Apple Is Becoming HBO

This is by far my biggest concern with Apple. Their mac lineup is a mess. I could forgive this if I had confidence that they were doing something awesome soon. But from all appearances they aren't. They are working on movies or watches or even phones. I love my iPhone, but I think I would rather switch to android for my phone that switch to windows or linux on my personal computer. They are stewards over the single most important piece of technology in my life and it appears that they don't like it nearly as much as I do, or at least they like different things about it than I do.

@Mike You forgot cars. :-) I, too, would much rather switch to Android than to Windows or Linux.

"Apple doesn’t have the resources and attention to make sure that PDF files work or that their customers have a good Wi-Fi experience. And of course there’s plenty of iOS and cloud work to do, too. TV and movie content seems like an unnecessary distraction. Apple should focus on the things that only they can do."

Hmmm... I don't think "resources and attention" are the issues here. They're a big enough corporation, with more than enough resources to make the Mac and Mac ecosystem work properly. They have more than enough headcount to give the necessary attention. The issue seems to me to be that their priorities are such that they just don't care about the Mac, and that is the sole cause of the lack of the "resources and attention".

As far as getting into original programming goes, I've got no problem with that. They've got the resources and attention to do that without having to cut into other priorities. They can walk and chew gum, if they choose to do so. And given how Apple TV has been severely languishing, (something I'm not sure if everyone is aware of), if they want to stay in that game, this is something they actually need to do. Same deal if they don't want Apple Music to keep languishing.

The only problem with "becoming HBO" is that they're likely to fail. Netflix has thrown immense resources at the task for quite a while, and mostly failed to date. Same with Amazon. Same with other premium cable channels. It's really hard to "become HBO". HBO has been investing in a talent / production pipeline for original programming for two decades now, and they've become really, really good at it. Plus, as you note, the sector is massively oversaturated at the moment. Folks don't subscribe to Netflix for their originals, instead its a supplement to the TV/film back catalog that costs them a lot of dough. Folks obviously don't subscribe to Amazon Prime for their video originals. But folks in large numbers do subscribe to HBO just for the originals.

Everyone thinks creating compelling, "must have" original programming is relatively easy. But it's just not. Companies keep proving that fact over and over again. At least Apple has all the cash in the world, so they've got no issues with tossing a big chunk of money down a sinkhole to potentially be successful enough to add some minor value for folks in order to get people beyond pure company fanbois actually interested in Apple TV and Apple Music. Again, this probably doesn't work, but the alternative for Cupertino is to just watch Apple TV and Apple Music slowly die. (This should also be viewed in context of the ongoing Apple/Amazon shadow war.)

@Chucky Can they really walk and chew? It seems to me that the execs/groups that would be working on this are also responsible for some of the things that already need more attention. I agree about Apple TV languishing, but to me the issues are hardware, software, and access to existing content that people want. Apple making its own content doesn’t address any of those. And, yes, it seems unlikely that they could actually become HBO, or even Netflix, in terms of content. Didn’t Apple used to talk about how they loved to say “no” and only would take on areas where they could really make a difference?

I feel like Apple execs are hanging out with the wrong crowd these days, leading to weirdness like this interest in producing original content, or the high-end Apple Watch, and the neglect of their fundamental core.

@Chucky: "The issue seems to me to be that their priorities are such that they just don't care about the Mac"

If you have one product line that generates a million $1500 sales per-year, and another product line that generates a hundred million $500 sales per-year, and each requires about the same amount of manpower and investment to maintain, which product line do you shitcan so that you can put ALL of your manpower into doubling the sales of the other?

@has Right, but that doesn’t explain the lack of focus.

"Can they really walk and chew?"

An excellent question that will almost entirely determine Cupertino's future. The organization really does seem incredibly dysfunctional at the moment. Perhaps putting a supply chain guy and a design guy in charge has some downside. But if they simply can't choose to learn how to walk and chew gum at the same time, the whole ship is going to slowly sink beneath the waves at some point anyway, no matter where they put their focus.

"It seems to me that the execs/groups that would be working on this are also responsible for some of the things that already need more attention."

Well, that's the rotten core of the problem, no? A corporation of this mega-size and mega-resources needs to be able to create groups to focus on different areas, with enough executive control to prioritize and coordinate.

I mean, look at Amazon. They have fingers in pies of a whole multitude of various disparate projects. Some fail. Some work. They analyze, they reallocate, and they keep pushing forward.

Amazon may be unusually good at this type thing, but anytime a company hits a certain size, being able to do this at least minimally competently is the only way to survive.

"And, yes, it seems unlikely that they could actually become HBO, or even Netflix, in terms of content. Didn’t Apple used to talk about how they loved to say “no” and only would take on areas where they could really make a difference?"

