Apple gave up on reinventing television

We take a long, hard look at Apple's recent decision to make iTunes available on competitors' products.

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While Apple Inc. didn't attend CES 2019, the company made its presence in the world of consumer electronics felt on a very broad scale. The tech giant sent shockwaves across the entire show floor with the announcement that iTunes was coming to televisions not made by Apple.

Steve Jobs would not have done this

It needs to be said, because members of the Apple cult have been going through a grieving process since the world's greatest salesman and entrepreneur left the building in 2011. The move to make iTunes available on a Samsung TV was the last straw for me. Apple Inc.'s (AAPL) best days are likely behind them. This decision to open the ecosystem to competitors' devices may be good for consumers, but it comes from a place of weakness for Apple.

Buybacks and dividends are not innovative

Apple's board of directors decided in 2012, the year after Steve Jobs passed away, to institute a stock buyback and dividend payment capital return policy. This decision was the opposite of the management philosophy of Jobs and former Apple CFO Peter Oppenheimer who ran the company with no long-term debt and piles of cash.

Apple's balance sheet currently carries over $130 billion in cash net of the long-term debt. The board has authorized over $200 billion of stock buybacks and has very little to show for it. As iPhone revenues decline, shareholders are beginning to question if Apple has peaked. Tim Cook pointed to services revenue in a recent interview with Jim Cramer on CNBC.

Apple TV is "just a hobby"

Apple's set top TV product had been labeled as a hobby by Jobs.
Apple's set top TV product had been labeled as a hobby by Jobs.

According to several accounts of conversations with Steve Jobs, Apple was working on a television project at the time of his death. In the authorized biography of Steve Jobs, author Walter Isaacson described Jobs' interest in TV.

"He very much wanted to do for television sets what he had done for computers, music players, and phones: make them simple and elegant," Isaacson wrote. "'I'd like to create an integrated television set that is completely easy to use,' he told me. 'It would be seamlessly synced with all of your devices and with iCloud.' No longer would users have to fiddle with complex remotes for DVD players and cable channels. 'It will have the simplest user interface you could imagine. I finally cracked it.'"

Another one of Steve Jobs' closest friends Walt Mossberg has also spoken about a potential Apple TV project. On a phone call that took place on August 24, 2011, Mossberg and Jobs spoke about the former CEO's new role at the company.

“I’m writing this thing. And the phone rings. And it’s him,” Mossberg said. “I think he wanted to talk to me because he was feeling a little sentimental. And also because he wanted me to know that he wasn’t going away.

“He was going to still be involved. Their press release made some vague nod toward that. But he wanted me to know that he was going to be involved in big strategic things, and also that he was going to reserve one particular thing for himself.

“I said, ‘well, what’s that?’

“He said, ‘Well, it’s television ... I think we figured out a way to do it, and it’s going to be fantastic. I want you to come out, in a few months, and I want to show it to you.’

“He was really weak. Hearing nuances in speech was difficult. But he was really excited,” Mossberg said. “If you would have asked me five minutes after we hung up, I would have said he was going to reinvent the whole TV set. It would be Apple-esque, meaning it was high quality, and very easy to use. But he was thinking about more than hardware — that was clear, too.”

Steve Jobs passed away less than two months after that call with Walt Mossberg, and it appears that whatever had him so excited never came to fruition. Jobs always referred to the current Apple TV product as a hobby, leaving many fans to hope that there would be a true Apple take on television someday.

Apple's "grand vision" for TV

Tim Cook attended the Wall Street Journal's All Things D11 in 2013. In an interview with Kara Swisher and Walt Mossberg, Cook said, "There is a very grand vision for it," when pressed about Apple's plans for television. This was two years after Mossberg's last phone conversation with Steve Jobs, but Apple has yet to reinvent the TV. I wholeheartedly doubt that Cook's "grand vision" in 2013 included putting iTunes in a Samsung product.

Disruption takes time and patience

Apple Inc. has filed a number of patents for what could potentially be brand-new takes on display technology. Most of them revolve around projector technology, including patents for a stereoscopic projector with a gesture-based user interface.

