Monday, October 24, 2011 at 1:02 pm.

Here’s how Apple could finally put the “TV” in Apple TV

Apple TVAfter reinventing the mobile phone (iPhone) and personal computer (iPad), it makes sense for Apple to eventually apply its magic to the living room. The company has been clear to distance itself a bit from the existing Apple TV box by calling it a “hobby.” But now, there’s all sorts of evidence that Apple is developing an actual television, which could be released next year or whenever.

Here’s the problem: For all the cool stuff that Apple could do with a TV — games, apps, FaceTime video chat, Siri voice-controls, using the iPhone and iPad as remotes — the most important part of the TV experience is still TV. As in, the television shows and channels that Americans still watch for an average 5+ hours per day. I don’t think Apple can immediately escape this.

Yes, there may be a future someday when we pick and choose all of our video over the Internet, and Apple’s TV — along with its App Store and iTunes distribution and payment — may be the platform that gets us there. But for now, most people still want to watch TV on a TV, and iTunes hasn’t yet been able to deliver that.

Launching an Apple television without TV service would have been like launching the iPhone without phone service: It might make sense to a few people, but Apple makes products for everyone. So Apple needs to be able to say: This is the best machine in the world for watching all the television you already love. And it does all this other cool stuff. That’s a winner. (That’s the approach Apple used for the iPhone.)

Until recently, however, this would have been a real nuisance for Apple. The last thing that the UI wizards at Apple would have wanted to do is ship a product that requires you to use your old cable set-top box for watching TV. These devices still ship with some of the worst software design in the world. They seem to take longer to boot up than an airplane. Everything about them is embarrassingly outdated. But there wasn’t much of an alternative: Trying to use an Apple UI shell with an infrared zapper to control your old set-top box is too kludgy the for masses. And CableCARD technology never took off or evolved very well. So Apple never really had a good entry point.

But things are changing, which may finally allow Apple to control the user experience of watching TV, while the cable company still provides the content and bandwidth. Specifically, more U.S. TV providers are testing and deploying TV service over IP (Internet Protocol).

  • Later this year, Verizon FiOS subscribers will be able to watch some live HDTV through an Xbox 360, using the Kinect motion-sensor as a user interface.
  • Comcast, the biggest U.S. cable company with more than 20 million subscribers, has been testing delivering cable TV over IP at MIT.
  • Cable companies like Time Warner Cable and Cablevision have developed apps that stream live TV to your iPad within your home. There’s no apparent technical reason why they couldn’t do this for an Apple television.
  • AT&T U-Verse has allowed its subscribers to use an Xbox 360 as a set-top box since last year, though the U-Verse back-end is also made by Microsoft so I’m not sure if or how easily Apple could integrate.

The big idea is that IP television is becoming a mainstream reality, and that is good news for Apple.

That doesn’t mean it’s a done deal: Apple may have trouble negotiating, and the whole thing could fall apart. But the opportunity is at least growing for Apple to be able to control the user experience of television — which should be a good thing for everyone.

What’s in it for the cable companies under this model?

Well, they get to keep their TV subscribers — for now. They get to see how good TV software really works, so they can later try to rip it off for themselves. And, just as the iPhone drove huge uptake of mobile data subscriptions, the Apple TV and all of its Internet-powered magic could help the cable guys upsell faster broadband service. (As an added bonus, this may help them re-capture satellite TV customers, whose providers don’t own huge fiber-optic pipes running into the nation’s living rooms. That is, unless the satellite guys are the ones working closest with Apple.)

Meanwhile, the cable companies get to reduce their capex spending on cable boxes and, perhaps someday, can lay off some of their customer service reps and van drivers because the Apple TV will just work, unlike most existing cable equipment.

Then, over time, Apple can add more iTunes TV content, potentially even competing directly with cable someday. (The way it took Apple three years to launch FaceTime, which competes with carrier-powered phone calls, and four years to launch iMessage, which competes with carrier text-messaging service.) It would be especially cool if Apple did something like outbid everyone for the next NFL TV contract, so that “Sunday Ticket” was an Apple-only service.

But TV moves very slowly and HD video eats up a lot of bandwidth. So it’s best to start where Apple can already be a winner: With all the TV content people already love, delivered over the pipes that already exist, onto the most gorgeous television hardware in the world, controlled via the best TV user interface ever created. That’s something Apple could even do next year.

Related: Why wasn’t Apple in the running to buy Hulu?