They've hit both size and maturation in their core product market that leaves them in a situation where they can no longer love to say "no". They need to be able to love to say "yes", and then monitor whether or not to continue saying "yes" to each different thing.

As previously stated, we seem in full agreement that they are indeed highly unlikely to "become HBO". But again, I don't see how they avoid sinking money into such an effort unless they decide they're willing to let Apple TV and Apple Music slowly die. Their bigger risk seems to me to replicate their late '80's strategy where pursuit of short-term margins and profits keeps them from investment necessary for the future. Think of how much money Amazon is setting on fire to subsidize Prime Video - it's gotta be a huge chunk of the price a consumer pays for Prime, and results in Amazon delivering them video they're essentially getting for free. But it gains Amazon big benefits in growing their ecosystem.

"If you have one product line that generates a million $1500 sales per-year, and another product line that generates a hundred million $500 sales per-year, and each requires about the same amount of manpower and investment to maintain, which product line do you shitcan so that you can put ALL of your manpower into doubling the sales of the other?"

The problem is that the BIG product line has hit maturation in terms of growth prospects. There will be no doubling in the foreseeable future. Either they'll adapt to that fact, or they won't. And to adapt, it means enhancing the broader ecosystem, even at the cost of some short-term margins.

It's not as if they're losing money on the Mac. It's not as if they lack the resources necessary to have fingers in multiple pies.

If management is too dysfunctional to be able to do such things, well, pray.

@Chucky I think the company would be just fine if Apple TV and Apple Music died or never existed in the first place. So it’s not at all obvious to me that Apple should get into video content to prop them up. Indeed, I wonder whether those products are causing a strategy tax that ultimately hurts the iPhone and thus the company. Imagine if instead of trying to sell Apple TVs, Apple licensed AirPlay (not just audio) so that it could be built into as many devices as Amazon is.

Yes, the mega growth for iPhone is over. Plus, if it’s strategic to invest billions in factories, etc., to build hardware for the iPhone, why would it not also be strategic to invest in the platform that produces the software for the iPhone?

My theory is that Apple keep walking down these blind alleys because they're forced to in order to maintain key staff. I suspect the car project was there to stop Ive from walking off and doing it himself via his own agency, which is why its forced cancellation due to strict budget cutting probably hurt more than people realised at the time. And maybe somebody in the senior management team really wants to get into content creation.

In other words, since Jobs' demise, the whole "vision thing" has become a democratic process. Cook has many many virtues and is steeped in Apple values, but at no point has he ever shown any kind of vision. His only choice is to democratise it.

Kind of off-topic, but am I the only one who thinks the "TV" app has a terrible icon and seems like an unnecessary revamp of the Video app? Especially if you don't have any apps that work with it, or use an cable internet provider that isn't supported - the unusable functionality takes center stage.

@Jon Yes, as someone who only has video purchased from iTunes, the TV app seems like a regression. The interface is more confusing, and I get bounced to another app to see some of the episodes.

"I think the company would be just fine if Apple TV and Apple Music died or never existed in the first place. So it’s not at all obvious to me that Apple should get into video content to prop them up."

I mean, from my personal POV, sure! I've never used either, because I don't like my services tied to a single hardware provider.

From the POV of an Apple shareholder, which I used to be until I decided the company was getting dysfunctional, I'm less sure. If they kill the Apple TV and Apple Music, they're both potentially really hurting the iTunes Store, and more importantly missing out on a big growth opportunity for the future, as well as the lock-in potential they love so very dearly.

"I wonder whether those products are causing a strategy tax that ultimately hurts the iPhone and thus the company. Imagine if instead of trying to sell Apple TVs, Apple licensed AirPlay (not just audio) so that it could be built into as many devices as Amazon is."

Now this, to me, is a far more interesting dilemma.

And it's not just AirPlay that'd have to go hardware agnostic. Apple Music too. And they'd also have to create a hardware agnostic platform for your iTunes Store library. At that point, they'd still have to make an Apple TV, just like Amazon makes a Fire TV and Kindles as a reference platform for consuming your content, even as they also let 3rd party devices access it as well.

Obviously, I'd personally love it. And it'd likely give Apple a far better shot at prospering in the content market going forward if it wasn't all ghettoized on Apple hardware. But, it's really, really difficult for me to see them going in that direction. The strategy tax / lock-in is so deeply ingrained into Cupertino management's DNA at this point, that even if it is obviously a better direction for Apple going forward, it's hard for me to see them having the vision necessary to reverse their whole direction on these matters.

"Plus, if it’s strategic to invest billions in factories, etc., to build hardware for the iPhone, why would it not also be strategic to invest in the platform that produces the software for the iPhone?"

