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Comcast Might Have Just Derailed Apple’s Next Great Product

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Apple's (NASDAQ: AAPL  ) CEO Tim Cook has promised to release several new products this year. Based on recent reports, one of those products is an improved version of the Apple TV set-top box.

The next Apple TV could be sold as a replacement to the traditional cable box, offering cable subscribers an improved viewing experience. Bloomberg reports that Apple was working on a deal with Time Warner Cable (NYSE: TWC  ) , aiming to offer its subscribers the improved Apple TV later this year.

Now that might not happen. On Thursday, Comcast (NASDAQ: CMCSA  ) announced that it was purchasing Time Warner Cable, throwing the deal with Apple into doubt. While it could still happen, there are a number of reasons why Comcast might not be willing to work with Apple.

Comcast has invested heavily in its own set-top box
For starters, Comcast -- unlike Time Warner Cable -- has invested heavily in its own set-top box technology. Gone are the days of sluggish, buggy cable boxes: the new X1 and X2 platforms offer Comcast subscribers a highly advanced, cloud-based set-top box complete with voice commands and personalized recommendations.

Any device from Apple would compete with directly with Comcast's new platform, and that's an obvious problem. Not only do Comcast's X1 and X2 differentiate it from its satellite-based competition, but they also serve as gateways to Comcast's pay-per-view services.

Comcast's Xfinity On Demand store competes directly with Apple's iTunes, offering Comcast subscribers the ability to purchase and rent digital movies. Replacing Comcast's platform with Apple's boxes would give iTunes all of Comcast's On Demand business.

But Comcast has worked with Microsoft
That said, Comcast has been willing to work with Microsoft (NASDAQ: MSFT  ) in the past. The Xfinity TV app, for example, allows Xbox 360 owners to replace their Comcast cable box with Microsoft's video game console, burying Comcast's interface behind Microsoft's technology.

The same is true for the Xbox One, although it should be noted that the full Xfinity App is still unavailable. That might just be a temporary delay given that the Xbox One has been on the market less than three months, but it could be something more.

Apple's TV revolution could be delayed yet again
The first Apple TV hit the market in 2007, but Apple's management has famously characterized it as "a hobby." The real Apple TV product has been anticipated for years, and it was finally starting to look like 2014 would be the year of its release.

Comcast's purchase of Time Warner Cable, however, complicates matters significantly. While Comcast has been willing to work with Microsoft in the past, its recent push into more advanced set-top boxes suggests that it might not be as willing to work with Apple as Time Warner Cable had been.

The deal will take some time to close, and regulators could reject it. Moreover, given Comcast's massive footprint, Apple would've had to work with them at some point anyway. Still, the deal complicates matters -- an Apple cable box alternative in 2014 is now far from a foregone conclusion.

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Read/Post Comments (9) | Recommend This Article (0)

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 February 13, 2014, at 10:44 AM, jdmeck wrote:

    Sam - wrong again. First of all if there is a deal in the works, it will be done long before Comcast ever has approval for the purchase. And I doubt the purchase will be approved without years of fighting and lawsuits.

  • Report this Comment On February 13, 2014, at 10:52 AM, MLuckman wrote:

    A simple solution for Apple, What 's stopping Apple from buying either Comcast and or Time Warner!

  • Report this Comment On February 13, 2014, at 10:57 AM, roadslide wrote:

    why would apple try to make a deal with a company that had put itself up for sale over a year ago.

  • Report this Comment On February 13, 2014, at 10:58 AM, oshuneer wrote:

    I doubt that Comcast will clear the necessary hurdles to swallow TW. Even if it does it will only spur the development of new escapes from cable's stranglehold.

  • Report this Comment On February 13, 2014, at 11:26 AM, aperture1 wrote:

    Wouldn't this make all the other cable companies desperate for technology that would enable them compete with Comcast?

  • Report this Comment On February 13, 2014, at 11:51 AM, Mathman6577 wrote:

    I have the same question as @aperture1 but who really knows what will happen (especially us who probably know 0.1% of what is really going on behind the scenes)?

  • Report this Comment On February 13, 2014, at 12:16 PM, twolf2919 wrote:

    How could this deal possibly be allowed, given that it will obviously lower competition? Surely not all the lawyers in the DOJ are busy with "protecting" us from Apple's nefarious e-book price fixing schemes?

  • Report this Comment On February 13, 2014, at 4:34 PM, Mathman6577 wrote:

    @twolf2919: if anyone at Comcast or TWC is a crony (campaign bundler, contributor, former employee, etc.) of the administration Eric Holder and friends will look the other way and allow this to happen. [That being said TWC could probably be improved by merging w/ Comcast.]

  • Report this Comment On February 13, 2014, at 8:56 PM, mattack2 wrote:

    You have been able to use other DVRs (e.g.) with cable companies too, with CableCards. On Demand works in some areas on Tivos too.

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Sam Mattera

Sam has a love of all things finance. He writes about tech stocks and consumer goods.

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