"Underwhelming" Apple TV could be replaced by groundbreaker in 2011
Thursday, September 2, 2010 at 03:56PM
More than a gateway device, experts project real Apple TV will integrate TV and Mac to revolutionize home entertainment
By Alex Dobuzinskis
LOS ANGELES (Reuters) - Critics hoping for more from Apple Inc's Web-to-TV plans -- a device, say, that would revolutionize living room entertainment the way theiPad changed tablet computing -- may just need to wait a bit longer.
Shortly after Apple unveiled its latest Apple TV product on Wednesday, complaints surfaced from some circles that the company had failed to live up to its own high standards. The device is smaller and cheaper than the one it brought out in 2006, but it also has shortcomings.
Kaufman Brothers analyst Shaw Wu, for instance, called the Apple TV product "underwhelming" and said some innovative applications, such as those on the iPad, would have helped. "It seems it's strictly more of a rental machine."
But most expect that Apple has more groundbreaking plans for a future version of Apple TV, and for marrying the Web to the television, up its sleeve.
"Longer term, I do think they have more ambitions in the living room," said Ashok Kumar, an analyst with Rodman & Renshaw LLC.
"They didn't announce it today, but we're talking literally about an Apple TV, not a gateway product, which integrates a TV and a Mac. That's a 2011 event. I'm not sure which other features it could have," Kumar said.
Analysts said the ability to run applications on a TV-connected device would be a key development down the line for Apple.
As it tackles the TV frontier, Apple will increasingly battle with the likes of Google Inc, Microsoft Corp and Amazon.com Inc, which have all sought to forge ties with Hollywood studios to distribute movies and shows online.
That has been a minefield for technology companies because of the rights issues involved. Hollywood studios and cable operators have pushed back, with Google encountering some resistance to its Internet-connected Google TV, which would allow users to search for content on the Web.
Apple co-founder Steve Jobs gave an indication of the company's overall strategy by announcing Apple TV will stream content from iPhones and iPads through its AirPlay wireless technology.
"The most important hint of Apple's real ambitions in the living room come from AirPlay, which puts iPhones and iPads in the driver's seat and makes the TV just an output device for the Apple ecosystem," said Forrester Research analyst James McQuivey.
"Expect Apple to gradually push more and more in that direction, but as of this moment in 2010, Apple has not yet made a significant play for control of the TV," he said.
Only 12 percent of U.S. adults who use the Internet are familiar with the original Apple TV, according to Forrester Research. Analysts said that the new $99 price point for Apple TV, down from $299 before, could give it wider adoption.
Meanwhile, consumers already have access to a broad range of devices that connect TVs to the Internet media players, from Blu-ray players to video game consoles like Microsoft's Xbox and the PlayStation from Sony Corp.
And then there are stand-alone media players such as those from Roku Inc, which CEO Anthony Wood said is closing in on 1 million unit sales in three years.
Wood said of Apple TV's relaunch, "I was initially worried it would be better than it was but it's not something we couldn't compete with."
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