Why Apple’s New iDongle Will Fail

Google Video could be headed to Apple’s iTV TechCrunch has a post out saying that Google is reportedly in talks with Apple to allow Google Video to work with the new iTV widgety thing that I’ve decided to call the iDongle. You remember the iDongle of course — that little gadgety thing that Apple thinks they will be selling for $300 next year.

I previously wrote about the $300 iDongle here suggesting that someone needed to check Steve Job’s pipe because he’s probably pretty high if he thinks people are going to pay $300 to have the privilege of buying less than DVD quality movies at $10-$15 each when you can get a monthly subscription to Netflix for far less than the cost of two movies a month from Apple.

So will Google Video become the long tail savior for the $300 iDongle? I don’t think so. You see the problem has to do with people’s expectation of picture quality and Google’s picture quality sucks. Can Google Video be successful on a PC? Sure. Can it be successful on a handheld device or laptop or even a cell phone? Probably. We’ve grown to accept mediocrity in terms of picture quality on the PC, cell phone, handheld device, etc. But YouTube, Google Video, and the whole host of other companies can’t afford to store and serve HDTV content yet and this is what people want on that new fancy plasma sitting in their living room.

Now I know what some of the Appleheadish types will say. C’mon it’s Steve Jobs. He’s a marketing genius. If anyone can do it Apple can do it. Apple is so damn cool it makes me want to melt down in a puddle of tears as I weep translucently at how amazingly magical their ultra hip marketing department can name things. How nobody cares about HDTV and how people will accept inferior sound quality over at iTunes, so why not with movies.

Let’s talk more about picture quality. First off, there is a much more perceptible difference between standard definition TV and HDTV than there is between an iTunes file and a CD track. Our eyes in general are more acute sensory tools than our ears.

If you let someone hear a CD track and an iTunes track and ask them to rate each on a scale of 1 to 10 you will get very little difference between the two. If you show someone a show in HDTV though and then in non HDTV you will get a much wider differential.

Second, people are all about what is sexy with their plasmas. Seriously, CES was out of control this year when it came to HDTV sets and HD and Blu-Ray DVDs. In fact I’d go so far as to say that in my opinion high quality content and the sets that show it where the number one thing going at CES back in January. It may feel like early adopter stuff still, but take a walk through Costco and you will see that HDTV sets are selling like hotcakes.

Third. More and more HDTV content is being produced and delivered every day. And with HDTV PVRs from TiVo and soon Media Center and even cheapo PVR HDTV offerings from the cable and satellite boxes, there is going to be a lot of competition in the “what should I watch on my fancy new HDTV set” sector.

By the time Jobs and Co. get around to actually releasing the iDongle (even if they don’t have HDTV sets yet) people will not be that interested in paying $300 for something that won’t do HDTV.

Note to the Appleheads. While Steve Jobs may in fact be a marketing a genius there comes a point when Eskimos will no longer buy ice. $10-$15 for a poor picture quality movie is a bad deal. Yes, idiots overpay for things. Yes, there are a lot of idiots out there and yes Steve Jobs may be able to use the Obi Wan Kenobi trick voice with some, but I predict this thing will flop hard. You read it here first.

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22 comments on “Why Apple’s New iDongle Will Fail
  1. Janio Cabezas says:

    Hi Thomas,

    I think you are missing a piece of the equation..

    iPods sell huge, not only because the is an iTunes store, but also because people had a need to carry their music (whether legally acquired or not) places..

    Now, we are compiling a huge amount of video content, which we are being forced to watch on our lame PC screens.. I certainlty have a need for a small factor box, that will move my content from my PC to my TV.. Let me just remind you that Apple’s quest is not for reigning in the content world, they would like to be the provider of the hardware world. If I only need one box, to move both online + DVD content, I’ll be happy..

    Sure there are solutions around, but certainly they do not work with the slickness of Apple’s hardware..

  2. My favorite commented (from an Applehead)

    “Will someone please tell me why I should get jazzed about this device, because maybe the lobotomy didn’t work the first time around.”

