to interact with your Xbox 360. Carmody stumbled upon something that’s right: We don’t want new user interfaces. It’s the near complete elimination of UI that makes Kinect unique and so wanted. We are moving toward ‘interfaces’ we’ve been using for centuries: body language and the spoken language.
The biggest problem with Carmody’s approach to understanding the future user interface (UI) of TV is he drags gaming into the framework. Not just any gaming like the casual games we play on our iPhones but hardcore console gaming. A console gaming-centric view of TV UI limits your understanding to those who buy gaming consoles like the Xbox 360 to, mostly, play games. The TV market is much much bigger than that. The TV UI problem should not be centered around the problems experienced by gamers, but around problems experienced by regular folks wanting to watch TV. And here is our first proof of Carmody’s gaming console centric approach leading to a wrong assumption:
As a consequence, weâ€™ve misunderstood televisionâ€™s user interface problem. Itâ€™s not really about too many cables and too many remotes, as annoying as that can be. Itâ€™s really about having the right kind of user interface for the task at hand.
I think most of us who have a TV connected to cable or satellite and a DVD or Blu-ray player and a Tivo, etc. will agree the problem is too many boxes, too many cables, and too many remotes. The reason why that’s the biggest problem is because we have to go through the immensely annoying routine of figuring out which remote is which and then remembering the sequence of buttons we need to push to get to what we really want to do. This can be even more daunting if a surround sound receiver has been integrated.
And the task at hand when you sit in front of the TV? For most it’s to watch TV. We subscribe to cable to watch the shows. We connect the DVD player to, you guessed it, watch movies that come out on DVDs. This should be the most common of common senses, but just in case let’s look at some market research numbers to hammer the point in.
About 250 million TVs sold worldwide in 2010 and 211 million sold in 2009. As of mid-2011 Microsoft sold a cumulative total 55 million Xbox 360s since 2005. I’m not having much luck finding total TV sales going back to 2005, so I’ll pull something out of my hat: say one billion cumulative TV sales since 2005, give or take 100 million. The point should be clear: Xbox 360 gamers as a percentage of overall TV viewers is extremely small. Most of us who have TVs don’t play console games; we just want to watch TV. So the task at hand is watching TV and the better UI will help us do just that: The right UI will help us find the TV show we want to watch with the least amount of effort on our part.
The future TV UI from Apple or some other company will need to be less complex than how it is today to succeed. Less complex means less boxes, less cables, less remotes, and more simple, more intuitive, more minimal.
Here’s something I see as quite possible: an updated Siri-enabled Apple TV. By this time iCloud should be nicely integrated with iTunes so all of our media including TV shows and movies are available for immediate download or streaming.
How would this make our TV viewing experience better? Right now if I wanted to watch the latest episode of Glee I would have had to program my DVR or Tivo to record Glee episodes. I would need two remotes to make this possible: TV and Tivo. I would turn the TV on and change the video input to Tivo. I would then turn on Tivo, navigate the menu to get to my recordings and find the latest Glee recording, and mash the play button. Oh, and you’ll need to keep the Tivo remote handy to fast forward all those commercials.
Now let’s take a gander at how a Siri-enabled Apple TV would work. I would have had to have purchased Glee for the season on iTunes. I’ll still need a couple of remotes: TV and Apple TV. First I would turn on the TV and set the video input to Apple TV. Then I would take the Apple TV remote and say to it, “Play the latest episode of Glee.” I would then sit back, relax, and enjoy the show. Now wasn’t that better?
What if I wanted to watch a movie? On the system we have today the answer would be, “It depends.” It depends on a lot of things. Too many headache-inducing things to consider. Heck, I don’t even know where to start. On the Siri-enabled Apple TV you just say, “Play The Blind Side.” Siri will probably ask, “Would you like to watch it in HD?” And finally, “Would you like to rent it or buy it?”
The emerging market isnâ€™t being driven by the attraction of new user interfaces. Itâ€™s extremely price-sensitive, and itâ€™s fundamentally driven by the availability of content. And that includes content of all kinds, from movies to gaming.
Gaming consoles make up a small percentage of the overall TV market, so let’s put that aside. Casual gaming, on smartphones and tablets, on the other hand is huge. But most important and more important than the availability of content, from movies to gaming, is access: easy access to content. When it comes to making things easy to use there is no question which company has done a better job in the past and is doing a better job now. And who do you think will do a better job in the future?