[nemothekid]

>If Apple can position the AppleTV as a console (maybe open it up to developers) or build something more along the lines of a traditional console, they will crush.

This opinion is pushed around a lot, however I cannot really see it happening, and I doubt Apple will ever pursue such a strategy.

For Apple to enter the console market, they would have to compete with the big boys, meaning if it can't push 100 million polygons at 1080p it will never get great adoption (who will want develop for a console with graphics out of 2005, and who will buy a console that doesn't have Call of Halo 7?). This means they have to create a modern console platform AND sell it at the price of an iPad. I'm not sure how the ghost of Jobs will take the news once he finds out Apple is selling hardware at a loss.

Next I doubt they would have anything to gain other than "you can now play CoD on the Apple ecosystem." They would lose money on the hardware, they wouldn't make much on the software if App Store profits mean anything (http://articles.businessinsider.com/2011-07-11/tech/29964545... reports they may have made ~$300 million). It just doesn't seem like a good idea finically. As far as the game console ecosystem goes I don't think MS/Sony/Nintendo will ever have to worry about Apple.

All in all, I am not really convinced that the App Store market will work for any of them. I strongly believe only Valve has the resources (and direction* ) to transition into the digital delivery era, at the expense of introducing yet another company into my living room. Still the question is how do you effectively deliver a magic box capable of playing Call of Duty at 1080p at the price of current consoles sustainably/profitably. Vavle's success so far doesn't worry about hardware. Their customers are either willing to spend $1000+ on a gaming every couple years, or just suck it up and blame Dell/HP for why their laptop can't play CoD.

* If Sony got their shit together, you are right, I believe they would take over the living room. They almost did it with PS2, and if the PS2 had come a bit later, or the PS3 was able to sell as much they might have done it. I think Sony could have built an Apple level brand loyalty (in the sense of having a Sony Computer, Phone, Laptop, Console) and (if they got much better at software development), they could have built a Sony store to manage your content on all those devices (after all they already own most of the movies and music). In another universe Sony may have been a Google + Hardware.

[rbanffy]

> meaning if it can't push 100 million polygons at 1080p it will never get great adoption

If you look at the Wii sales, you'll notice polygon pushing does not equate sales or profits.

[Karunamon]

Kind of a bad choice analogy... As per sales figures and TFA, a lot of Wiis might have been sold but their owners aren't using them all that much, and Nintendo is posting large losses.

I'll agree with you on principle, though. While gameplay > graphics every day of the week and twice on sunday, coming to the table with graphics from half a decade ago in this market is rather.. unwise. It's a huge blow to developers, a huge blow to imagination, and a boon to their competitors.

[natbro]

I honestly don't know if Apple will enter this market, but I'm not quite as pessimistic as you are about the profit margin as the reason not to.

I think they could build a next-generation-console-capable Apple-TV and sell it at or below $199 while keeping their 40% margin. They would sell you each additional wireless controller (and it would be sweetly designed, I suspect) for the standard $79 peripheral cost.

The primary contributor to their bill-of-material cost savings vs. competitors is that they already own and/or license at huge volume their CPU and GPU cores and know how to fabricate them in multi-core formats with high-speed cross-connectivity. They can also buy RAM and flash for SSD storage at better costs than anybody else. These are the primary cost drivers (basically money flowing to IBM, nVidia, etc for CPU/GPU and money flowing elsewhere for RAM/SSD/HDD) for xBox, PS, Wii.

Apple would have dramatically lower overall startup costs versus the original xBox/xBox360 and PS2/3 given they already have a toolchain and SMP operating system with sandboxing, an App Store and its back-end, user-accounts and payment infrastructure, and numerous other costs shared with the rest of the Mac and iOS ecosystems.

Apple wouldn't have a lot of work to do to train developers: tell us the screen resolution, how to interact with the controller and any other new hardware capabilities, tell us anything special about the GPU's and let us go to town with the existing toolchain we are using for iPhone and iPad.

So, again, I have no idea if they'll do it, I just think it would be a very profitable business for them.

[sounds]

With Tim Cook's track record of world class supply chain management it will surely be profitable for them.

When the iPod was introduced it didn't compete on tech specs with the other music players. "No wireless. Less space than a nomad. Lame." - the famous last words dismissing the iPod.

When the iPhone was introduced it did have innovative tech but it was secondary to the overall experience.

I'd say when, not if, Apple really wades into the TV market, they should be able to achieve the same kind of disruption. TV's are an obvious choice for Apple, because the TV is one of those consumer electronic devices that occupy a sweet spot between status symbol and the everyday always connected lifestyle.

Thanks for the article. Sony/Microsoft/Nintendo better watch out!

[nemothekid]

It would be absolutely revolutionary if Apple could do it, and it almost seems too good to be true. If that supply chain was opened to anyone else it would be like getting the power of an xBox 360 at $99, forget the raspberry pi.