  3. Shawn Oster says:

    Janio…

    iPod sells huge because of Apple’s marketing slickness and hardware chops, NOT because people need to carry music around. They could already do that before the iPod and can do so now without an iPod.

    Did you know there are people that actually think the iPod was the first digital audio player? There were *many* before the iPod, Apple just applied a lot of marketing love and now everyone must have an iPod.

    Second, if you want a small form factor box then I’d suggest getting an XBox 360 + Media Center. The 360 costs exactly as much as the iDongle, can do a whole ton more, actually looks pretty sexy and the Media Center interface is hands-down Microsoft’s best UI work, ever. It’s easily better than what we saw from Steve with his vision of the iTV future.

    I also completely agree with Thomas on this one. All the big name hardware folks are pushing HDTV and pushing it hard. I don’t think people are going to settle for watching expensive movies that look *worse* than SD TV on their HDTV sets.

    There is also the dirty little secret that a lot of subpar signals actually look worse on a HD TV than on an SD. So the quality won’t just look, “eh, I can put up with it”, it’ll look like, “holy crap I can barely stand to even look at this”, especially once people are used to watching any other type of HD content.

  4. The thing to remember is that the iTV is a device for today (or rather, six months time :) ) not for the HD-based future.

    At present, in order to get HD content on your new HD TV, you need one of two things: a TV provider broadcasting in HD, or an HD-DVD (and/or BluRay) player. There is no digital delivery mechanism for HD content, which means that, for the market of people who want to watch digital files because of the convenience, there is no HD-based solution. And I very much doubt there will be when the iTV is launched, either.

    What’s more, the amount of offline HD content available is still limited. It’s big news when a film company launches five new titles. The reason for this, of course, is that unless a film has been filmed digitally, converting to HD is an expensive process. It will be many, many years before the catalogue of HD films rivals that of DVD.

    So anyone wanting HD content is, for the near-term future, left with the option of recording HD content from broadcast – and here, Apple is in no better (or worse) situation than anyone else. I have no doubt that, by the time the iTV comes out, either Apple or (more likely) a third party will have produced a product capable of recording HD-quality from broadcast to your computer – and streaming it to iTV.

    In many ways, HD is in the place that CD-audio was in 1986. There are lots of and lots of players, with prices tumbling all the time. But the content isn’t there, and it’s expensive when it is.

  5. Vinny says:

    And no one is going to pay for downloads of a song and miss the tangible factor of the album art, box, and physical media.

    Oh…

    Wait a minute…

  6. Anonymous says:

    Can someone please tell me why everyone blindly assumes the iTV won’t be HD-compatible?

    Steve said it will use “802.11″ networking, which could imply 802.11n, which would have the bandwidth to stream HD content. It has component video and HDMI connections, nicely configured for HD.

    iTunes doesn’t currently sell DVD-quality or HD quality movies, but who says it won’t? Maybe this device is Steve’s way of showing Disney and the other studios out there that they need to let iTunes sell DVD quality movies.

    Some may blindly think Steve Jobs and Apple will make everything “insanely great” and act like lemmings to go buy anything Apple sells at whatever price, but you guys seem to think the opposite, and you’re just not thinking outside the box.

    People at the event where the iTV was announced said Jobs showed a Pixar movie in HD through the iTV. Was that accurate? I don’t know. No one is sure anymore. The devices on display after the announcement were not showing any settings and no one would answer questions about HD.

    Let’s stop commentating on why something won’t sell just to get hits when the thing that supposedly won’t sell isn’t out yet, doesn’t have any tech specs to analyze and could vastly change in every respect prior to its release.

  7. Vinny says:

    Indeed. Especially since calling it non-HD capable with an HDMI and Component outs seems a bit like calling it night while you’re being blinded with the sun.

  8. gbor says:

    The reason iTV will fail (or at least not succeed like the iPod) is the simple fact that you need that computer in the other room to use it. Only when everything you need sits on top of your TV will something like this succeed on a mass scale.

  9. Anonymous says:

    Everyone is trying to compare the iTV to the iPod. Why?

    Why does it have to sell like the iPod to be a success? Who said they need to sell tens of millions of these things a year in order for it to become successful?

