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Apple TV's Blurry Future


TECH & YOU PODCAST

The best thing about Apple (AAPL) TV is that it tries to do for video what the iPod has done for music. The worst thing about Apple TV is that it tries to do for video what the iPod has done for music. The reason for this paradox: Apple's laudable effort to simplify video downloads by running everything through iTunes leaves too much good content out in the cold (see BusinessWeek.com, 2/25/07, "Apple's International iTunes Controversy").

Although the iPod approach to music has come in for criticism, especially from European antitrust regulators, I think it has served consumers well. The iTunes Store is the only online source of purchased iPod music, but this does not limit customers, since nearly anything you can buy online can be gotten from iTunes. And the record companies have effectively forced all online stores to price tracks at 99 cents, just like iTunes.

The video world, by contrast, is fragmented into incompatible sources and formats. (I'll be examining the digital video mess in more detail next week.) The $299 Apple TV set-top box, designed to move video from your computer to your TV, can only play movies and TV shows from iTunes. That adds up to about 400 movies from Disney (DIS), Paramount (VIA), and Lionsgate (LGF) and a couple hundred TV series. There are thousands of other shows and movies you can download from other sources, but they haven't been licensed to Apple, so you can't get them from iTunes. Unless iTunes becomes a universal source for video, as it is for music, Apple TV's simplicity and convenience will require unreasonable trade-offs.

THERE'S NO DISPUTING APPLE TV works very well within its limitations. It's a handsome white plastic-and-aluminum box about 8 inches square and a little over an inch high. You plug it in, connect it to a wide-screen digital TV (older sets need not apply), and run through a couple of menus that get you set up on a wired or wireless network. Apple TV then searches the network for PCs or Macs running iTunes. You choose one, then go to the computer to enter a code number that Apple TV displays. From then on, the videos, music, podcasts, or photos that you choose from iTunes will be copied automatically to Apple TV's 40-gigabyte hard drive.

Earlier efforts to bring online video to television sets have failed because streaming live video over a network doesn't work very well; even the fastest networks suffer glitches that spoil viewing. Apple solves the problem by storing content on the Apple TV box. And while that box syncs with only one iTunes computer, Apple permits you to stream content stored on other computers in your home—with the quality lapses that entails.

If you want to watch on-demand high-definition video, you'll have to get it from your cable service. Apple TV can display HD, but there is almost no such content available. Apple claims "near DVD" quality for iTunes movies, but they don't come close to DVD images. ITunes TV shows all look a bit blurry, not even matching standard broadcast quality. The bigger and better your display, the worse it will look. On the other hand, you can take that iTunes content with you on a laptop or iPod; you can't do that with on-demand cable.

Then there are all the things Apple TV can't do. It can't order downloads from the iTunes Store directly, only play content already in iTunes on a computer. You can't view streaming video directly from the Web, so no YouTube. You can't even stream a DVD being played on your computer over to your TV set. (A DVD player would be a welcome addition, allowing Apple TV to replace a piece of gear in your video system instead of adding one more box.)

Wouldn't it be great if iTunes were a one-stop source for all online video? One can always hope the studios will "get it," and just fall in line. But given the fractious and fragmented nature of the entertainment industry, I wouldn't bet on it.

For past columns and online-only reviews, go to Technology & You at businessweek.com/go/techmaven/

By Stephen H. Wildstrom


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