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Will Apple TV be bigger than iPhone?

Some believe Apple TV, due out this month, is a more important product

By David Haskin
March 19, 2007 12:00 PM ET

Computerworld - Apple TV isn't the first product to collect, manage and play on TV video that was downloaded to desktop computers. But then, the iPod wasn't the first portable digital audio player.

Not surprisingly, then, some industry experts say Apple TV, due to be released this month, will be a huge iPod-like success, doing for digital video what the iPod did for audio. Some even think Apple TV could be bigger than Apple Inc.'s much-ballyhooed iPhone, which will be released in June.

"Long term, strategically, Apple TV as a revenue-generating platform is much bigger than iPhone," said Jeff Heynen, directing analyst for broadband and IPTV for Infonetics Research. "It's a $300 device that multimillions of people will put in their homes vs. a $500 device [an iPhone] in a market that's saturated with BlackBerries and similar things."

On the other hand, some industry observers will tell you that while Apple TV may be successful some day, it has significant hurdles to overcome.

"The reality is that this class of device faces challenges," said Ross Rubin, director of industry analysis at The NPD Group. "None has been successful so far."

What nobody disputes, however, is that Apple TV heralds a new age in which we obtain and manage our media in significantly different ways than we once did.

AppleTV user interface Image courtesy Apple.com

Potential gain

While vendors such as Netgear and D-Link, not to mention Microsoft with its Windows Media Center, have offered similar devices and technologies as Apple TV, not one has yet succeeded. But Apple can succeed if the quality of its previous products is any indication, said Martin Olausson, director of digital media strategies at Strategy Analytics.

"You need to be able to bridge that gap from the PC to the TV set, and today there aren't many technologies that do that very well," Olausson said. "What Apple is trying to do, obviously, is to use their user-friendly technology and bridge that gap."

Another difference with similar products, according to Heynen, is that Apple is entering a market that has been prepared by cable and satellite providers in the last couple of years.

"The cable companies have had a great deal of success with subscription video-on-demand for premium channels," Heynen said. "A lot of subscribers see [on-demand programming] as better than having a DVR because it begs the question: Why do I need a TiVo if my service provider will offer content on-demand?"

Olausson added that products such as Apple TV are even better than on-demand programming because they don't require users to pay for expensive cable TV or satellite subscriptions. "If I'm into Desperate Housewives or 24, I can just buy that. I don't have to pay for anything else but a broadband connection."



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