Now I am not too keen on the video games industry and an insider might have differ, but I've tried to do my fact checking. In a way the device you described for Apple's target specs is what Nintendo did the Wii - and were hugely successful for. They sold 100s of millions of units, and it wasn't sold at a loss so they minted money. However, despite their huge shipments, only Nintendo enjoyed success. The people who bought the Wii, only bought 1 or 2 games (like WiiFit and WiiSports) and it became incredibly hard for third parties to market big budget games to them. Effectively the 3rd party abandoned Nintendo.

Secondly, if the system is not powerful enough, I believe gamers will reject your platform. I believe this is more important than the "No wireless" issue because gamers are the only ones who will spend $59.99 on a big budget game, and as a result 3rd party companies will suffer. You can't sell Call of Duty at 99 cents, and gamers don't want to play a Call of Duty that looks like it was made in 2002.

So the market, I believe splits into 2 groups - 1.) Average folk, who want the box. 2.) "Gamers", who want the software.

We can already see this today. There are Netflix Machines like the Roku (1.) and consoles (PS3). However I believe that the the console guys (Nintendo/Sony) will eventually win out, because they provided the hardware (the hard part) first. Its relatively simple to get the indie devs on your side - open up the platform. But to get the big budget guys on your side you have to convince them that they won't waste 50 million producing the next CoD because it will be drowned out by the likes of Angry Birds and Temple Run.

Lastly, I am not sold on the fact that Apple will be able to push the same numbers as Sony on Apple TV without "big boy" support. If EA is not going to support your system I don't think the Apple Box will sell as much. (the Apple TV only sold 2.7 mill while PS3 sold 10 times as much). While Apple is known as the company that can sell a brick to the masses, I am not sure they can sell 25 million consoles without some big franchise names at launch.

[Lewisham]

Apple has never shown itself to have the wherewithal to correctly interface with game development, and I doubt they have any appetite for doing so. They're already doing gangbusters on iOS without any particular help offered, but the market realities of consoles (and, to a certain extent, PCs) are very different.

Microsoft's huge win on both PC and Xbox has been their active and aggressive devrel for games, which was where Sony stumbled hard on the PS3 (Cell processor development difficulty abound).

[theevocater]

This would be the one sticking point for me: it seems Apple has never really cared about games, so it is unclear they will start caring.

[rat87]

Maybe I'm wrong but my impression was that Apple never understood or cared much about gaming and largely lucked into their ios game success due to being a popular portable mobile device with opengles and a decent virtual application marketplace at the right time. I have a hard time seeing them get into consoles.

[theevocater]

I'm vaguely imaging a scenario where they don't sell anything resembling a console, but expect you to own some sort of iDevice to go a long with your AppleTV, or maybe sell it with a iPod touch?

But yeah, I could see your scenario happening. It would probably be amazing either way

[theevocater]

Oh wow, good point I totally forgot about valve holy crap. That should be soon!

I'm not sure Apple will/would do it, but I think they have the muscle. They aren't competing with CoD, they are competing with Tetris. They want you to buy and play games on your media device, not watch media on your games device. Hugely different market which is ripe for picking.

Apple would probably not build a device they lose money on: that isn't their game. They are a hardware company and they make their money on hardware. This is why I assume they would build something similar to the AppleTV with maybe a bit more juice: rely on the iPad to deliver the CPU juice and the AppleTV (or whatever) to show the content. "Everyone" already has an iDevice, leverage that and jump in.

[nemothekid]

If Apple is competing with Tetris, then Nintendo/Sony/Xbox won't have to worry about them. The people in that space are Smart TVs, Rokus, and Apple TVs, which already exist and aren't eating Nintendo's lunch.

If your console cannot play Call of Duty and Mario like the big boys, you aren't really competing in the same space, and as long as Mario and CoD are popular, your average person will simply just buy the iDevice and a Nintendo. Now if the Nintendo has the advantage of doing everything the iDevice can do, most people will simply opt to buy the Nintendo, especially if they are being sold at the same price.

[theevocater]

Think about the long term though. Apple has already convinced millions of people to put the AppleTV in their homes. With a simple update they could enable iDevices and an App Store to allow developers to do crazy stuff. Then at next iteration they unveil offerings more tuned to hardcore gamers. They liked the first one, now they want more. Apple is already deep in the gaming market, they have the patience.

So yeah at first Apple will compete with on delivering simpler game experience like Angry Birds or Space Team or Letterpress. But so what? People love those! Don't forget that "hardcore" gamers are no longer the focus here, other markets are much bigger. Apple can wait to focus on bigger titles.

[nemothekid]

What you are describing has already happened though, just the other way round. Nintendo convinced 100 million people to put hardware in their homes, and then with a simple update included Netflix. However just because people liked the first one, doesn't mean they would want more. The Wii U is selling as well.