Most of us, including Bruce Springsteen himself, have thought it: there’s nothing on TV. This is despite the fact that many people who pay for cable or satellite subscriptions have constant access to hundreds of channels. Many of us lament, or perhaps are overwhelmed by, choice. While channel-surfing and looking for something new, you could consult a paper TV Guide, or its modern-day equivalent, the on-screen “grid” interface.
But now, a new Silicon Valley startup wants to change all that by harnessing a feature that most channels already output—closed captioning. Boxfish captures all closed-captioning information, indexes it, then makes that data searchable in a Twitter-style interface. All in real-time.
The company was founded in January 2011 and launched its “beta” search interface in March.
“We thought that this is a fantastic way to discover television,” said Eoin (pronounced like “Owen”) Dowling, who hails from Ireland, in an interview with Ars on Tuesday.
“Most people discover television using this grid. We turned this basically TweetDeck-like feed for television into a remote control for TV. So you’re at home and you tell us what you’re interested in, and we pop what’s happening in real time and then you can control your TV with it.”
While gamers are enjoying the barrage of Fall releases in the fourth quarter like Battlefield 3, more console owners are utilizing the gaming device to consume movies and television.
The economics of the consumer electronics industry dictate that on a long enough timescale, all products will become low-margin commodities. The companies that make products household names are destined to fade from the public’s memory. Will Apple suffer the same fate as others before it, such as RCA, who revolutionized television sets in a similar fashion but were relegated to the dustbin of history decades later?
It’s products will most certainly be commoditized, but thanks to its ecosystem of software and services (the Stores and iCloud), it will largely avoid the fate of RCA (and may just re-revolutionize the television itself).
We owe Apple for cracking the smartphone nut, re-imagining what a mobile device should be, and aggressively marketing that vision to the world. Smartphones are now mass-market household items, and although about 65% of all Americans do not own one, that number is sure to change in the coming decade. (Apple did the same for tablet computers, but let’s stay focused on one market for now.)
Years from now we will look back at the early 21st century and mark it as a true turning point in the story of our species. When smartphones and mobile broadband saturate most of humanity in the coming decade, most of us will be operating in the same river of instantaneous information, the effects of which we’ve yet to fully experience. See the slide below for an early example of these effects. [1]
But how long will society be specifically thanking Apple for this transformation?
RCA had done what Apple did for the smartphone: making the electronic television set a household item. Philo Farnsworth may have actually invented the first all-electronic TV, just as Palm and Microsoft had made early attempts at smartphones before, but it was the radical approach of future companies that made both devices truly mass-market. Despite RCA’s initial success, over sixty years later few can recall who deserves credit for that explosive adoption.
I posit that Apple’s reputation as the smartphone revolutionary (and global information empowerment writ-large) will not fade from society’s collective memory in the same fashion.
The fate of consumer electronics devices is commoditization: a decrease in prices such that gadgets descend the ladder of affordability, from expensive luxury good to cheap commodity.
Commoditization occurs because of the underlying technology of these devices. To profitably manufacture and globally distribute a gadget like a smartphone, companies must make an extremely large initial capital investment.
The chips that run our gadgets are scientific marvels, and the factories that produce them (semiconductor fabrication plants) cannot be built for tens of millions: they cost billions. There’s just too much precision machinery, cleanroom necessities, and other operational considerations that make it an all-or-nothing investment.
In addition, chassis manufacturing requires costly CNC machines (tools that take 3D design schematics to create objects by sculpting metals with laser-precision) and the skilled labor to operate them. There’s also years of research and development that are factored into this equation as well.
These costly factors of production are offset by economies of scale, which dictate that at large enough scales, companies can mass-produce consumer electronics at a profit (ironically also making them quite affordable). At the same time, gains in manufacturing efficiency and automation coupled with improvements in semiconductor design (Moore’s Law) bring down the price by several degrees of magnitude each year.
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An iPhone factory in China [2
Therefore, on a long enough time scale, selling consumer electronics is a low-margin game. The bottom line is that a company will eventually run into a corner selling hardware in the consumer electronics business, unable to distinguish themselves from other brands and losing their “upper-tier” image.
RCA’s fate was no different. The same economics applies to the production of televisions, and even more so to the large flat-panel displays peddled at every BestBuy in the nation. The size of the machines that produce the large sheets of glass from which TVs are cut increase each year, making the production of larger TVs cheaper. This occurs year after year, with the same gains in technology and manufacturing that other gadgets like phones experience as well. Throughout the 1960s and 70s, television production became globalized and cheapened, in turn devaluing RCA’s product.
