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AppleTV – Turning a Hobby into a Business.

Since the release of AppleTV, Apple CEO Steve Jobs has maintained that it isn’t yet a serious business venture for Apple, but more of a “hobby”.   For some this is simply a way of explaining away a less-than-successful product, but I think Jobs is being more honest about it than we think.

It IS a hobby to them, but I think it’s likely that you’ll see the AppleTV going from a hobby to a business soon.  Very soon.

Jason Calacanis recently talked about how Apple is going to go into the Television business,  making flat panel TVs.  While I’m sure they have a few Apple flat panels in the lab, there is no freakin’ way they’re ever going to get themselves into such a commoditized business.   They would have to compete with EVERY television maker out there, and there just is no way for them to grab enough marketshare to make it worth it.  In a world where $700 Vizio HDTVs are King,  there is no way for Apple to add enough value to make a $2000+ TV worth it to most people, which is likely where they would want to place it in the price structure.  I still think the set-top box is the way for them to go.

Why?  Find out after the jump.

Look at Apple’s usual M.O.  They tend to wait in a market,  and look how badly everyone else puts together a a user experience.  Then they look at WHY what the other companies were doing was wrong,  and then proceed to do it better.  

Now look at your daily life.   The UIs you deal with on a daily basis have gotten light years better over the years.  Your computer is easily usable,  your phone is easily usable, and your media player is easily usable.  What is the last bastion left of really HORRID user interfaces?  Cable set top boxes!

For any of you out there like me who are cursed with one of those horrid Scientific Atlanta cable boxes, you know the pain I feel on a daily basis.   I have a feeling Apple does as well.

I’m thinking that the current AppleTV is out as mainly a placeholder for what’s coming.  It’s just that dealing with the cable providers worldwide is 10x the problem that dealing with cell phone providers was for the iPhone.  Since CableCard has yet to take over as any sort of real standard,  there is no real way for a lot of cable companies boxes to talk to each other or to accept cards from other providers.  Considering this,  if Apple was to release a cable/fios set top DVR box,  they would have to work out contracts with many of the major cable providers in the country to get started.  Believe me though,  they know it’s worth the effort.

Imagine using a cable box designed by Apple.  Navigating your TV would be simply painless.  Recording would be equally painless.  You would still have iTunes capability to download and watch movies, and the capability to stream media and photos over your network to the box for display on your HDTV.

But that isn’t where the money will really come from.  Imagine if you will,  the App Store for AppleTV.

Could you imagine a set top box with applications?  Perhaps a Hulu app for streaming TV on demand, or a Netflix app for watching Netflix streaming movies.  If the horsepower is bumped a bit on the AppleTV, imagine it as a really great casual gaming platform in the vein of iPhone.  You could download a copy of Safari for web browsing,  or perhaps a TV formatted version of NetNewsWire for RSS feeds.  Hell, I’m sure people like Merlin Mann would appreciate an application that popped up notifications on the screen that told you from  your calendar that you have other things to be doing instead of watching the TV all day. Weather widgets, email clients, Wikipedia, movie times, social networking apps.  An AppleTV with an App Store would be the realization of the promise of interactive Television that we had been promised for decades, likely without any of the stupidity and cheese that came with something like Web TV.  It wouldn’t replace your computer or phone as your main internet experience,  it would just be an additional way to check out cool new things.

Note that i left out a blu-ray drive.  Jobs has been pretty vocal about the fact that blu-ray hasn’t really taken off and that the costs of licensing the technology make it nearly worthless to put in his products.  I tend to agree.  A network connected device like this with things like Hulu and Netflix streaming would have very VERY little need for a blu-ray drive, and for those who were REALLY interested in the perfect quality, they would likely go out and buy a PS3 anyway.

I’m curious to see what Apple continues to do with the AppleTV especially considering the potential it could hold as your one stop set top box.  If they are able to get distribution deals with major cable providers,   you could see this quickly becoming a VERY interesting product.   In the mean time, I think it will remain as Apple’s little hobby.