A patent filed in 2008 for a glasses-free stereoscopic projector had some Apple fans hoping for a new product.
A patent filed in 2008 for a glasses-free stereoscopic projector had some Apple fans hoping for a new product.

In the past, Apple had always disrupted product categories and industries by inventing or repurposing technology in a way that provided a simple UI accompanied by some sort of new way for humans to interact with the products. The iPod clickwheel, iPhone's multitouch, or even the mouse are all examples of how important human interface devices have been to Apple's ability to innovate in product categories.

Another Apple patent that implied the company was thinking about incorporating projectors into iOS devices.
Another Apple patent that implied the company was thinking about incorporating projectors into iOS devices.

It seems that whatever they had cooking at the R&D lab in Cupertino simply didn't cut it. The dream of an Apple take on a television product is pretty much dead. Companies file patents for products all the time that never see the light of day, but it certainly feels like Apple was working on something brand-new in the world of video displays before they made their move to other platforms at CES 2019.

Apple gives up

Tim Cook faces his greatest challenge as he navigates Apple through slowing iPhone sales and a gap in their innovation cycle.
Tim Cook faces his greatest challenge as he navigates Apple through slowing iPhone sales and a gap in their innovation cycle.

Apple Inc. is usually late to enter product categories. They weren't the first MP3 player or smartphone to market, but they were able to innovate and improve enough on those devices that people were willing to pay a premium for that logo on the back. Many fans had hoped to see a full-fledged Apple TV that lived up to the company's reputation of disruption and innovation. We wanted to hear, "Today, Apple reinvents television." 

I never believed that Apple would compete in the flat panel market. The margins are terrible, and the industry is full of competitors. What I found shocking about last week's announcement was that Apple is breaking down the walled garden that Steve Jobs built. It comes from a place of weakness as Apple's revenues are declining, but it also shows very little innovative thought. Netflix is at least ten years ahead of Apple in fostering platform agnostic partnerships, so the move to bring iTunes to competitors' TVs could be too little too late. 

The company has enough money to market iTunes as a Netflix killer, but they find themselves in the position of trying to buy cool. They have added Carpool Karaoke and Oprah to their upcoming video content offerings, but have already failed with efforts like Planet of the Apps. Apple really appears to be struggling to change the negative narrative on Wall Street about the company. The decision to bring iTunes and Airplay to devices that are outside of the ecosystem is good for consumers, but I have to ask why now? 

If they had a viable vision for TV, this would not be happening. This is a capitulative moment for Apple as they are readily encouraging their fans to buy products from outside of their halo of products. Perhaps iTunes as a service will take off and I will have egg on my face, but I am more inclined to believe that the tech giant is grasping for straws as they face a very rough period ahead. The decade-long multitouch smartphone cycle is coming to an end, and the company's largest revenue segment is shrinking. The situation is not one in which Apple is on the verge of bankruptcy, like they were in the late 1990s, but it is troubling to see the company known for innovation take such a cowardly step away from the product philosophy that lead to them becoming the first $1 trillion company in U.S. history. 

Steve Jobs is dead

This whole article probably sounds like a fanboy finally giving up on a dream, and that is fair. Sadly, the innovative spirit at Apple that was fostered by Jobs and Woz is hard to find in 2019. Last week's announcements were the last straw for me, and I am no longer bullish on the company's long-term prospects. The stock will likely flounder over the next decade, unless they are able to change the world again with a new, innovative product. The idea that Apple would put iTunes on a rival's device is beyond me and is contrary to Steve Jobs' product and service philosophy. but he's dead. Whatever he was talking about in 2011 might still be in a lab somewhere in Cupertino, and maybe someday we will get to see that one more thing. I am not holding my breath, as the company appears to be far more focused on what Wall Street thinks of them than ever before. 

CEO

Asif Khan is the CEO and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.

