Thoughts on Apple TV

I'm on one of my periodic trips to Mountain View, home of Microsoft's Silicon Valley Campus and site of Google's city-wide WiFi experiment that never seems to work (believe me, I've tried). This is good timing, as Los Angeles is starting to go through its yearly journey through hell's lake of fire (though depending on your political persuasion, you might be of the opinion that LA never leaves it, figuratively speaking), and though San Francisco isn't that far off from LA, it tends to be a great deal cooler. Then again, Silicon Valley tends to trap heat, so maybe I've jumped from one frying pan into another, much geekier one.

But that's not the point of this blog.

Walk around LA coffee houses and you might think that the market share positions of Apple and Microsoft were reversed. This isn't the case with most other cities (and I do notice such things), but then again, LA isn't like most other cities. LA denizens are ridiculously fashion-sensitive. It's like an American Milan, and though I try to row against the flow by occasionally venturing outside with unwashed hair packed into a baseball cap and a faded old computer conference T-Shirt (I usually wear pants, too), I find that my wardrobe has vastly improved through fashion osmosis. The pretty people make me want to have nicer clothes.

That, again, is not the reason I am writing this blog.

I've discussed in the past that Apple has hit upon a niche that is brilliant for its insight into human buying behavior. Jobs and company have identified that technology products have the capacity to be fashion accessories as much as clothes or sunglasses, and though they don't manage the profit margins of a pair of designer label sunglasses (you can't tell me that ANY sunglasses are worth $300.00), they still manage to achieve profit margins that are the envy of the industry. A previous blog post by Larry Dignan asked whether Apple should pass on the cost savings from newfound economics of scale (partly driven by its shift to an Intel architecture) to consumers.

Well, should Gucci sell pants closer to cost? Of course not. In fact, doing so might even undermine the reason people buy Gucci products in the first place. People, paradoxically enough, want expensive. It's part of the pursuit of invidious distinction.

iPod are well designed products that look great. The MacBook portable computers are similarly well designed, and look great, too. You pay for the privilege of an Apple product, but so do people who pump for $300.00 sunglasses by Marc Jacobs (which might explain a bit my technology preferences...that, and I'm a programmer). If you are a hardware company, you either want to compete on cost and ship large volumes, or ship smaller volumes with high profit margins. Apple has chosen the latter, and it's a model that works. Not many of Apple's computing peers from 20 or 30 years ago even exist today.

Considering Apple's DNA, however, where does Apple TV fit? I understand Apple's desire to be Mr. Entertainment. Though digital music purchases online constitute a tiny fraction of the songs found on a typical digital music player, iTunes - by reason of its association with the iPod - is the king of the space. That seems a tremendous "in" for Apple to ride into the living room.

Unfortunately, living room electronics don't really play to Apple's strengths. Apple makes products that people want to show others that they have. Apple laptops, iPods, and even future products, like the iPhone, clearly play to that strength.

It's harder to build street cred, however, by having an Apple TV device sitting in your living room, and walking around with a T-Shirt that says "I own an Apple TV" isn't normally considered cool (though if anyone could make it so, it would be Apple).

It's worth noting other, less image-oriented, products Apple makes. Mac OS X server has been around for quite awhile, and it's mostly notable for the fact that few pay it any attention.

Every company has a corporate DNA. Microsoft has theirs, even if, sometimes, they don't adhere to it as closely to it as I'd like. Apple has one, too. Though its possible to create a parallel way of doing things within the same company, there are certainly more hurdles to doing that, and companies usually do best when they find ways to express their corporate DNA in everything they do.

I can't fault Apple for trying its hand at living room electronics, particularly when some of its biggest competitors - particularly, Micorsoft - aim to software enable the living room, an event that would give them an advantage on par with Apple's lead in online music sales and players. You don't learn to do something well if you don't try to do it.

Still, dragons lie on that path, and Apple specializes in fighting goblins, not dragons. Just thought I'd point that out, because that's what you do in blogs.