    Why can’t it be a small money-making addition to Apple’s product line that complements another money-making Apple product? Or even a money-losing addition to the product line that complements and enhances a money-making product? Ask Microsoft and Sony how much they make on the XBox and Playstation boxes themselves versus the game titles. Maybe Apple wants to make more money selling content. And no, short-sighted people, I don’t mean the content they sell today at the quality they sell it at. I mean the content they sell in the future in the quality they will sell it at, at that time. You can’t base the success of future products on the limitations of today’s technology (or the short-sightedness of those producing and selling it). You have to base it on the future, and you have to have vision to see the future. All you really have to do is admit that you don’t know what the future holds because you can’t see it.

    And Vinny, you said it best about HDMI and Component video. This thing screams “I want HD content!”. Where will the content come from? Well, why the heck do you think they pre-announced it months in advance???

    Some people are very short-sighted. They see what they want to see based on their own perspective and you can’t shove reality down their throat no matter how hard you try. The iTV may succeed or not. It may be wildly popular or not. But at least base your expectations on the reality of the situation, not on what you want it to be so that your expectations will fit the article you want to write.

  10. Thomas Hawk says:

    Anonymous. Even if the thing streams HDTV via OTA this is not what people want. People want premium HDTV content. Premium satellite and premium HDTV CableCARD content.

    Perhaps I am wrong and the iDongle will support CableCARD. But getting a CableLabs certified device is no easy task and takes quite a bit of doing. Just look at how long TiVo and MSFT have been working on their certifications.

    If and when this thing announces CableCARD support or even HDTV support I might feel differently. Until then I’m going to stick with calling it the iDongle.

  11. Thomas Hawk says:

    “Some people are very short-sighted. They see what they want to see based on their own perspective and you can’t shove reality down their throat no matter how hard you try. The iTV may succeed or not. It may be wildly popular or not. But at least base your expectations on the reality of the situation, not on what you want it to be so that your expectations will fit the article you want to write.”

    Anonymous. I call them like I see them. If Steve Jobs has a secret agenda to turn the iDongle into the next great HDTV delivery device I would think he would commit to this when deciding to preannounce months in advance.

    Personally I think it’s a stretch to assume that this thing will initially support HDTV content due to content, bandwidth, wireless and DRM restrictions.

    The problem is that the only decent content that’s been announced are crappy quality movies at $10-$15 per pop. If I want to watch crappy quality movies right now I can get them on demand from my cable or satellite provider for $3. If I want higher quality I can subscribe to Netflix. The content does not represent value to the consumer. Yes, maybe this is not Apple’s fault. Maybe the content owners are saying to themselves after the screwing they took last time over the iPod that it’s not to happen again.

    Whatever.

    Bottom line this thing is dead in the water — at least in the livingroom without attractively priced high quality video content.

    If Apple decides to be more forthcoming about their secret HDTV plans in the future maybe this will change my opinion.

  12. Anonymous says:

    Thomas,

    I stick with my earlier comments, but as for CableCARD support, it might be a nice addition, but it seems to me that Apple is not trying to sell a cable tuner or a tuner/TiVo combo device. It appears they are looking to get your TV to play your computer’s content – movies, photos, music, etc.

    This is a similar discussion to the one where people complained that the Mac mini didn’t have the right ports and software to be a real media center PC. My reply was that Apple was selling a small footprint computer for those who need a small footprint computer and already have a keyboard, mouse and monitor or want to buy them separately.

    Apple did not make the mini as a media center and … oops, forgot to add the software and hardware to make it a real media center! They made it what it was and they did it for their own reasons.

    Same with the iTV. It is what it is (or it will be what it will be). It will suit the needs of some, who will buy it, and won’t suit the needs of others, who will stick to what they have or will add stuff other than the iTV to what they have.

    If it doesn’t meet your needs, don’t buy it, and you will be doing your own part to contribute to it’s success or lack thereof.

  13. Jake says:

    Anonymous. Even if the thing streams HDTV via OTA this is not what people want. People want premium HDTV content. Premium satellite and premium HDTV CableCARD content.