From The Chatty
  • reply
    January 16, 2019 1:30 PM

    Asif Khan posted a new article, Apple gave up on reinventing television

    • reply
      January 16, 2019 1:31 PM

      iGiveUp

    • reply
      January 16, 2019 1:34 PM

      I was thinking this would be the straw that finally broke a lot of camels backs. I was a bit surprised when I first heard they were doing that with Apple TV.

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        January 16, 2019 2:24 PM

        It's kind of sad. I feel like the old Apple creativity could have made smart TVs pretty awesome. Maybe we will get lucky and they are only partnering for a short period of time so they can gain experience in the market right now.

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          January 16, 2019 2:26 PM

          They missed leading the Smart TV category, the market is flush with them now.

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            January 16, 2019 2:33 PM

            Oh no, I know. But I'm saying maybe they can innovate them in some way. The same way they did with a lot of other stuff.

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            January 16, 2019 2:51 PM

            There is no strong leader in the smartTV space, but a lot of mfr made Linux implementations that don't quite work well and reliably crash. I'm very interested to see who ends up dominating.

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              January 16, 2019 3:03 PM

              I've been happy with Android TV's UI. Had the OG Mi Box, and I replaced it with a Shield TV last month. Haven't really experienced any of the other custom in house stuff other companies have been making, though.

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              January 16, 2019 4:22 PM

              I have AOSP TV on my Sony, the only current AOSP partner. It's ok but feels more like a phone OS reskin than designed for TVs. LG and Samsung bake their own, lower end has Roku and FireTV. Unlike phones, no one has a dominant OS yet. I expect apps, OS and customer expectations to improve in the next few years, but for now, TV OS appears to be up for grabs

        • reply
          January 16, 2019 2:36 PM

          An Apple smart TV would be functionally no different from a smart TV today with an AppleTV plugged in except maybe like 1 less button press to turn it on.

          • reply
            January 16, 2019 2:44 PM

            The SmartTVs I've seen and used seem to have universally terrible interfaces that non-techies struggle to operate.

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              January 16, 2019 3:01 PM

              AppleTV is the UI an Apple smart TV would have though

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                January 16, 2019 3:02 PM

                So wouldn't it follow that an all-in-one device with an AppleTV interface would be a product that adds value to the market?

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                  January 16, 2019 3:06 PM

                  Not particularly, and especially not if someone's thesis is that Apple had 'cracked' the TV market with Jobs but just failed to execute it. An AppleTV that costs $2000-3000 because it comes with a screen so it has slightly better UI to change inputs and is slightly smarter about changing inputs automatically or something is not altering the landscape of TV.

                  What would alter the landscape of TV are all things they could do with the existing AppleTV (single sign on), but can't in practice, or things which run contrary to the walled garden approach (ex be Netflix) which this analysis is saying is a sign of strategic weakness.

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                  January 16, 2019 9:13 PM

                  Not sure it would be enough for Apple to charge what they'd want to charge in that market. Pricing is a big deal with TVs and drives a lot of the sales.

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              January 17, 2019 4:24 AM

              I was skeptical, but I actually like the Roku interface on my TCL.

    • reply
      January 16, 2019 1:42 PM

      I get that it suggests they gave up on TV, but iTunes has been available on non-Apple devices forever so they could get market share. What makes it so different on a TV vs a PC?

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        January 16, 2019 2:22 PM

        I haven't seen iTunes on anything but Windows PCs before. That seems like a necessity. I haven't seen it on TVs or anything like that ever before.

        Did you read the article? I'm not asking to be snarky, I truly want to know if you read it and that was your takeaway.

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            January 16, 2019 2:36 PM

            Is that the same thing as having and buying music through iTunes on your phone? I don't use Apple Music. I'm assuming that iTunes for TVs will be where you can buy stuff from them and watch it all on your TV? I use the appleTV to watch my Disney movie reward movies but I know that account links up with iTunes. Is there a way to watch that stuff on a non apple device? I really don't know.

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              January 16, 2019 2:38 PM

              It's the iTunes client for Android. I have no idea how it works, as I'm not in the Apple ecosphere

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                January 16, 2019 9:14 PM

                I don't think Apple Music and iTunes are the same. iTunes is much more than music now.

