Apple-Comcast Negotiations Could Open the Flood Gates Like Apple-AT&T did in 2007

UPDATE: Updated the title to be more representative of the content of the piece, will leave the link so previous links aren't broken.

I've written previously that the current television market is antiquated and that no progress on the Apple TV (whether literally a television set or just a new set top box with far advanced capabilities) can be made until that changes. I strongly believe this to be the case and, if I had to guess, is the only reason we haven't seen a new Apple TV that goes from being "just a hobby" to another leg on the Apple product "stool".

Rumors are flying this week about ongoing negotiations between Apple and Comcast. This situation is reminiscent of the smartphone industry before the iPhone. Prior to the iPhone, the carriers held the power, they controlled the phone software, they controlled the "apps" (I have a hard time calling those apps when we know what real apps are like today), they controlled everything. Apple came in and took back control, because without that control they cannot own the user experience. Apple has mastered owning the user experience and has repeatedly offered products that succeed because of this curated, clean, and enjoyable experience. 

The television content/distribution market today is an extremely similar landscape to the smartphone industry before the iPhone. As I said in Reality Check: Disrupting the TV Industry, the content owners currently hold the power. Comcast is an owner and a distributor. Comcast is now in the role that AT&T was in back in 2006/2007 for the original iPhone.

If Apple plays their cards right the consumers stand to gain from this in truly magnificent ways. I say the consumer because if Apple succeeds, content owners will be working aggressively to add other partners (Amazon, Google, and Microsoft come to mind) to avoid letting Apple have too much power over them. With multiple partners and multiple platforms, the growth and advancement will come at a drastically increased pace. Consider the delta in smart phones from 2004 to 2007 and then again from 2009 to 2012; now imagine that growth in the television industry (not a one-to-one comparison, but this stands to have a flood gate effect like the iPhone created).

This also goes hand in hand with why I don't believe Apple needs to make an actual television set to transform the television industry. Their reach will be far greater if they offer this revolution in the form of a reasonably priced set top box, though I'd assume above their current $99 Apple TV price tag.

I believe we're on the cusp of a revolution in television, we just need the flood gate to open a little bit and the rest will take care of itself.

There is no iWatch [Updated]

Make no mistake, Apple has evaluated, designed, and strongly considered variations of a smart watch, but the tech media is blowing up with absolute certainty that "the iWatch" will be released. It won't. The is no iWatch. I'm not saying it will never be released, but not in 2014, and likely not for at least a handful of years after that, if ever.

There have been compelling discussions on this. One by Craig Hockenberry at Furbo, and another by Ben Bajarin at Techpinions - both are excellent reads. Craig's highlights a multitude of serious concerns for entering the wearable space and poses the quintessential question for Apple:

What problems can a wearable device solve?

That is how Apple is looking at this problem, and there are few, if any, compelling arguments for why Apple should enter the market. The reasons not to enter the market are overwhelming, here are some key issues.

  1. They're competing with highly skilled, tremendously well designed, and thoroughly entrenched parties for the wrist real estate.

  2. Entering a market where the measure of style and quality is not even remotely within reach in the sub-$1000 market is problematic. Apple cannot release a watch that expensive for several reasons, namely because tech is outdated so fast and people will be expected to replace this device relatively frequently (every iPhone or two, even three). Traditional watches last forever.

  3. Making a watch is very different from providing a solution that classifies as wearable technology.

  4. The technology simply doesn't exist to make a beautiful design, long battery life, nice screen, and compelling fitness features. The Moto360 is attractive, but far too thick, no word on battery life, no word on price, and doesn't have any fitness features.

Apple has always been about cultivating a user experience that is vastly aided by a carefully nurtured ecosystem. That is a major reason why platform lock-in is so common. The ecosystem is so great, you want to use it. Once you have invested in it, it's really tough to leave unless you want to forfeit your investment.

To this end, Ben highlights a far more likely scenario to explain all of the Healthbook features seen in the iOS 8 leaks.

In short, what if Apple is preparing to enable and empower an ecosystem of wearables, made by third parties, but with unique and proprietary hooks to the iPhone. Healthbook would simply serve as a mechanism to work with third party hardware, along with specific APIs, and display key data for the consumer. This makes the most sense to me. Apple would encourage and enable third party hardware companies to build value around the iPhone and make the platform stronger. 

That doesn't just sound like Apple, it screams Apple. It oozes of Apple. There is no one-size-fits-all solution to wearable tech. Every person has a different daily routine, different activities, and different health concerns. It is impossible for any one device to cover all of these with today's technology.

The iPhone works because the overlap in usage is so large for smartphone users that the iPhone works, in one way or another, for millions of people (for those where it doesn't work, there are other platforms). I don't see a similar market opportunity for wearables as it sits today.

I fully expect Apple to accelerate and enable technology growth in this space to make things interesting, I just don't think they'll be releasing an iWatch to make that happen.

