Three years since its last major upgrade, another Apple event has come and gone without a peep about Apple's streaming-video box. Here's why we're still waiting.
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Apple's streaming-video box has gone three years without a refresh to a new generation, all while Internet-delivered TV has grown bigger and more accessible than ever. In that span of time, Apple has thrown plenty of splashy events, and each one has come and gone without Apple TV getting serious time in the spotlight. But Monday's developer conference keynote was supposed to be different.
This year, the Cupertino, Calif.-based consumer electronics titan has been widely reported to be developing a new Apple TV box that it would launch alongside an Internet-delivered television service. In March, Apple cut the price on its current streaming-media box from $99 to $69, a classic signal that a company is clearing out old inventory ahead of a newer version coming down the pipeline.
But as the company's Worldwide Developers Conference approached, the prospects of seeing a new streaming device at the confab dimmed. Apple couldn't broker deals with TV programmers to stock the new service with channels in time, according to reports.
The no-show underscores the daunting challenges that even a major player like Apple faces when introducing a video service that seeks to upend the status quo. TV content providers, for instance, can hold out for better terms. Rights for the country's hundreds of local stations aren't as simple as sealing a deal with few parent companies.
The price cut on the Apple TV box, meanwhile, reflects more than just its pipeline plans; it's also an acknowledgement of cheaper competitors. Google's Chromecast dongle for online video can be purchased for $35. Most important: Even without any significant marketing, a tech refresh, or a high-profile new service, Apple TV is doing just fine on its own.
And for Apple, there's really no rush to introduce something that's half baked. Because Apple is Apple, it has the luxury to wait to get it right. Being late to the game has never hurt the company in the past -- just look at the success of the iPod, which followed other digital music players, and the iPhone, which wasn't close to the first smartphone on the market. But what would hurt the company is introducing something that's not truly compelling despite having years to get it ready.
Apple declined to comment.
Content is king
For years, getting traditional TV content through the Internet remained out of reach as programmers held tight to the rights to their channels, worried that so called "over-the-top" delivery would chip away at the number of people watching through traditional distributors like cable and satellite providers. As the number of people subscribing to traditional pay-TV services began to slide regardless, networks began to loosen the reins to allow new online options like Dish Network's Sling TV and Sony PlayStation's Vue to launch.
Sling TV is a $20-a-month online service with live television streams of more than 20 channels, with the option of bolting on extra bundles of networks for additional fees. Vue is a similar service available to people in Chicago, New York and Philadelphia that streams via PlayStation consoles; it includes more channels -- upwards of 60 -- but costs $50 a month.
If Sling and Vue can do it, why can't Apple?
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"Apple TV is trying to change the universe a bit," said CBS Chief Executive Les Moonves last month at the Code Conference. Apple is reportedly trying to include local channels in its service, which complicates the negotiations. Local broadcast channels are sometimes owned and operated by their affiliated parent like CBS, ABC or NBC, but not always. It's part of the reason Vue has rolled out in specific markets only and why Sling TV's nationwide offering doesn't have local channels.
Moonves was also clear about what it would take for his channels to show up on Apple's service: "Money," he said. [CBS is the parent company of CNET.]
That competitors like Sony, Dish, Verizon and others are all vying to lock down the licenses for programming has created a seller's market: Rights holders are in the position to make large demands of Apple at the negotiating table, especially given the company's financial wherewithal to pay up. The company's stockpile of cash hit $193.5 billion at the end of March.
For Apple TV hardware, that means waiting for the service to be ready for its debut. Paul Erickson, a senior analyst with IHS, noted Apple never simply unveils a new device; rather, the company also presents an ecosystem of apps and services that make that product powerful.
The absence of a new Apple TV reflects the company is "probably waiting to present the most formidable proposition they could, that being new hardware alongside a new service," he said.
"Apple TV is like a DVD player for the 21st century -- you connect it to your entertainment system just like a DVD player, but it plays digital content you get from the Internet rather than DVDs you get from a physical store," Steve Jobs, Apple's CEO at the time, said in a press release announcing the product.
Apple cut the price for its first Apple TV to $229 in January 2008 and introduced its second-generation device, which cost only $99, in September 2010. Its third-generation device, which added support for 1080p video, hit the market in March 2012. It's that device, originally priced at $99, that Apple continues to sell to users.
In the early years, Apple referred to its TV box as a "hobby." But the company has bigger ambitions in that market. Walter Isaacson's biography of Jobs, published shortly after the Apple co-founder's death in late 2011, hinted at Apple's plans for a full-fledged Apple TV set and service.
"I'd like to create an integrated television set that is completely easy to use,"Jobs said in the biography. "It would be seamlessly synced with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it."
Such a product has never materialized, though, and The Wall Street Journal last month reported that Apple quietly shelved plans to produce an ultra-high-definition television set more than a year ago. And now, its new Internet video streaming service and updated TV box may not arrive until next year.
Apple's not the only company that has struggled with TV. Intel, the company that supplies the majority of the world's chips for PCs and servers, in early 2013 talked up its efforts to build hardware and software that would let users watch live TV, recently-aired content, on-demand programming, and other shows in their homes and on mobile devices. The subscription service, dubbed OnCue, would deliver the programming over a broadband Internet connection, and it would launch by the end of 2013.
Intel had the hardware and sleek, personalized user interface all ready to go and even had the "vast majority" of big content companies on board with its plans, people familiar with the matter told CNET at the time. But the company's new CEO, Brian Krzanich, decided to sell the business to Verizon. Verizon, the biggest wireless carrier in the US, hasn't yet launched anything from the OnCue purchase.
But others in the market have, including Dish and Sony. And Google has revamped Android TV to make it more appealing to viewers.
Not broke? Don't fix it
Biding time until its service is ready is manageable given Apple is also free from pressure caused by any new technical requirements, according to Erickson.
"We haven't seen radical innovation in the market," he said. Though consumers enjoy more sources of online video than ever before, their streams aren't much more challenging technologically than they were when Apple released the last generation of box in March 2012 and later infused it with a more powerful processor in January 2013. It would be a different story if 4K video -- an ultra-high-definition format that makes computers work harder -- were gaining traction. But 4K remains niche.
Perhaps the greatest factor behind Apple's lack of motivation to update its box: Apple TV is leading the market without any tinkering. In March, Chief Executive Tim Cook said the company has sold 25 million Apple TV units in the device's lifetime, by far the greatest traction of any device in the category.
It compares with No. 2 Roku's 10 million total sold, according to the company in September. Google hasn't released stats for its Chromecast, but Erickson estimates an installed base of 10.5 million for the streaming dongle. And he notes that the $35 Chromecast, which allows owners to fling video they're streaming on another device like a laptop or smartphone up on a television screen, isn't a direct competitor with Apple TV, which is a stand-alone gadget for watching online video on TVs.
If the reports are to be believed, Apple wants the next iteration of Apple TV -- both the service and box -- to be something wholly different from what's out in the market. Consumers are certainly ready, even if the broadcasters may still be hesitant.