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                  January 16, 2019 9:15 PM

                  It comes up when you search for 'itunes', that's all I know

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                  January 17, 2019 6:28 AM

                  I think Apple wants a streaming TV service like Netflix but calling it Apple Music makes no sense. They put shit like Planet of the Apps on Apple Music and it still makes no sense.

                  Using the iTunes brand is at least a bit better, since they have sold TV & movies over there for so many years.

                  So this is really all it is, just branding, don’t think too hard.

        • reply
          January 17, 2019 4:10 AM

          I read it, and that was one thing I wanted to ask.

    • reply
      January 16, 2019 2:22 PM

      Steve Jobs is dead. Airplay & Stock buybacks for all!

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      January 16, 2019 2:33 PM

      this is their chance to go all in on something. home automation is screaming for a market leader, someone that will do hardware AND software and align all of the best parts of things, and eject the garbage.

      also, I have no idea why apple hasn't made a smart remote ala logitech. they are REALLY missing out on the proliferation of gadgets in the household, and the apple ecosystem used to be a thing. now, it isn't. apple needs to get back into shepherding various devices AND their software.

      why isn't there an apple roomba? a remote? their attempts to stay within narrow product offerings is killing them. they have to broaden their footprint, immediately, or keep facing these concessions.

      apple receiver with speakers? take on sonos. do it.
      apple receiver with apple TV and an apple remote? take on pioneer, logitech, roku, logitech. do it.
      apple light switches with apple zwave hub? take on amazon and the billions of shitty companies making wifi-enabled stuff. do it.
      apple thermostat? take on ecobee. do it.
      pick something. release products. integrate them with native IOS. make apple a household name instead of releasing shitty speaker gizmos trying to copy amazon and google.

      the iwatch series 4 is an incredible iteration of that product, and they are finally getting it. but it still lacks automatic workout tracking, automatic sleep tracking. lame. why is apple half assing everything?

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        January 16, 2019 2:35 PM

        Agreed. Home automation is a mess right now and I’d love for them to fix that.

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          January 16, 2019 4:34 PM

          Almost no chance of that. The problem is that there are too many devices and techs that they would have to do. You'd need, at a minimum:

          Hub of some kind
          A low power wireless tech
          A controllable power outlet
          A controllable switch and dimmer switch
          A motion sensor / presence sensor
          A thermostat

          All that plus some special sauce that made it stick out. Probably some sort of 3d tracking system that knows exactly where you are in the house. That can map out your house as your walk around so you don't have to make a diagram of your house.

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            January 16, 2019 5:27 PM

            weird, new roombas can do exactly that.

            https://www.theverge.com/circuitbreaker/2018/9/6/17817220/irobot-roomba-i7-robot-vacuum-empties-itself-maps-house

            what you are saying is that apple shouldn't try. ALL of those consumer gadget spaces are being filled, and poorly. apple is all about fusing products together. airplay. imessage. siri. keep that user experience consistent, streamlined. and what you are saying is exactly what they SHOULD tackle.

            anyway, suggesting this is beyond them is laughable at best - the issue is that the competition is so fierce, you seem to be suggesting they'd lose. that is where I differ. if apple doesn't try, they continue losing ANYWAY. is it merely because of apple's price point? nope. if apple sold a killer universal remote setup, for a reasonable premium, it would sell very very very well. why? they get to add their other gadgetry to it. you can turn off your onkyo TV and pioneer receiver and instantly swap onto an amazon prime audio feed to your Homepod. Why isn't apple taking the lead on this?

            apple branded equipment, combined with their constant updates, should be super easy. why haven't they done this? why didn't they capitalize on wifi aware gear when they were selling routers? see what I mean? they HAD the "hub of some kind" staring them right in the fucking face the whole time. the home is ready for a huge leap forward in terms of tech, consistency, usability, reliability, scalability. apple is ignoring home potential at their own peril. people are keeping their phones, and getting OTHER GADGETS.....

