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It's The Set-Top Box Stupid! Apple's Cracking Of TV Is Hiding In Plain Sight

This article is more than 10 years old.

Ryan Lawler of TechCrunch just wrote a snarky article about the doldrums of August and the "non-story" that "Yes, Apple is in discussions with cable operators, and has been for months."

Lawler's "news" peg is an article in today's Wall Street Journal, which reports that "Apple Inc. is in talks with some of the biggest U.S. cable operators about letting consumers use an Apple device as a set-top box for live television and other content, according to people familiar with the matter."

Apparently, Apple has been considering  the idea of a set-top box for two years, but Steve Jobs dismissed the idea because the cable companies do not have a national reach. The bigger issue may be the the cable companies fear Apple because they have a national (and international) reach.

But in the same way that Apple may have seemed to have "eaten" the music industry with the iTunes store, in reality they disrupted the market and ended up being the biggest player among several. The same thing could happen with TV.

The cable companies may ultimately not have a choice. Apple has been selling millions of $99 Apple TV boxes and the next generation of the product, rumored to include an app store for TV apps, will do even better. The more consumers get comfortable with bypassing the cornucopia of the cable bundle with their own (and Apple's) choice of TV content apps, the weaker the cable companies' prospects are for holding onto their business model.

Just like the record companies, big cable may finally be realizing that their market is in the process of disruption and that they will be better off (somewhat diminished) within the Apple ecosystem than risk being left out in the cold.

Now the Apple ecosystem is not a guaranteed win for consumers. Many TV industry insiders will tell you that many of the cable channels that viewers like, will not survive in an "unbundled" world. As I wrote last week, once TV becomes "app-ified" there will be a profusion of new business models—and the death of some old ones. Again, the old Yiddish proverb, "be careful of what you ask for, because you will get it."

So, on this level, confirmation or strong suggestion that Apple is actually negotiating with Time Warner and other big cable operators about taking over the hardware and software for the set-top box is indeed a big story. For a piece of technology that people spend so much time with, cable boxes remain obdurate and inscrutable "black boxes" of functionality. For viewers to feel intuitively comfortable navigating the navigation of their TV experiences would be a quality of life improvement for many.

Although this idea sounds like it's not the "cracking" Steve jobs was thinking of, it sets the stage for the implementation of Apple's full repertoire of crack-age in the years to come. Stay tuned!

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