Apple TV is an Embarrassment

“Doing quite well” isn’t a phrase you associate with Apple, and yet that’s just how CEO Tim Cook described the Apple TV this week. The little-loved stepchild of the company’s hardware range, at $99 – with no need for a carrier agreement or subsidy – it had the smart TV price point right while Google TV was floundering at more than twice that amount. Yet Apple has consistently failed to capitalize on its foot-in-the-door of the living room, and it’s looking increasingly like it may miss the opportunity again.

“Our Apple TV product is doing quite well… but in the scheme of things, we still classify Apple TV as a hobby” Tim Cook said during the post-results financial call yesterday. “We continue to add things to it. If you’re using the latest one – I don’t know about you, but I can’t live without it.”

Problem is, Apple is doing very well at making sure a whole lot of people can live without Apple TV. With a record quarter in revenues under its belt, it’s hard to call any aspect of the company’s performance an actual failure, but when you contrast 1.4m Apple TV sales with 37m iPhones or 15.4m iPods – even 5.2m Macs – it’s clear to see which was the under-performer.

Apple’s strength has always been at the meeting point of hardware and software: doing “magical” things that make everyone else look mundane. The Apple TV is certainly capable of such “magic”, but it’s not Apple doing it. HTML5 gaming, running iOS apps, even becoming a 1080p media center… the Apple TV has done it all, but only at the hands of the third-party developer community.

It could have been very different. Apple’s gaming ambitions for the Apple TV have been well-discussed; the company already has a broad portfolio of third-party titles, sufficient processing power inside the STB, and the ideal controllers in the iPod touch, iPhone and iPad. With iOS at its core, Apple could’ve easily opened up a pared-down App Store with a selection of flagship titles.

For a moment, with the first generation of the Google TV being such a wretched let-down, it looked like Apple had the perfect opportunity to show us what smart TV should be like. Just as the iPhone made us look at smartphones differently, the iPod encapsulated the simplicity of the ideal PMP, and the iPad shaped the consumer tablet market, Apple TV had the chance to beat Google to the market with app support and show couch potatoes what they were missing because of their dumb TVs.

[aquote]Google’s second-gen Google TV may not be perfect but it will be cheap and ubiquitous[/aquote]

That opportunity is fast expiring. Google’s second-generation of Google TV may not be perfect but it will be cheap and ubiquitous: shifting to ARM processors from Intel’s comparatively expensive platform opens the door to a huge range of low-cost smart TV devices building on the open-source OS. And it really can be cheap; only this week Raspberry Pi was talking about how its $25 computer has better graphics abilities than an iPhone 4S or NVIDIA’s Tegra 2 chipset. Slap it in an enclosure, get it online and you’ve got a 1080p-capable streaming, gaming powerhouse that’s legitimately interesting while Apple TV remains a yawnfest.

Meanwhile, Google’s Eric Schmidt predicting Google TV will be on the majority of new TVs by this coming summer is looking a lot more practical. Smart TV was big news at CES this month, and there’s a solid chance that the chipsets OEMs like Samsung, LG and others have picked for their home-grown internet connected sets would be just as happy running Google’s software as they are proprietary platforms.

Apple isn’t out of the game, but it’s squandering more opportunities than rivals would get away with. On that it gets a pass-card of sorts, based on previous form. Still, continuing to treat smart TV as a hobby is a surefire way to miss out on a key element of the smart home ecosystem. Tim Cook may be content to tinker, but Apple TV eventually needs to step up and earn its keep.