I’ve read a bunch of posts on the iTV announcement by Apple over the past couple of weeks. The posts have ranged from rhapsodic adoration of everything Apple to complete dismissal that anyone would pay such a price for a simple media extender. But I think it you look more deeply into what is going on here, the strategy of Jobs and company actually becomes quite clear and very compelling for the average consumer.
If you look at the iPod, it is essentially a portable mass storage device with an OS and display. You might only be able to display video at low resolutions on the device, but there is no reason why you cannot store high quality (or even HD) video on that hard drive. The iTV unit is Wi-fi (and likely USB) equipped such that it can stream video from a Mac to the TV. But really, all Steve has to do is add Wi-fi to the iPod and he can begin streaming high quality video from an iPod to the iTV (and even more reliably with wireless HDMI or similar technology).
In other words, the iPod becomes the remote by which you surf through your locally stored video content and then select for playback on the TV. Now, this solution doesn’t provide for playback of broadcast TV (which I think is a big problem), but nonetheless provides a very simple mechanism for replacing you universal remote with an iPod and your entire home theater set-up with an iTV. This is the type of simplicity everyone is looking for and that Apple is so good at delivering.
I think this type of set-up will occur within the next 12 months and will begin to put enormous pressure on cable, satellite and IPTV players. If they succeed, they become one of the first viable closed channel alternatives to studio distribution through existing MSO gatekeepers. I think Apple is going to eat their lunch very quickly. The response by the MSOs that want to survive will be to open their devices up in a way that Jobs seems pretty unwilling to do. It is their only strategy for continued relevance, but it is simply the lesser of two evils.
Apple is going to usher in the age of disaggregation between content owner, pipe and device in a way that is going to be very profound. Look for Microsoft to be a fast follower with the Zune (which will find limited success in the music market but fertile ground in the video market). The balance of power between open and closed distribution is being heavily distorted by a very talented dude. My hats off to Jobs for being able to bend the market in his favor, years after his strategy should have fallen apart. But it won’t last forever, Steve, it won’t last forever…