From DailyTech: The perennial rumors that Apple, Inc. (AAPL) is preparing to launch a "smart" LCD TV or more advanced set-top box have been dealt a blow by Bloomberg, which cites multiple sources as saying the project has stalled on Apple's inability to cut a deal with content providers.
The news service reports that Apple engineers have been working since 2005 to make a super set-top box. Inspired by TiVo, Inc.'s (TIVO) eponymous recording hardware and other smaller players like Roku, Apple aimed to beat perennial rivals Amazon.com, Inc. (AMZN) and Google Inc. (GOOG) to expand the role of the digital TV.
Today Apple is selling, according to a (calendar) Q1 2012 earnings call, 1.4 million units of its AppleTV. That may sound okay, but compared to the distribution deals TiVo owns, and sales of other Apple products it's pretty abysmal.
The problem is that Apple's current product -- in its third generation -- lacks many features, while actually regressing in some ways on others. Early models had hard drives (40/160 GB first gen.), but Apple ditched the mildly useful feature for streaming only -- a cut it justified by a price drop from $229 to $99 USD.
Walter Price, an investor in RCM Capital, a major Apple stakeholder which owns $1.9B USD shares says that in a recent meeting Apple executives said the roadblock was content providers being set in their traditional business models. The content providers are reportedly afraid of putting Apple in the driver's seat. This is not surprising; many content makers long ago grew frustrated at Apple's rigid iTunes pricing rule, and today regret helping the media market rise to its current dominant position.
If Apple can't cut a deal with content providers, it's next best bet is to try to approach the middle man -- the networks that distribute them. According to Bloomberg, its strongest hope lies with AT&T, Inc. (T). AT&T is a fresh face on the broadband scene and is looking to rapidly expand its Uverse cable network to challenge Comcast and Time Warner Cable's offerings. Plus AT&T already enjoyed a successful union with Apple, during the period of iPhone exclusivity.
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