Report: Apple Prepping Cheap, Cloud-Based Apple TV For War With Google

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The idea of putting iPhone apps on the Apple TV has been something some of us have been thinking about since at least 2008, when the original App Store launched. When rumors were swirling about Google TV, it became an even better idea as the living room was likely to be a new battleground for Apple/Google. And with the unveiling of Google TV last week, it became clear that this would be a next major fight — provided Apple started taking it seriously. Soon, they will be, if Engadget’s sources are correct.

The gadget blog says that a tip they’ve since confirmed with “a source very close to Apple” suggests that Apple has been working on the next version of the Apple TV. The goods according to them: it will be a very small box (smaller than the current one) with perhaps only outputs for power and TV-out cables. It will run on Apple’s new A4 chip (the one found in the iPad and soon the new iPhone). It will still do 1080p video, but may have as little as 16GB of flash memory. That’s because the thing will be based around streaming over the cloud (or from other computers in your home) rather than local storage. Most significantly, it will run the iPhone OS.

Basically, it’s an “iPhone without a screen,” is how Engadget hears it. Oh — and it will cost only $99, supposedly.

A product update may seem obvious from Apple, considering the steady pace at which they iterate devices. But the Apple TV hasn’t received a major hardware upgrade in its entire lifespan — almost exactly 3 years. The reason is that Apple still considered the device a “hobby.” The likely reason for that is because they haven’t figured out a way to make money from it yet.

But Google’s announcement of Google TV — a platform which will run on the mobile Android OS — changes everything. Apple needs to take the Apple TV seriously now, or it runs the risk of losing what should be an important battle with Google. While Engadget notes this product has been in development before Google’s announcement, you can probably bet that the announcement put it on the fast-track.

Still, it seems hopeful at best that we’ll hear about it at Apple’s WWDC event next week in San Francisco. The new iPhone is expected to be the centerpiece there. But, if this new device really does run iPhone OS, might Apple hint at it considering the event will be iPhone-centric? Remember, Apple first showed off the original Apple TV a full 6 months before it launched (when it was still tentatively called “iTV”).

Also consider that getting the iPhone OS on to the Apple TV will require some work as developers will yet again (just as with the iPad) have to work on scaling apps to correct resolutions. And that may be a big issue since people have all kinds of different TVs with all kinds of different resolutions.

It’s possible that Apple could pull an iPhone and release the device as a closed system first (maybe in the Fall), and then later open it up to third-party apps. It all depends on how threatened they feel by Google TV — which will also be out in the Fall. But, again, Google TV will run Android apps out of the box, so if Apple released an Apple TV that doesn’t, it will disappoint a lot of people.

Engadget notes that there’s no word on if apps will be included with the product or not. But it makes little sense to use the iPhone OS for this device and not includes apps (at least eventually). As I noted, the reason Apple hasn’t been taking the Apple TV seriously up until now is because they hadn’t figured out the best way to make money from it. That’s largely because Apple makes money off of hardware sales, and for devices like the iPod, those are driven by the availability of content at a good price. That’s the reason the Apple TV has failed to catch on: not enough content at a good price.

The reason there’s not enough content is likely because Hollywood is giving Apple much more push-back than the music industry did. For example, they won’t yet agree to Apple’s idea of subscription-based iTunes TV show packages. But apps could change all of that. Apps are content, and they would immediately vault the Apple TV into must-own status. Imagine playing all those thousands of cheap games on your TV. Nintendo, Microsoft, and Sony must be shitting themselves.

And if something like the Netflix app or the ABC app for the iPad worked on the Apple TV, the bitching about a lack of content would simmer down quickly.

Of course, there’s the issue of how you would control those apps — since you’re not about to walk up and touch your giant screen TV anytime soon. But there’s an easy solution for that: make iPhone, iPod touches, and iPads the controllers for the apps on the TV. They already have a Remote app you can use on your iPhone to control the Apple TV.

The $99 price is interesting to me because it suggests that Apple may not make a lot of money off of the device. It’s not clear if that price is just wrong, or if Apple would do something like that because it’s that concerned about Google owning the space. With no glass touch screen needed, it is possible that Apple could produce these things cheaply, but that cheaply?

Assuming these details are right, this Apple TV/Google TV battle should be a good one. Yes, it’s iPhone OS vs. Android in a new battlefield, but the devices would also have their own strengths and weaknesses. For example, Apple TV would have access to all of your existing iTunes content (and possibly over the cloud). Google TV, meanwhile, would work with your existing cable television, and would simply overlay the Android OS on top of it.

My only hope is that this battle will lead to a transformation of the existing cable television ecosystem in the U.S. For too long it has absolutely sucked.

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