Now here may be our only real disagreement. My take is that Cupertino management is so damn dysfunctional that it isn't a question of scattered focus. It's a question of the dysfunction making it impossible for them to do almost anything well.

Cook is a fine supply chain guy, so they do investing in factories well. Ive is a fine superficial design-looks-good-in-the-store guy, so they do that well too.

But beyond that, what on Earth is Apple doing well these days? Not only can't they handle Mac software well, but as you note, they're not doing all that well with the iOS platform. So I worry far less that going into video content production will scatter their focus than I do about the fact that they just can't execute anything all that well these days, no matter how clearly it affects their core interests and should be a primary focus.

In short, I guess my point is that this isn't even a question of being able to walk and chew gum at the same time. The question is if they can figure out how to just simply walk without constant stumbling around, even without any distractions.

@Chucky: "The problem is that the BIG product line has hit maturation in terms of growth prospects. There will be no doubling in the foreseeable future. Either they'll adapt to that fact, or they won't. And to adapt, it means enhancing the broader ecosystem, even at the cost of some short-term margins."

No, it means they should've started breaking ground on their *next* Big Market four years ago. That's four years every Apple competitor has now had to catch up to where Apple was four years ago. And now that they've arrived at that waypoint, they can't believe their eyes when they see that Apple is still there too, quietly dozing!

Whereas what should have happened is that they arrive at that point, only to see Apple flying off full speed atop its Next Big Thing, laughing at the suckers standing there agog hands full with OLD PRODUCT which they now have to shift so they can start trying to catch up with Apple all over again.

By resting too long on its existing laurels, Apple has handed all it competitors a free opportunity to get *ahead* of them in the race. Ballmer's Microsoft did exactly the same thing in the 2000s: got fat and complacent at the top of desktop/laptop computing; so wasn't paying any attention when Apple—then Google—suddenly flew straight past them borne by the NEW HOTNESS that was smartphone supercomputing.

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A front-of-the-race leader like Apple cannot continue selling the same-old same-old as its primary product and expect to remain in the game. It has to keep moving forward *constantly*, disrupting itself BEFORE anyone else gets the chance, just to maintain its position relative to the rest of the pack.

Microsoft failed to do this, and all they can do now is go make themselves into "the next IBM". They'll always be around making okay money, but they will NEVER get another chance to be WORLD #1—the one who not only leads the fields by a mile but gets to define all the rules by which all their rivals must race them too.

Apple is failing to do this now too, and—worse—if it does lose mobile it CAN'T just fall back to being a desktop/laptop company either. Because even if it should survive such a catastrophic fall in both markets' and shareholders' eyes, there is *already* an established "IBM" who WHOLLY OWNS that particular market, and the certainly aren't going to share their scraps with anyone else.

Apple should still have a bit of time in which to upright themselves and get back into a healthy position; not the lead, but a forward position where they can start working to retake it. OTOH, if Apple haven't *already* had their recovery plan underway long before folks outside of Apple start noticing a problem†, they are in FAR more serious trouble internally than a just few New Product stalls and flops.

† Oh, and I don't mean silly nonsense like "talent retention" (c.f. the big news this week), because good talent *always* moves often. That's how great employees advance their careers: by jumping to a higher-placed, higher-paid job at each new employer (WAY quicker than hoping to get promoted internally). Regular movement = good health. It's employees who *never* move that are the real sign of impending sickness: they're the complacent deadweight that ossifies in-place till further progress becomes impossible. Likewise, seeing existing talent quiting means nothing; it's not seeing hot New Talent arriving by the truckload and immediately getting to work on hot New Product Development that says they're seriously in the shit.

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Where Apple *should* be at by now is owning the entire living room: huge black glass rectangle on the wall, pencil-thin exclusive Bose speakers to each side, no visible cables or boxes anywhere, and NO MESS OF REMOTES all over the coffee table either, cos everyone just talks to the unified, universal multimedia system that grows through their home via their personal iPhone, the family iPad, or just speaking out loud to their house's own Siri assistant. Always-on streaming music, TV, movies, life-size video-calls to family and friends; every hook into Home Automation so that even lighting and room temperatures are immaculately integrated and seamlessly streamlined; a *house* that *looks after you*; a home that *knows you* even better than you know yourself.

iPhone and iPad are still there, of course, but now they're no longer the Big Product, just a now-totally familiar, largely unremarked, traveling companion to the customer whose assigned role now is simply to tie it all together.

And all this might've happened by now too, had The Steve's wetware not chosen that particular moment to pack up and quit.

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Peanut gallery members like to scold Apple right now for forgetting how to produce great products, but it's not new products that Apple's forgotten how to create, it's new markets.