There is no doubt that Apple is on the same course. But unlike RCA, Apple has a plan in place to circumvent the problem (thereby keeping its image high in the public consciousness as long as possible). The writing is on the wall. Within five to ten years, producing the hardware for iPhones and iPads will be dirt cheap, and competition will keep driving prices down, eroding margins for every player in the industry.
The solution is in the Stores: the App Store, iTunes Store, iBooks Store, and all other digital media stores. With the iCloud mobile storage and syncing solution as the final glue that binds all stores across all devices, once users bring their digital lives into Apple’s ecosystem, it’s extremely difficult for them to get out.
Technology analyst Horace Dediu has crunched the numbers on precisely this type of “lock-in” effect, estimating average revenue per year per iOS user of about $150. He’s careful to note that they are recurring figures, meaning customers are expected to spend this amount indefinitely.
Why will Apple’s name as bastion of the information age last into the ages? Because their ecosystem of software and services will keep everyone entrenched in their system, making it too costly and inconvenient to switch over to other providers. Each new purchase opportunity will yield to Apple, reinforcing their presence in consumers’ minds. These recurrent purchases are not only good to the public image but also to the bottom-line. Dediu’s valuation of the company based on the recurring revenues of its install-base is a whopping $620 billion by 2014 (see chart below).
The long-term value of Apple, not just its image, rests on keeping customers entrenched, not selling hardware (though that will continue to be lucrative for some time as well).
To compete against this strategy, companies will need to fight over the consumer experience. Apple has understood this for a while (that’s why they don’t advertise detailed specs like RAM for iPhones and iPads). The entire battlefield has changed. Even the late Apple CEO Steve Jobs is quoted in his latest biography as saying that competitors like Microsoft and Android “just don’t get it” (referring to the overall consumer experience).
Apple has built a vast playpen, locking in its customers with walls as high as the sky. As this site has covered before, Apple is likely to extend this playpen to televisions soon. Consumers will be delighted to experience the same software and media on their iPhones and iPads in their living room. But competitors are not standing by idly: just yesterday Google signaled their intention to compete in the re-imagined TV space using the same weapons of software and services: Google TV will now directly support Android apps. This will ultimately benefit consumers greatly. Apple will trump the introduction of apps to TVs with a new user interface built on their Siri voice-recognition technology introduce in the iPhone 4S. Thus, Apple is well-placed to re-revolutionize the TV market and be recognized for it through the ages.
It’s a pity RCA never had any apps to sell!
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[1] Slides are from Kleiner-Perkins-Caufield-Byers partner Mary Meeker’s presentation on Internet Trends given at the Web 2.0 Summit in San Francisco on October 18. It can be found here.
[2] Image of Chinese iPhone factory from WIRED U.K.
The CW Television Network is now the exclusive television partner of Shopkick, a mobile shopping application that rewards its more than 1.5 million members for walking into stores and scanning product barcodes. The network made the announcement at its Upfront presentation in New York Thursday.
With the network-startup team up, CW advertisers will be able to reward Shopkick users with offers intended to drive them to stores if they watch select ad spots.
Television viewers will be prompted to open the Shopkick application on their Android or iPhone devices before a commercial airs. The application, using the device’s microphone, will then be able to recognize an advertiser’s spot and deliver instant rewards to the viewer.
“Shopkick’s first network partnership with The CW is a revolution for advertisers,” Shopkick CEO and co-founder Cyriac Roeding says. “The cellphone is the only interactive medium that consumers have with them while they are watching television and while they are shopping in the store.”
The relationship, arranged to help advertisers close the loop between TV ad buys and in-store purchases, is similar to the one forged between IntoNow and Pepsi for a TV ad-tagging promotion started last month. Yahoo acquired IntoNow just five days after the promotion was announced.
For today’s YouTube video, we’re going to take a little trip into the past — to the crayon factory located in Mister Rogers’ Neighborhood, to be precise.
This little vid is a bit longer than your usual YouTube fare (and demonstrates how kids from years past had much longer attention spans than those today), but it’s basically the most soothing thing ever.
You may be picking up the iPad 2 tomorrow — and a bevy of wondrous styluses to accessorize — but nothing beats the waxy satisfaction of scrawling across a fresh sheet of paper with a crayon. Watch it. Breathe. And go buy a pack.