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        January 16, 2019 2:44 PM

        apple receiver with speakers? take on sonos. do it.

        https://www.apple.com/homepod/

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          January 16, 2019 2:52 PM

          my brother has that. it's a tragic also-ran. it barely qualifies as a honed/upscale apple device. I mean multi-room/zone, centrally controlled, adaptable to play lots of sound sources.

          going "HEY SIRI PLAY WU TANG CLAN" is a whole lot of nothing when it's from apple.

    • reply
      January 16, 2019 2:35 PM

      "He very much wanted to do for television sets what he had done for computers, music players, and phones: make them simple and elegant," Isaacson wrote. "'I'd like to create an integrated television set that is completely easy to use,' he told me. 'It would be seamlessly synced with all of your devices and with iCloud.' No longer would users have to fiddle with complex remotes for DVD players and cable channels. 'It will have the simplest user interface you could imagine. I finally cracked it.'"

      Except he didn't actually crack it in the sense of having the tools necessary to achieve it. He and the rest of Apple overestimated Apple's negotiating position with TV/content folks like they were the music labels desperately trying to stem the bleeding from piracy in the iPod/iTunes era. They didn't need Apple to save them so they weren't about to give up a bunch of stuff. And they've been proven right. The AppleTV is a good enough proxy for what a full flatscreen TV experience would've been in terms of software/UX and they still don't have single sign on to all your services and these sorts of things which require real leverage to do, Siri isn't going to magically be able to search every streaming service that is happy to let themselves be aggregated and undifferentiated into 1 Apple UX.

      What I found shocking about last week's announcement was that Apple is breaking down the walled garden that Steve Jobs built.
      ...
      The company has enough money to market iTunes as a Netflix killer, but they find themselves in the position of trying to buy cool.


      I don't understand this. The only way to make iTunes a Netflix killer would be to make it completely platform agnostic. But in the same breath you're knocking Apple for putting iTunes and AirPlay into non-Apple hardware (even though it's to support a hardware sector you're admitting would be a terrible business move). If Apple services don't work on your TV but Google ones do then that's just one more reason to use Android instead of iOS over time. The alternative of 'buy a $250 AppleTV' or 'buy a $3000 Apple TV screen' is not a realistic way to fend that off. To say nothing of what the value is of Apple spending $10bn/year on content to compete with Netflix on a service that has no complementary value to their other hardware/services.

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      January 16, 2019 2:55 PM

      I think part of their issue with their ambitions with Apple TV were thwarted by the television providers and they haven't been handling its other strengths well.

      I've made Wolf3D, DOOM, Quake, Quake 3 and RTCW run on Apple TV and I get emails all the fucking time asking how to get them running. I think the idea that unlike your Roku the Apple TV could play actual games could be a real strong feature. And yet Mojang didn't even sell enough copies of Minecraft on Apple TV to even bother to keep selling it.

      If you're going to charge $149 for it include a game controller.

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      January 16, 2019 3:03 PM

      There's no money in television outside of being a massive provider. Technology doesn't make money, content does.

      • reply
        January 16, 2019 10:35 PM

        This right here. That’s the boat Apple missed.

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          January 16, 2019 10:38 PM

          At multiple shareholder meetings I argued against paying a dividend/buybacks and instead focusing on acquisitions. Think of what they could have accomplished in the content space with a fraction of the $200 billion they wasted...

    • reply
      January 16, 2019 3:09 PM

      You didn’t mention at the end if you were still long on AAPL

      • reply
        January 16, 2019 3:12 PM

        My bad. I am long some shares and calls between all the portfolios I manage. Will have a more in depth analyst piece coming out soon.

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          January 16, 2019 4:35 PM

          Diggity

        • reply
          January 16, 2019 5:02 PM

          Awesome. Looking forward to it. Is AAPL still a buy? Or downgraded to hold in your opinion?

    • reply
      January 16, 2019 3:21 PM

      The move is not that surprising. They are sinking a TON of money into Hollywood right now to fund a host of original content, and they would not get enough of a return on that investment by simply providing that content to Apple TV users.