@Chucky: "Cook is a fine supply chain guy, so they do investing in factories well"

Ahem, Tim Cook is a bloody brillian supply processes designer and implementor: he innovated the hell out of Apple's entire production, distribution, and sales chain and made it into one of the best in the world. WAY more significant and valuable to Apple than all your puny Macs!

OTOH, this also becomes part of the new problem: since becoming CEO, Cook's done a terrific job of smoothing out every bit of unpleasantness and disruption throughout the business; e.g. getting rid of Forstall, who was at war with half the other department heads.

TBH, Cook couldn't have done otherwise: Steve kept this in mad rabble under control through sheer force of his personality, so when he made the call they all instantly dropped into line and followed; Steve's word was absolute, just like the respect every single one of them held him in. Whereas Tim is just too nice a guy to run things Jobs style; he can only run things Cook style, which is seamelssly smooth and perfectly peaceful.

(Had Cook tried to be another Jobs, he'd only have made another Ballmer-style Microsoft, whose powerful departments were so hellbent on destroying each other in total civil war none of them even gave a crap about their *employer's* mission objective to destroy all of its *competitors* instead. Google owes Steve Ballmer a massive debt for making Android the unassailable global success it now is.)

Meanwhile, Ive sill designs the most beautiful-looking products in; the problem is that nobody's now designing NEW MARKETS into which they can then sell the products that they've designed specifically to sell into those markets. Which is why we now end up with extortionate Ratner-esque tat like novelty ankle jewelry and Lube Strips For Old DJs being held as Apple's "Hot New Stuff". Cos without Steve to lead Jony by the nose-ring to exactly where Steve *requires him to be* at any given time, Ive can now pretty much play with himself as much as he likes. And so now Apple builds two whole Mac designs to production-ready, then asks itself which of the two designs it thinks the market will like better? When what Apple should be doing is asking itself exactly what type of market does it want to own next, then designing ONE product to perfectly fit that. That's what Steve did, and it's the way NPD should ALWAYS be done.

So while ditching Forstalls was a required and correct change in leadership style, Cook et al has absolutely no excuse for forgetting how to MAKE Market BEFORE Product. Cos it's SALES101 and Steve drilled it into every last one of them.

Dude must be spinning by now...

"Where Apple *should* be at by now is owning the entire living room: huge black glass rectangle on the wall, pencil-thin exclusive Bose speakers to each side, no visible cables or boxes anywhere, and NO MESS OF REMOTES all over the coffee table either, cos everyone just talks to the unified, universal multimedia system"

That'd be terrific! If only Apple owned all the content production companies and all the monopoly last-mile wireline MSO's, they could make that come true! Easily! (When Steve-o kept saying the Apple TV was only a hobby because they lacked a "go to market strategy", he wasn't just blowing smoke. He was talking common sense. Unlike the music companies with their brain-dead no-DRM CD format, the film/TV industry had a plan to keep Apple from drinking their milkshake. They took notes from Apple's music takeover, and actually learned lessons!)

"Peanut gallery members like to scold Apple right now for forgetting how to produce great products, but it's not new products that Apple's forgotten how to create, it's new markets."

Of course, there also the concept that the iPod, which directly lead into the iPhone, was a one-off. There is no "new market" like that one. You can only discover the Americas once. And in that scenario, Apple is Spain.

Other companies will be England, because they understand that while you can only discover the Americas once, how you manage that discovery is the difference between short-term milking that discovery, and creating thriving business lines - aka "great products" around that discovery.

But in the meantime, they still sure know how to manage supply chains, no? Hurrah!

"The TV is going to lose until there's a better--until there's a viable--go to market strategy," Jobs said. "Otherwise you're just making another Tivo. It's not a problem with technology, not a problem with vision, it's a fundamental go to market problem."

Asked if it made sense to partner with a major cable company the way Apple partnered with AT&T to bring the iPhone to market, Jobs said, "Well then you run into another problem. Which is: there isn't a cable operator that's national. There's a bunch of cable operators.

"And then it not like there's a GSM standard where you build a phone for the US and it also works in all these other countries. No, every single country has different standards, different government approvals, it's very… Tower of Bableish. No, balkanized."

Jobs concluded by saying "I'm sure smarter people than us will figure this out, but that's why we say Apple TV a hobby; that's why we use that phrase."

I love my TiVo, FWIW. It's an absolutely kickass product. Beats the hell out of all the competition. My recorded cable shows and my OTT shows all in one unified list. You can pry it out of my cold, dead hands. Less than 1% market share.

Apropos of nothing, and 4 1/2 years out of date to boot, but perhaps my best writing on how Apple can take over the TV industry...

[…] Apple Is Becoming HBO […]