Can iTV beat Microsoft and Sony?

iTV

With this product, we move to almost pure speculation. What we know is that it is a set top box like product that will provide HD content. It is believed this content will largely consist of pay-per-view offerings downloaded from the Internet and coupled with Itunes Music. We believe it will also be able to link to other Media files on networked PCs or Internet resources. Costing under $300, this is easily the least expensive product in this grouping but it appears to depend on a networked PC for full capability (streaming video over a DSL connection would be ugly, particularly HD video).

For iTV it all comes down to content - how much, where they get it and how much it costs. We know the Sonos product, which looks very similar, does music incredibly well but won't do video at all and is locked into Real Networks for premium content. We know that the Apple user interface will be very good, and we know they probably have a deal with Disney for Disney content. But, even though Disney is the first studio I would pick, they can't be the only studio and if you have to buy every program at a dollar a pop for TV, I think that will get old fast in the face of anything else that will record off the air.

Price for Movies will be $9.99 to $14.99 or the same as DVDs and they should also play on your Ipod video and probably your laptop. TV will probably be a $1 per show but HD TV downloads may cost more and will clearly be a pain do download, due to file sizes. In fact, downloading HD anything could be incredibly painful which is why off-air may be the best short term solution.

While the Media Center and PS3 can function as standalone offerings, iTV needs something else and we simply don't know about that part of the offering yet to fully fill in all the blanks.

So, think of the iTV as more of a super set top box, or better Media Extender. But then, that may be all you want in the living room.

Picking the Winner

So, in the end, much like it is with gaming, the winner here will have a great deal to do with who gets the content. Number 3 is easy to call because the PS3 just doesn't have the content. Right now the Media Center would win on content but next year, when both products launch, that may not be true.

Now, in combination with an iTV a Media Center could be interesting and - as a super Media Extender - it could do very well. This is where Intel and Viiv come in and we know there are several things Apple is keeping close to the vest. If they plug into Viiv for content, the entire solution - which would be more in line with a full featured Media Center /Media Extender - could be very interesting and tip the scales in their favor because of ease-of-use advantages. And the Media Center, in this case, could be running the MacOS with some betting that Leopard, with Media Center capability, will actually launch on the same day the iTV does.

If that rumor is true, the combination of Leopard with Front Row 2.0 and Live TV could trump, with iTV, Windows Media Center/Media Extender/Xbox 360.

It is about time for the full power of the Apple/Intel alliance to be felt and, if iTV showcases that, it could mean the battle for the digital living room goes to Apple. But Apple traditionally doesn't do alliances well and Intel, so far, has tied Viiv to Microsoft's Media Center. In that view, a combination is a stretch but it also means that they have the opportunity to do something amazing and Apple does that a lot.

The company we all probably should be watching is Cisco because what they are building doesn't require a PC and their Scientific Atlanta division also has the content problem addressed through its alliances with cable providers. With the right implementation, they could build a scenario in which only the gaming products (and only for gaming) weren't obsolete.

We'll see, in the meantime I'm having a ball with my Vista Media Center. Building one of these things is a lot of fun and we'll probably revisit that when Vista ships next year.

Rob Enderle is principal analyst for the Enderle Group. He can be reached at renderle@enderlegroup.com.