Apple Still Has TV Opportunity in Light of Xbox One Failure

The long-standing rumors of a forthcoming Apple (NASDAQ: AAPL  ) smart TV were given weight this week after Apple confirmed that it had acquired PrimeSense, the company most known for developing Microsoft's (NASDAQ: MSFT  ) Kinect technology.

Apple's TV has reportedly been in the pipeline since at least 2009, and since that time, a host of competitors have emerged, including Microsoft and Samsung (NASDAQOTH: SSNLF  ) . Yet, despite Apple's delays, the opportunity remains.

Microsoft's Xbox One is loaded with advanced TV features
Microsoft's new video game console, the Xbox One, is packed to the gills with smart TV capabilities. In addition to offering access to online services like Hulu, the Xbox One interfaces directly with owners' cable boxes, giving users the ability to control their TVs with voice and hand gestures. It also offers facial recognition and Skype video calling.

In short, it's just about everything you'd expect from a full-fledge Apple television; indeed, Apple's decision to acquire one of Microsoft's suppliers suggests that Apple is moving in a similar direction. Before it was acquired by Apple, Authentec supplied fingerprint scanning technology to Motorola for the Atrix smartphone.

But although Microsoft apparently had the right idea, early reviews of the Xbox One have found fault with the interface. The Verge noted that Kinect "doesn't always work," and that voice commands were "hit or miss." It found similar issues with the Xbox One's hand gesture-controls, characterizing them as "even more finicky."

CNet's review was largely the same. In addition to faulting the voice controls for their unreliability, it complained about the Xbox One's confusing dashboard and lack of full DVR integration.

Samsung sees its TV advantage as a way to stand out
Samsung, not Microsoft, might ultimately become the more fearsome competitor. Samsung already has a massive, established TV business -- with about a quarter of the market, there's a good chance that many Apple iPhone owners have a Samsung TV in their house -- and now Samsung wants to use its TV business to support its mobile devices.

Samsung held its first annual developer conference in October, unveiling several software development kits (SDKs) that make it easy for programmers to give their mobile apps TV functionality. For example, one allows games played on Samsung handsets to be beamed to TV screens, while another offers easier multi-screen content sharing.

All of Samsung's high-end TVs currently comes with its included smart TV software, but that's largely nothing more than a built-in Roku player. Techradar said Samsung had only the third-best platform, behind both LG and Panasonic. Some of Samsung's TVs include voice and gesture controls, but these were for faulted for being unreliable.

The threat comes from Samsung's large install base. Since 2012, all of Samsung's smart TVs have come with in a slot in the back, which allows owners to install "evolution kits" at some distant future date. If Samsung ever gets it right on smart TV software, consumers may find it easier to upgrade their existing Samsung TV rather than buy one Apple's new one.

Apple's TV potential
I suppose Apple may opt to employ PrimeSense's technology for something else, but given how Microsoft has used it in the living room, it seems to more or less confirm what so many have expected -- Apple is planning to release a full-fledged TV.

In the past, I had speculated that Apple had waited too long. That the market for the device was rapidly being filled by Apple's competitors, particularly Microsoft, who had beaten it to the market with gadgets that offered similar functionality.

But with Microsoft whiffing on the Xbox One's TV features, the opportunity for Apple to introduce a breakthrough smart TV remains. As the iPhone unified a market of confusing, faulty smartphone solutions, so too, could Apple's TV bring Internet-connected TV to the masses. And like the iPhone, Apple's major competitor could prove to be Samsung -- not Microsoft.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 27, 2013, at 11:55 PM, Viking70 wrote:

    "...Apple's decision to acquire one of Microsoft's suppliers..." is incorrect. Primesense was a supplier for the initial Xbox, but is no longer a supplier. It is doubtful that Apple acquired Primesense for their motion/gesture-sensing technology. More likely it was for mapping/location services.

  • Report this Comment On November 28, 2013, at 12:43 AM, iphonerulez wrote:

    Why is it that there is never enough room for two or three companies to succeed? It's like only one company is ever allowed to be successful and everyone else is considered a failure. The automobile industry has dozens of manufacturers and many can be considered successful. When it comes to Apple or Samsung or LG people talk like if one is successful, all the others are going out of business. I really don't understand this "There must be only one" attitude. Are all automobile companies seen as threats to each other? I doubt it.

    I don't think any one company can excel at everything and there are enough consumers who always want to try something else from another company. All I ever hear about in the consumer electronic field is who is beating who or that the company with the most market share is the best or most successful. Why does that even matter?

  • Report this Comment On November 28, 2013, at 3:11 AM, faust445 wrote:

    just a couple of days since the xbox released and you are already declaring it a failure based on two very first look, very superficial articles. Please...

    a question for you: do you own Apple stock? If not, at the very least you are very biased...

    what comes to mind...Shill !

  • Report this Comment On November 28, 2013, at 9:38 AM, pepe wrote:

    In only 7 days of released xbox one ,is a failure?,sorry stop read here...

  • Report this Comment On November 28, 2013, at 3:55 PM, MooseTheHab wrote:

    Have you actually used the Xbox One. I'm not a gamer and I would consider it a success as it provides MS another avenue to extend its reach of the xbox/windows ecosystem. The Xbox works great for me , graphics are great and fast... so fast that at some points the TV has a hard time keeping up. Xbox music is excellent, scanned the network and brought in all of my music effortlessly. Samsung's problem is that they have no ecosystem - Google Play. Apple has an excellent ecosystem (best by far) but the crowd is catching up. Next time write an article on actual experience as a user without bias for your stock holdings!!! You just look foolishly otherwise.

  • Report this Comment On November 28, 2013, at 4:29 PM, KenLuskin wrote:

    Great comments from MooseTheHab!

    The author is weak. His research is bad. His conclusions are illogical.

    There are room for numerous "smart" TV solutions.

    As a non gamer, I am very interested in the Xbox One because of the INTEGRATION of SKYPE and the voice interface.

    Voice will not ever be a perfect interface.

    Other people do NOT always understand, and respond to our requests or commands, so why should the Xbox ?

    Nothing is perfect.

    The Xbox is a VAST improvement over what most people have in their TV room.

  • Report this Comment On November 28, 2013, at 5:08 PM, dileepkrp wrote:

    Putting your cart ahead of your horse, are we? XBox One sold one million units in less than one day and someone here is already celebrating its failure.

    Mr. Sam, breaking news - it will be another 6 months to one year (if not more) before any level headed person can understand whether it is a failure or not. Sorry to be having common sense here, and happy thanksgiving. I guess you should be thankful to be able to publish such claims unscathed.

  • Report this Comment On November 28, 2013, at 8:34 PM, AdamChew wrote:

    It is hard for a fan to see their favourite being bashed.

    Welcome to the club.

    The writer had his points and you have yours so let the market decide which one will be successful in terms of revenue and profits and not just market share.

    I wonder how is chromecast doing? Google is so quiet about it lately perhaps not as successful as the pundits predicted.?

  • Report this Comment On November 29, 2013, at 2:22 AM, imnu wrote:

    So the Xbox is a failure because features like the voice recognition don't always work?

    By all accounts Siri is far from perfect.

    Should we conclude that the iPhone is a failure?

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