    This coming from a guy who refuses to pay $10/month for data service on his cellphone or $15/month to listen to Howard Stern…

  14. gbor says:

    Anonymous, I find it hard to believe that Apple would only think of iTV as a small money-maker. I think they have grand ambitions for this thing. To quote Steve Jobs from the presentation, “We think iTV is going to be pretty popular: Movies, TV Shows, Music, Podcasts, and Photos.”

    I also doubt that they want to make more money on the video content. As with iTunes/iPod, their goal is probably to again drive demand for the hardware. Regardless, they better get a rental or subscription service going if they want to make much headway in video.

  15. Janio Cabezas says:

    shawn..

    I can not agree with your opinion, marketing wil only take you so far, a compelling product that addresses the need of the customer will result in a hit..

    10 years, back when the MP3 revolution started, we had the same discussion.. The Thomas Hawks of the time doomed the digital revolution, because we already had the music in better quality media (namely the CD), yet here we stand 10 years after and the majority of the people resigned sound quality to get the convenience of having access to their whole collection at their fingertips..

    We fianlly developed the technology that will allow us to do video the same way, this will indeed change the whole game all over again, this time for the movie studios.. We are already exchanging content around, now we would like to watch the content, of course apple’s marketing will play a huge role, but a compelling, easy to use product will be the reason we will deem our DVD player unusable, just as we are doing with our CD player a while ago

  16. Janio Cabezas says:

    I forgot to add that TiVo like technology is just a bridge technolgy while we find a way to download (or stream) our content.. I believe in a future where we will only be watching sports, news and certain events live, series will be released for download just like podcasts.. The TV network executive defining our programming is doomed. This is pure long tail, we want to receive niche programming, the programming we want to see.. Just like when we rebelled against the 11 songs we did not like in a 12 song CD, we will rbel against the 100 channels and 24 hoiurs of programming that we never watch, we want to pay for the content we want, and nothing else!

  17. Anonymous says:

    Regarding your HDTV versus standard TV comparison. Why not have them compare the two sitting their normal distance from the television, with their normal sized TV. Simple physiological facts mean they’ll often be unable to see any difference.

    You can find some facts and figures on what resolution you can discern, based on viewing distance, screen size and quality of your vision here:

    http://www.burnyourbonus.info/hdtv-faq/faq3.html

  18. sportsunit says:

    I think it’s pretty safe to agree with Thomas. This thing will flop hard. It’ll have about the same market share that Macs have. Macs != ipods…

  19. Anonymous says:

    Thomas,

    I am afraid that you are wrong on this one. I will be purchasing iTV for the simple reason that I will be transferring my entire movie collection of DVD’s, tapes and hard drive files, in conjunction with my cassette tapes, lp’s, cd’s and itunes purchased music all to one place — an imac mini. This will be attached to a 1 terabyte drive and I will be able to access anything at anytime with the imac mini remaining on for 24 hours at a time.

    If the price drops to say $100 or $150, I’ll purchase another one.
    The idea of being able to keep all of your old films and music in one place is absolutely amazing. One could talk about windows media, but to be honest it just doesn’t work well.

    I am expecting itv to work right out of the box. Anything else, wouldn’t be Apple. Additionally, the best compression on the market is easily AAC 256+ and Lossless for music and H. 264 really destroys wmv or avi. The file sizes are just small enough. Of course, I would have liked to see DIVX, but I guess that’s asking too much.

    This will succeed because of the fact that you can use it with a wired and wireless lan at very high speeds.

    Nice Blog.

    Richard,
    Converted from Windows to Mac October, 2006. With No Regrets.

  20. jordan shoes says:

    I also completely agree with Thomas on this one. All the big name hardware folks are pushing HDTV and pushing it hard. I don’t think people are going to settle for watching expensive movies that look *worse* than SD TV on their HDTV sets.

  21. dugang says:

    also completely agree with Thomas on this one. All the big name hardware folks are pushing HDTV and pushing it hard. I don’t think people are going to settle for watching expensive movies that look *worse* than SD TV on their HDTV sets

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