Why Betting on Apple or Microsoft to Win the TV Wars May Be Follyhttp://www.fool.com/investing/general/2011/12/05/why-betting-on-apple-or-microsoft-to-win-the-tv-wa.aspx Tim Beyers
December 5, 2011
We've been writing a lot about the future of TV in these digital pages. The debate over who ultimately wins the so-called "war for the living room" has taken many forms, but mostly we've evaluated the various news and offerings from the major vendors, including:
On balance, I believe our analysis has provided important context for entertainment investors. But I also think, as a group (me included), that we've failed to fully consider watching habits in evaluating the potential winners. We haven't thought enough about what has to change for any single vendor to win.
No longer. History tells me that usability (primary) and infrastructure (secondary) will, more than anything else, determine who dominates the digital TV market from here on.
What consumers want
Apple's iPad is my favorite example among recent introductions. Neither the most functional nor the most widely endorsed tablet at the time of release -- remember, the original iPad had precious few apps at launch -- the Mac maker won by designing to the most basic of human factors.
How so? We output most reading material to 8.5 by 11-inch paper. Designing a 10-inch tablet therefore created familiarity lacking in 7-inch alternatives. Familiarity won and is still winning.
What the TV ecosystem looks like
This combination affords us, as consumers, both serendipity and control. We can surf and find live TV we like, or we can switch over to recorded or queued content through paid services such as Netflix.
Advertising pays for the serendipitous or recorded content we consume. Premium content comes with a cost, though most of it is accessible straight from the equipment supplied by cable and satellite operators. Comcast (Nasdaq: CMCSA ) , DISH Network (Nasdaq: DISH ) , and their peers invest to make sure their boxes are emblazoned with logos, even though someone else makes the equipment.
There's a good reason for this. Set-top boxes and gaming consoles usually aren't required to get at premium content. Only the geekiest of consumers (two thumbs, pointed inward) are likely to own a system disconnected from the remote that comes with the cable plan.
And therein lies the problem for both Apple and Microsoft.
Controlling the remote
What users want and expect is one remote to control a television, and maybe a separate remote to control a Blu-ray playe