UPDATE: Given some of the feedback, I thought it is worth clarifying my position on the iWatch. I would love for an iWatch to be a real thing. After owning and liking some things about the Pebble, I'm confident I will be wearing a smart watch in the future, and who better than Apple to make it? That being said, this article outlines what I consider to be the overwhelmingly convincing case as to why that isn't happening in the short term. I sincerely hope to be wrong.

UPDATE (03/17/15): Apple did the primary thing I suspected they would not do – they are taking on the high end watch market. I still believe that both types of products can coexist, but I didn't see this one coming. I was partially right saying that there wouldn't be a watch in 2014, there was a more finished product than I expected, but not a product for sale. That being said, I still think they are a full year ahead of where I would have expected them to be at the time (much like the retina iPad Mini in 2013).

Apple Doesn't Need to Make a TV to Reinvent TV

News broke this morning, as reported in Haunted Empire: Apple After Steve Jobs, about Steve Jobs proclaiming confidently that Apple would not be making a television set. Specifically, when asked about Apple making a television set the conversation went like this:

Yukari says "Jobs didn't hesitate." He said, "No." 

"TV is a terrible business. They don't turn over and the margins suck," said Jobs. (Unlike iPhones which are wildly profitable and replaced every two years, a TV gets replaced every 8 years, and isn't all that profitable.)

There are two things to consider here. First, Jobs wasn't exactly shy about bashing an industry that he and Apple would soon enter (like 7" tablets, though the case is solid for a 7" tablet being far different from 7.85"). Second, and most importantly, Apple doesn't need to make a television set to revolutionize TV. They don't and they won't; it simply wouldn't make sense.

Apple as a company provides superb user experiences and beautifully designed products. It would be ideal to have everyone viewing the Apple TV revolution on some Jony Ive designed 4K screen with high end surround sound to match, sure. It just isn't realistic and the upside is limited.

The revolution in the television world will be with content delivery, content packaging, and content itself. Apple has had great success cultivating an ecosystem of content, but the traditional cable provider and television network situation has clearly proven challenging for even Apple to battle. Apple will not go all-in on the TV/content market until they have the control they demand. 

They have the UI figured out. They've got the set top box designed. They have the remote ready to go. I've got a hunch that their television plans have been ready for quite some time now, they're just waiting for the content deals to fall into place, then they push the button.

Why Tesla and CarPlay Matter to Everyone

Tesla, along with Apple's recently announced CarPlay, are positioned to have a major influence for everyone planning to be driving a car in the foreseeable future. This is independent of whether or not you're driving a Tesla or a car equipped with CarPlay.

Stuck in the (Technology) Dark Ages

The auto industry has managed to remain uniquely positioned with respect to technology. Low to middle-end cars are the worst offenders, but in this class cost almost always comes first. Higher end cars are still behind, but not as far. You could argue that Ford has had their voice control service for a while now, other companies are on a similar trajectory, but the offerings are entirely underwhelming at best.

Here are a few key reasons the auto industry is able to have inferior technology and charge such a premium for it; these are inferences I'm making, not based on inside knowledge.

  1. Cost is king when people shop for new cars.
  2. The tech we're used to isn't designed for as rugged of conditions. Your iPad's operating temperature certainly doesn't cover -15 degrees, but your car's touch screen does. Vibration isn't likely as much of a concern.
  3. Design cycles are long for cars, there's a reason cars debut so long before they're ready to buy. The tech available in that car will lag what is thought to be current because it was designed a couple of years (?) beforehand.
  4. There is a vested interest by auto makers to prevent major software feature upgrades. These comforts, when outdated, can become driving forces behind another purchase.
  5. Proprietary barriers exist. Supporting only Apple or only Android is highly limiting and until now there was no official protocol to support. If they chose to support an unofficial protocol, there is no guarantee it would continue to work, which would result in very angry customers.

Driving Change

So where do Tesla and CarPlay come in? I think CarPlay is fairly obvious. It is the first major step at taking the brain of the technology out of the car and putting it into the phone. Phones are a lot easier to upgrade. As long as compatibility to the CarPlay protocol is maintained, this is a vast improvement over the current situation. The most obvious issue is that CarPlay is Apple/iOS only, and likely always will be. I suspect cars will eventually need to ship supporting CarPlay, Google's solution, and maybe even Microsoft's to remain competitive.

Inside Man

Tesla has the potential to disrupt from the other side, the inside. They're the first actual shot at being a successful and forward-looking auto maker. They have high tech at their very core, it is what they are built on. Tesla has embraced the smartphone revolution in a very serious way giving you a tremendous amount of control over your vehicle from within their app.

Progress in this industry will only come if it is successful enough that auto makers can't produce cars without competitive technology. The CarPlay features are low-cost to implement with the potential for high return. Tesla is sweeping the industry with their incredible design, tremendous safety, and aggressive adoption of new technology. I'm not declaring these two products as the long-term "winners," but I do firmly believe they'll serve as excellent propellant to move this industry out of the dark ages.