Idea: Apple will license Airplay to TV manufacturers

Airplay is the technology that lets you send video and audio from a IOS device or Mac to the Apple TV - you can start playing content on your apple device and press ‘send to Apple TV’ - and without further ado it starts playing on your TV screen via the Apple TV plugged into it. (In the current IOS firmware this is only available to Apple apps - in the forthcoming 4.3 it will be available to third party developers, such as the BBC or Netflix). In effect, this is DLNA done properly. 

To my mind this is a far better interaction model than a connected TV, Google TV or Youview. Instead of putting the UI on the TV screen and trying to navigate it with a TV control (or even something really stupid like a qwerty keyboard), the UI is a touch screen in your hand. Find what you want and then press ‘send to my TV’. 

I have no specific knowledge, but I’ve been thinking for some time that Apple will license Airplay to TV manufacturers:

  • First, Apple is not making significant profits on the AppleTV, since it sells for just $100
  • Second, Apple has already licensed Airplay for audio to hifi manufacturers
  • Third, the BOM for TV makers would be minimal, since they already have much of semiconductor functionality built-into their connected TVs

For Apple, this solves the route to market problem in the living room. It doesn’t need to compete with subsidised CATV STBs, nor get into the (capital intensive, low margin) TV business itself. Steve Jobs talked about this issue at the All Things Digital conference last year. 

For TV manufacturers, Airplay has very little strategy cost, unlike Google TV or Canvas/Youview. There is no requirement to take someone else’s UI, nor to give up control of the platform, nor to build a $2-300 memory and processor-hungry mini-computer into the TV. They can implement Airplay in much the same way that they implement Netflix, LoveFilm or Pandora, and gain another selling point, while carrying on with the ‘we can sell content ourselves’ fantasy. Incremental BOM for a connected TV (which already has most of the required silicon) would be minimal. They could even implement this into a device running Google TV (one of the few benefits of an open platform). 

You could say this means I think the featurephone model will prevail over the smartphone model for TV sets.

What would be the implications of this? 

For Apple, the negative is that the Apple TV itself would have limited potential as a platform in its own right. The Apple TV can in theory run apps (it’s the same underlying hardware and software as an iPhone or iPod Touch) and there has been speculation that Apple will create an Apple TV App Store. Of course making apps for the Apple TV, with no touch screen, would clearly be quite different to making them for an iPhone, but I would imagine that Pandora or the iPlayer team would be happy to have a go. But if a mid-range TV has Airplay built-in, your need for a stand-alone Apple TV is pretty minimal - unless of course you’ve just bought a TV that doesn’t have Airplay. The TV replacement cycle is obviously important here. 

On the other hand, Apple would collect a royalty per unit ($5?) that would add up to far more than it will ever make from the Apple TV, besides being more capital efficient. More importantly, it would drive sales or more Apple devices and make it that much harder for people to switch away to Android. 

Meanwhile Google TV, Youview and the other connected TV platforms would look more like white elephants than ever. There’s also, probably, an incidental swipe at DECE/UltraViolet.