AppleTV one small step toward Web-a-vision era

SAN JOSE, Calif. – The TV will become a Web-connected multifunction device with television just one of its applications. The new era will fuel innovation in remote controls and personalized video services and is already challenging traditional service providers and set-top box designs.

The shift is driven, in part by an increasing number of low-cost Web video systems. Apple Inc. re-launched its AppleTV system Wednesday (Sept. 1), focusing on streaming high definition movies and TV shows over the $99 box that's 80 percent smaller than Apple's previous set-top. Apple also refreshed its iPod line up.

A day earlier, Roku cut the price of its similar system to $59, and Korean giant Samsung held its first TV developer conference, pledging to spend as much as $70 million to establish an ecosystem of apps on its televisions.

"We are entering the Internet era of TV" in which service providers are driven to provide content over all networks and devices, said David Grubb, chief technology officer of Motorola Home, speaking in a keynote at the Set-Top Box Conference 2010 here.

"This is a big platform transition that will take several years, and it's an opportunity to reinvent the platform," said Grubb.

Google will release its GoogleTV code early next year so Android developers can create TV apps, said Larry Yang, a lead palt5form architect for GoogleTV on a panel at the conference. "We believe by creating an open app platform [for TV] you will drive a lot of innovation," he said.

The Yankee Group forecasts one in eight pay-TV subscribers will move to free Internet video services by the end of the year. There are no signs of such a shift happening yet, said Grubb, pointing to a New York Times series that suggested Web video is still not ready for mainstream users.

But Grubb is quick to admit the TV industry "got hyper-focused on quality as the driver" in the HDTV era, and you will see that again with 3-D TV," he said. "Internet service providers are stepping into the opening to provide more choice and convenience [in video services with boxes like AppleTV], filling a hole that wasn’t being addressed" by traditional TV providers, he said.

Boxes like those from Apple, Roku, Tivo and others help users choose what they can watch and when, coming closer to the live broadcast windows of pay-TV providers. For example, Apple has struck deals with ABC and others to make some broadcast shows available the day after they air on pay-TV services. Users have up to 30 days to start watching the programs and then 48 hours to finish.

Even Apple is being pushed to offer choice beyond the 65,000 TV episodes and more than 10,000 movies in its iTunes store. Its new AppleTV box also supports the Netflix subscription service and Google's YouTube.

Twenty-eight percent of users said they would find TV apps extremely valuable and 48 percent said they would be somewhat valuable, according to a story by The Diffusion Group. The highest valued apps are those related to finding and watching TV, the study said.

People most likely to buy high-end TVs are also the most positive about the value of social networking, the study said. "Even if apps are not necessarily the big driver they may be an influencer when it comes down to making a TV purchase decision," Grubb said.

"TV service is becoming an app, enabling a multi-device environment—there's a lot of activity in the industry around that," said Grubb.

Indeed "three-screen" is the new adjective du jour heard at the Samsung and Set-Top conferences to describe video services that span TVs, PCs and handsets as well as the various networks that connect them.

The Diffusion study said people who use video services on three screens still prefer consuming video on a TV. "At the end of the day it's about getting all these services on the TV for the consumer, and that's an interesting challenge with contradicting goals," said Grubb.