Why Apple Won't Stay on Top

"Apple, you were the rebels, the underdogs, but now are you becoming The Man." - Jon Stewart

• The Underdog by Spoon

Apple recently ousted Microsoft in market cap as the world's largest tech company, edging ahead with exquisitely designed high-end gadgets and its Apps store money machine.  With its Iron Gates attitude to just about anyone who dares to enter its coveted app shop, the new AppleTV will karmically receive a similar reception by television studios, distributors, and sponsors.

Toss It and Leave It...Google Will Show Up to Retrieve It
Apple notoriously shut out Adobe Flash from the Apps store.  As 75 percent of online video content runs on Flash, many believe this was a Pyrrhic victory.  Now Google hops into bed with Adobe, as its new Android 2.2 will debut with Adobe Flash Player 10.1 compatibility.  Furthermore, NBC and Time Warner are holding their ground, refusing to let go of Flash to deliver their content.

Side tidbit: YouTube, which runs on Flash on your computer, is not Flash based on the iPhone/iPad, but has been re-compressed as H264 video (mp4).

Battle Dance, Go: Apple TV vs Google TV

Correction 6/4/10: Google TV is also a box with a small form factor that fits behind your TV, so the viewer cannot see it. Other than that, it is still just a widget platform.

AppleTV: The TV that isn't.
The fearsome tech giant recently launched Apple TV.  I want to draw attention to the product description on Apple's own website:  Buy the latest commercial-free episode of your favorite show the day after it airs, and then watch it whenever you’re ready. Choose a Season Pass and get a whole season of a TV show automatically. Or get a Multi-Pass for shows that air every day, such as The Daily Show with Jon Stewart, and enjoy a month’s worth of episodes downloaded to Apple TV as they become available. Individual shows cost as little as $1.99. HD versions are $2.99.

1. People want to watch TV when it is on. The fact that you can't watch TV while it airs with Apple TV, such as the evening news, Oprah, and Glee makes this product incomplete.  It brings the web to your TV, just not TV to your TV.
2. Funny you mention Jon Stewart. Jon, who you can watch on cable or for free online, has this to say to Steve:
   

   The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
   Appholes
   www.thedailyshow.com
   Daily Show Full Episodes Political Humor Tea Party

   [Stewart dubs them 'Appholes' in regards to the freak-out over the leak of their new iPhone]
3. If you want to watch the entire last season of American Idol on FOX (a station available on regular TV for free), the day after each episodes airs, when you already were told what happened by then, it will cost you: 43 x $1.99, or $85.57.  In HD the cost is $128.57.

Your cable box is connected to HDMI 1 and AppleTV to HDMI 2, so you would have to switch inputs to watch on-air television.  Apple TV like recent competitor, Boxee, are not TVs, but rather additional hardware called OTT (over the top) boxes.  Boxee can only access web pages that are built for its platform.  Also Hulu has blocked them, and they cannot access iTunes store, so content is rather limited akin to Roku and MSN TV systems.

Apple actually tried, and failed, earlier in the year to talk to studios to see if they would allow users to subscribe to live streams of network programming through iTunes.  Apple had a taste of their own medicine when the networks said "no way" because its system is closed (sound familiar?), and as it has yet to make a dent in market-share, it has zero leverage.  Moreover, it is highly unlikely influential network TV sponsors would welcome the new product with its commercial-free day-old shows which block out market reach to an affluent consumer group.  Good related blog post

Google TV: 90% Search? 

Google TV not a TV, but rather is a widget platform like Yahoo! TV for your TV.  People can build  applications for a "connected TV," which cost 25% more than normal TVs. Similar to Apple TV, users can access content from popular sources like Netflix, Hulu, and YouTube.  Unlike Apple TV, Google TV is Flash compatible. Google TV lets you do one main thing: You can type in a search query and it will look through your program guide for live TV and online at certain video sites to find exactly what you want.  However, people need to buy a new keyboard and mouse setup to do this.  While humans surf the web through our Google search toolbar, we channel surf with a remote. Below: Vague cartoon video introducing the world to Google TV, released May 18:


Verdict: Fear The Underdog.
While Apple TV eliminates the effort it takes to connect your computer to your TV with a cord, pop a disc into a dvd player, or dock an ipod into speakers, without complete on-air television it simply fails as a TV.  Apple's mantra has been: "Make it and they will come."  This simply cannot fly in this market if they do not deliver on what the benefits of a TV actually are.  At this point, with Google TV, users cannot channel surf with the ease of a remote.

The victor will provide a service that fully integrates the benefits of the Internet with your TV for a better, TV-like user experience.  ViaClix, a Los Gatos based start-up founded by the woman who invented the two-tone demodulator (rad), by working with distributors like Comcast, integrates live TV and web content, enabling users to navigate between the two without having to type in urls all through one remote.  Knowing Google, they will eventually figure this out, whether it requires adapting product, partnering with, or buying out such competitors.

Reflections
And as Apple is improving its gadgets, Google is working on its cloud operating system, and both are releasing new 'TVs,' Facebook is probably working with Microsoft on an email system to rival Yahoo! and Gmail.  The battle strategies of today's tech giants remind me of war plays between European nations in the sixteenth through eighteenth century (maybe I just think it's funny to compare Apple to France). 

Google's willingness to partner with anyone (even known enemies) against other competitors and Facebook's ability to both shape and adapt to the demands of the social sphere are why they will be on top for a long time.  Apple can't simply rely on its sexy UI to stay on top, it must be flexible with the changing marketplace, better cater to the proletariat, and cultivate strategic alliances with both the little guys and the major players.  Or else, the iTunes store will go down in history like the Bastille.