If The Rumors Are Real, Apple’s iTV Will Be A Runaway Success

Though the Apple rumor mill is always a fickle beast that’s more often wrong than not, when rumors from a variety of sources start to come together, you can be assured there’s something behind it.

Now that we’ve been hearing about a revamped AppleTV – dubbed iTV – for some months now, it seems safe to say that something is coming down the pipes. Most people seem to agree that iTV will be smaller than the AppleTV, come in at a low price like $99, and run some form of iOS. Most recently, it was Kevin Rose of Digg fame who provided the newest burst of speculation, and what his sources tell him seems to line up with what we’ve heard so far.

And, even though it pains me slightly to think of Apple becoming a dominant player in yet another space, if these rumors are correct iTV will be a massive success. (Note it pains me for no other reason than I’d like to see another company beat Apple to the innovation punch.)

So why will iTV work where AppleTV failed?

Subscriptions Ahoy

If the rumors are true and the device comes in at $99, it will mark a slight shift for Apple. For years now, iTunes has essentially broken even; Apple uses the iTunes ecosystem to encourage people to buy hardware, which is makes a profit on. A $99 price tag is a bit different, however, and it’s likely the purpose of the device will be to simply get people using iOS – and possibly to use some new form of iTunes.

The most likely candidate for this  ‘new use’ of iTunes would be the subscriptions we’ve been hearing about for a while now in which consumers would either pay a set amount for access to a certain channel’s offerings – say ABC or Showtime – or would pay a regular amount per month for a certain number of episodes or seasons.

That kind of move would finally offer something like ‘a la carte’ pricing that so far cable and satellite providers have refused to engage in. So there you’d have selling point #1: pay for only the things you want and nothing else.

Apps Aren’t “Open” – But They’re Close Enough

Currently, your best options for a cable company-free living room are the Xbox 360 and the PS3. Their secret sauce is that they both have their own movie/TV stores but also offer Netflix streaming, and will soon also offer Hulu Plus.

Now, if the iOS rumors are true, then iTV could be even more compelling, as in addition to iTunes, you’d also get possible subscriptions, apps from people like ABC and then apps from Netflix and Hulu – plus YouTube too. It’d be a pretty sweet box to have under your TV, as it would offer a huge variety of content.

BUT – and it’s a big one – Apple are notorious for not allowing content that conflicts with their own business model. So far, they haven’t done anything to resist Netflix or Hulu from appearing on the iPad. But if the iTV is designed to push subscriptions, it’s possible Apple may not allow competing ecosystem – in which case it will achieve modest success, much like AppleTV: okay, but nothing game-changing or revolutionary.

The “Can Your Parents Use it” Question

So, the Xbox and PS3 already offer pretty compelling ‘under the TV’ experiences. But most people who aren’t tech-savvy – you know, the hundreds of millions of people who do things like click on spam or forward chain emails – find them too hard to use.

If the past is any indication, Apple will ensure that tasks that many people’s 50 or 60 year-old parents would never dream of doing – seeing photos on a TV, browsing Facebook using an app – will be simple and intuitive. What’s more, the simplicity of things like purchasing apps, streaming video etc. will mean that something like iTV may have even more mainstream appeal than the offerings from Microsoft and Sony.

What’s more, if it is $99, it will prove much more enticing than a two or three hundred dollar video game console.

The iRemote?

Some of the rumors we’ve heard have also suggested that the iPad might function as a remote. My guess, however, is that will remain a premium option. Apple aren’t so narrow-minded as to expect people to by a $500 remote. It is far more likely, however, that the 100+ million people who own iPhones, iPod Touches and iPads will get an app to control the device. Because the ecosystem already exists, this will be one more node in Apple’s network of devices.

The… *sigh* “Apple Magic”

It’s almost frustrating to write this, but we all know the other aspect of Apple’s success – beyond design, ease of use or compelling ecosystems – is their strange combination of marketing and foresight that makes Apple seem a step ahead of everyone else.

The point is that, now the iOS is cemented in the public imagination as ‘a sign of the cutting edge’, iTV will be hailed as the future of TV – often by tech bloggers. It won’t matter whether Google TV is a better option or not, or whether a PS3 is better value, because Apple understand that it’s the experience of buying and then owning something that trumps actual functionality. Whether you can ‘do more’ with another device will take a back seat to whether it feels as easy, intuitive – or even ‘cool’ – to use the iTV.

And as I’ve argued endlessly, Apple always ask what people want to do with technology and then create things for that. It’s likely that iTV will continue that trend.

Update: Bloomberg is reporting that Apple and News Corp (owners of Fox) are in talks to deliver 99 cent rentals of TV shows. If that’s true, it’s at a price that will finally make individual, a la carte rentals enticing to most people.

If the rumors are true, will you buy an iTV? Why or why not? Will iOS’ closed ecosystem be a benefit or a liability in your eyes?