AppleTV will feature expanded cable offerings

The long-rumoured iTV is a red herring. Real change will come in different form.

SAN FRANCISCO, CA – MARCH 07: Apple Senior VP of Worldwide Marketing Phil Schiller talks about the new iPad during an Apple product launch event at Yerba Buena Center for the Arts on March 7, 2012 in San Francisco, California. In the first product release following the death of Steve Jobs, Apple Inc. introduced the third version of the iPad and an updated Apple TV. (Photo by Kevork Djansezian/Getty Images)

In the run-up to Apple’s recent announcement of the latest iPad, there were fresh hopes of news about “iTV,” the company’s long rumoured entry into the television market. Instead, what CEO Tim Cook revealed was an update to AppleTV: the small accessory that lets users get movies, shows and music from iTunes onto their living-room screens.

To many, it was an anti-climax. The hockey-puck-sized device looks unimpressive, especially compared to the idea of a sleek, Apple-designed set. But this reaction betrays a misunderstanding of what Apple can bring to the TV arena. The problem with television is not a dearth of hardware, but the lack of an integrated system that merges traditional and online content in an intuitive manner. And that issue is far better tackled with a set-top box than a set.

Dragging TV into its inevitable digital future has proven to be exceptionally tough. Today, there are two TV worlds: the first consists of cable and satellite broadcasting; the second, web-based programming from Netflix and others. Together, they provide a surfeit of options and no easy way to wade through them.

Introduced in 2006, AppleTV has proven to have limited appeal. Only so many people want to buy shows through iTunes, and though they can also use the device to stream Netfl ix or watch live sports, the Xbox and PlayStation do the same with more functionality. Even Apple downplays the gizmo: both Cook and Steve Jobs have called AppleTV “a hobby.”

The first clue that Apple may be shifting gears is that its website now presents AppleTV as an iPad accessory . The tablet (or an iPhone) could essentially serve as a remote for navigating programs streamed to your TV. A touch-screen device working in tandem with a set-top box seems a superior way to access video content than a cable remote.

Access aside, the real challenge for Apple is distribution. Consider the iPod: though its popularity is often attributed to design and usability, its success was equa l ly due to Apple’s creation of a new distribution ecosystem in the form of iTunes. It was the confl uence of a way to buy music, software to organize it and hardware to play it that led to iPod’s ubiquity.

A similar approach, based on a platform rather than individual products, will guide Apple’s move into TV. The company will likely partner with cable and satellite providers, much as it did with telcos for the iPhone. The result would be a set-top box similar to AppleTV but expanded with cable offerings.

T hat doesn’t sound revolutionary, does it? Yet it would be, because it would unify currently disparate ecosystems of content under one interface. For consumers, it would solve the problem of media and gadget glut. For Apple, it’d provide a big new stream of hardware revenue. And cable and satellite providers would maintain their profitable broadcast businesses. As such, little-noticed AppleTV may become a lot more important.

Navneet Alang is a Toronto-based blogger and technology critic