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Apple TV, yes. CableCARD? No way.

A former Apple executive, now a Silicon Valley VC, is the latest to argue that an Apple-branded TV is inevitable. But his argument assumes that an Apple TV would deliver cable subscriptions to your living room using the finicky CableCARD technology. That won't happen. Here's why.
Written by Ed Bott, Senior Contributing Editor

Jean-Louis Gassée (who worked at Apple back in the 1980s and is now a Silicon Valley venture capitalist) has a fresh blog post arguing that Apple will develop its own TV:

The idea is exciting and so obvious it’s got to happen. Imagine a true plug-and-play experience. One set with only two wires: power and the cable TV coax. Turn it on, assert your Apple ID credentials and you’re in business. The program guide looks good and is easy to navigate; pay channels are just a click and a password away. The TV runs apps, from games to FaceTime and Skype, it “just works’’ with your other iDevices and also acts as a Wi-Fi base station using the cable provider’s Internet service.

Sounds great, doesn't it? Until you see that Gassée is depending on CableCARD technology to do the heavy lifting:

An integrated Apple TV set wouldn’t benefit from better electronics as naturally as an iPhone does…unless, of course, the tiny iOS computer is implemented as an easily accessible plug-in module. This could also solve — or at least mitigate — the field service problem: Bring the module to the store, we’ll diagnose and replace it if needed…or sell you this year’s model.

In one device we might have something like: a CableCard inside an Apple TV 3.0, itself inside a TV set.

That’s a nonstarter right there.

CableCARD is finicky. It violates the most fundamental of all Apple principles, which is that the underlying product has to “just work.” No one who has ever tried to pair a CableCARD to a consumer device would use that phrase.

It also means that Apple would be dependent on cable companies—many of them—for critical technical support issues. That would drag Apple's legendary support experience into the gutter. On the American Customer Satisfaction Index ratings, with its 0-100 scale, Apple earns an enviably high 86, far above the average score of 78 for personal computer manufacturers. The subscription TV industry as a whole earns a dismal 66, with cable giants Comcast and Time-Warner Cable down at 59.

Update: As a commenter points out, CableCARD is a U.S.-only technology. There are dramatically different TV-delivery technologies in Europe, in Japan, and in South America. That complicates the issue considerably.

Back in 2008, Steve Jobs dissed Blu-ray technology, calling it “a bag of hurt.” CableCARD makes Blu-ray look simple by comparison. It’s loaded with proprietary digital rights management technology that Apple would have to license from CableLabs, and it’s subject to program licensing restrictions that can be horribly confusing for customers

I wouldn’t be surprised to see an Apple TV someday, maybe as early as next year. But I would be shocked to see it as a delivery vehicle for cable subscriptions. Apple’s future is in streaming media from its shiny new data centers like the one that opened early this summer in North Carolina.

The company controls the iTunes ecosystem from start to end. Imagine an Apple-branded TV set with a direct (wired or wireless) Internet connection, with an iOS device (an iPad or an iPhone Touch) acting as remote control. It could serve up TV shows and movies from the cloud, with Apple in complete control of the technical and financial details of each transaction.

The device that Gassée describes is nothing more than an Apple-branded set-top box embedded in a TV set. That’s a combination of two low-margin businesses. Google might want to play that game with its Motorola Mobility acquisition, but Apple’s all about disruption. And an iTunes TV would seriously disrupt the traditional cable business.

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