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Apple TV Rumors Disrupt the Tech World: What to Expect

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The dog days of summer were livened up a bit last week when the Wall Street Journal unleashed a fresh wave of Apple television rumors. Will the fabled TV set be here by the holiday buying season? Certainly not, and it might not ever exist. If the rumors are true, Apple is now trying to gain entry to the living room by creating a next-generation cable box.

To recap: the old rumors had Apple building a full TV, perhaps with an app-driven interface that lets consumers get a la carte content. The new rumors have Apple approaching cable companies to build set-top boxes, delivering their existing content but with Apple's software skills. It might include a cloud DVR.

The problem with the new rumors is that there are no signs that cable companies are taking the bait. There seems to be little motivation to let Apple gain entry to the pay TV ecosystem, and the last thing that the studios or pay TV companies want is to disrupt that lucrative area.

"The economics are just not working in the favor of companies like Apple that would seek to disrupt the current pay TV landscapes," says Ross Rubin, principle analyst for Reticle Research. "It might pay for Apple to take its time and wait of the economics to improve." That will happen over time as more premium content is created that isn't part of the cable exclusivity system.

"As more content becomes available, then it might make more sense for Apple to enter at a later date," Rubin adds.

One growth area now is with authorized apps, such as HBO Go, which can stream certain titles. Pay TV customers can use them to access premium content. As more of that type of programming becomes available, says Rubin, it could offer Apple a middle ground to work in, between the current system where Apple would have no control over content presentation and an ideal situation where Apple has complete control over content.

"Knowing Apple, we're all onto the wrong thing," says Greg Ireland, research manager for IDC, and he's only half joking. Apple can be excellent at keeping secrets, and we won't really know what it's doing until it makes an official announcement. "Thinking you know what they're doing often proves faulty," he says.

Ireland sees the most likely offering as a cable box, which shows that even Apple can't bend the TV and movie industry to its will.

"Any given company, whether it's Apple or Amazon or Google, it can't rewrite the rules of television distribution without partnerships with content providers. One of the easiest ways to get into the ecosystem is in partnership with the people who are already there, which is the pay TV guys," says Ireland.

"Apple certainly can't act unilaterally," he adds.

That possible cable box won't be just any old cable box, of course. Ireland believes Apple is offering cable companies a combination of its software, user interface, personalization, and recommendation expertise, to work in partnership with their content offerings. It would certainly work with Apple mobile devices and make mobile content consumption more enjoyable. Usability, says Ireland, is the more compelling opportunity.

Once a platform is created, it could be integrated into a variety of devices, such as cable boxes, televisions, and set-top devices. Apple could build out the platform with multiple sizes and formats, as it's done with the iPod and will likely do with the iPad.

The revolution customers want is a la carte offerings, but Ireland doesn't see that happening anytime soon.

"To me the revolution is how do you break the mold of content distribution, but the reality is it is what it is," Ireland says. Until the mold is broken, companies like Apple will have to focus on making smaller improvements.

Don't expect to see the results of Apple's efforts this year. Ireland predicts that whatever new device Apple creates will hit the market in the first half of 2013.

Apple fans might want to scale their expectations downward for that release, as it seems that even Apple can do only so much in the face of the current pay TV landscape. But if Apple can prove the experts wrong and pull out something truly disruptive, we're happy to be surprised.

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