    • reply
      January 16, 2019 4:03 PM

      This is part of their strategic shift toward services as device revenue flattens. In that context, it makes sense -- how much traction could they possibly get if their television service required buying Apple hardware?

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      January 16, 2019 4:05 PM

      It would have been really interesting to see what Apple would have created to shake up tvs. There does seem to be a lack of innovation over there.

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      January 16, 2019 4:24 PM

      No money in tv's its a total race to the bottom, the real money is in content. Apple is losing that race bad!

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        January 16, 2019 5:37 PM

        True to that and it is their very strange puritanical stance on content that is doing it to them.

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          January 17, 2019 12:15 AM

          Wat? They don't allow porn apps on their store, that's the only 'puritanical' thing I can think of.

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      January 16, 2019 8:28 PM

      He succeeded, but not in the way he thought he would. My daughter doesn’t watch tv; content is almost always via an iPad.

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      January 16, 2019 8:48 PM

      Good article Asif. Seems crazy jobs died almost a decade ago.

    • reply
      January 16, 2019 10:32 PM

      [deleted]

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      January 16, 2019 10:54 PM

      I really enjoyed this article and I can tell it comes from a place of really having marinated on this for a while. I hope we see more thoughtful articles like this coming down the line. Also - I agree completely with the sentiment of the article.

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      January 17, 2019 12:18 AM

      [deleted]

    • reply
      January 17, 2019 1:27 AM

      Thanks for sharing an informed opinion. It's always interesting to read

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      January 17, 2019 1:33 AM

      Apple gave up on reinventing television :\

    • reply
      January 17, 2019 4:03 AM

      Hey remember when Apple allowed clone desktops to proliferate? That was a weird time...

    • reply
      January 17, 2019 4:44 AM

      I disagree, if iTunes is to have any chance at all it has to become as widely available as Netflix
      or Spotify, without that it’ll be dead before it ever begins.

    • Zek legacy 10 years
      reply
      January 17, 2019 5:53 AM

      Hardware and software should be separate. Walled gardens are not worth celebrating.

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      January 17, 2019 6:21 AM

      The idea that Apple would put iTunes on a rival's device is beyond me and is contrary to Steve Jobs' product and service philosophy.

      Steve also put iTunes on Windows. Yes I know the reasoning is vastly different, but “contrary to Steve Jobs” is silly.

      I like the article’s premise, but you kind of lost me with all the talk about Steve Jobs. I really honestly think that Steve did things all the time that would be contrary to what Steve would do. He never once cared about his past decisions, he only wanted to make the best one that matters “right now.”

      But once I got past the silly Steve stuff you put in, the rest of the article is pretty good.

      iTunes on a Samsung TV makes some amount of sense. The last time iTunes went to another platform was Windows, and it was mainly to allow the iPod to work over there so that they could expand their market.

      They found was a whole new set of Apple customers who had never used an Apple computer outside a school or library. Suddenly these people saw a new Apple and bought more than an iPod.

      With iTunes on Samsung TVs, the idea is similar, but instead it is a software play, they want people to see Apple as a competent services company. One that can deliver content and not just apps.

      The biggest risk I see, and I totally agree with you on, is that putting it on a TV running Tizen OS can lead to a horrible experience.

      Unlike iTunes for Windows where you could escape to your iPod, if you have a bad experience you will never use it again, they don’t have hardware to wow you with and make you put up with iTunes being bad. If the experience sucks then people will go back to using Netflix or whoever. So Apple better nail it with content or they are fucked, and that hasn’t been working well.

      But with Airplay on TVs it is different than that, it is more about doing the right thing there. They have to put it on as many devices as possible, this is just the way Airplay grows up and becomes a name brand like Chromecast. This naturally bolsters their product sales and is at very smart move. Any negative feelings about this one seem misguided.

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      January 17, 2019 6:25 AM

      Can't couldn't reinvent television because content holders are demanding too much money for their programming.

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      January 17, 2019 7:23 AM

      [deleted]

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