Who Will Land the Apple Television?
That way, Apple still controls the user interface, can sell apps and services directly, and provide access to live, linear programming -- something that the stand-alone Apple TV device is still sorely lacking. (See Apple's Connected TV Nears Production and Jobs Bio Confirms Apple Television Plan .)
And the strategy would sort of mirror the one Microsoft Corp. (Nasdaq: MSFT) is taking with the Xbox 360. Microsoft, like Apple, has lots of money, but got sticker shock when it found out how much it would cost to build a subscription video service from the ground up, opting instead for a partnership strategy. (See Comcast Won't Cap Xbox 360 Streaming and Comcast, Verizon Connect With the Xbox 360.)
If the business deal doesn't hand over too much control, one could see why an MSO, telco or satellite TV provider would consider letting Apple inside the gates. Cable's still losing video subscribers, so a partnership with Apple could help to reverse that trend. The set will reportedly be expensive, so I wouldn't expect there to be an iPhone-level effect on those subscribers, but it could be worth the risk should the set turn out to be a hot seller.
But BTIG Research analyst Richard Greenfield thinks cable may be on the outside looking in, particularly if Apple decides to be choosy and one of its big goals is to secure national coverage for its new gizmo.
He predicts in a blog post (registration required) that DirecTV Group Inc. (NYSE: DTV) and Dish Network LLC (Nasdaq: DISH) are "prime candidates" to work with Apple, because they would give the new TV access to their national pay-TV footprint right away. He envisions them providing Apple with video APIs that let Apple design the look and feel of the programming bundle, store content on the TV and in the iCloud, and use iTunes for video-on-demand.
To make a sizable dent on the cable end, Apple would have to carve out separate deals with Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), Cox Communications Inc. , Cablevision Systems Corp. (NYSE: CVC) and Charter Communications Inc. Even if Apple extended that to AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), already partners on the mobile side, that would still leave it with some significant gaps.
Of course, Apple could try to work with all of the above, but that's not really the Apple Way when it comes to service provider partnerships. Temporary exclusivity, followed by deals with new carriers over time, has helped to keep demand for the iPhone stoked, so Apple could try to replicate this approach with its fancy new television.
And securing deals with the satellite guys could give Apple lots of negotiation leverage with the MSOs. The cable guys, Greenfield reasons, would almost be forced to cut authentication deals with Apple or risk losing more share.
— Jeff Baumgartner, Site Editor, Light Reading Cable