The Missing Screen

By Timothy R. Butler | Posted at 2:57 AM

While the January 2007 unveiling of the iPhone was over a year prior to the App Store launch, the iPhone was already stunning at its initial unveiling despite its limitations. I suspect if a nearly empty app store had been unveiled at the same time, if anything, it would have merely been a negative distraction to the overwhelmingly positive points of the device. The lack gave time for the iPhone’s merits to build up a market for the store that in some ways felt like it should have been there from the beginning. The iPhone and, eventually, its app store, also helped create the market for the tablet, and, I’ll up the ante, the product after it.

The influence of the iPhone on the advent of the iPad or iSlate or the iWhateveritwillbecalled really cannot be underestimated. Given that virtually every touch screen device prior to the iPhone was – at best – mediocre, would anyone really take Apple’s tablet entry as a serious industry force now if not for the iPhone? Would Apple even bother to enter the market?

In mindshare and, of course, programming framework, the iPhone provide the foundation for the tablet market. Established as the touch OS company, people are ready for a tablet made the way Apple makes things before it has even been demonstrated.

Apple, it would appear, already had bigger things (literally) in mind when the iPhone came out. But, iPhone was necessary to create the environment in which a tablet computer could finally become a reality. A tablet will need an application ecosystem to be a success, but such an ecosystem does not appear overnight. It is a chicken and the egg sort of problem that could kill an otherwise good tablet. The iPhone did not need apps to succeed. By becoming entrenched first, and then allowing apps in once virtually everyone was demanding them (and, hence, developers could not wait to produce them), Apple was able to launch an ecosystem that can now support a device that will be absolutely dependent on it: the tablet.

Like the larger app situation, I would wager that the success of the subset of the app store that is gaming was anything but unplanned as well. Long before the first demos of “Super Monkey Ball” showed off the intriguing possibilities of iPhone gaming, surely Cupertino was already planning to make a gaming move – but, if it had been announced too early, and with too much initial fanfare, it might of flopped. That people bought the devices for other reasons and – oh, by the way – it also plays some really pretty competitive 3D games, has been a good strategy for Apple.

Now, imagine you take the same philosophy and apply it to the tablet. Obviously, the tablet has to be a lot more than a game machine for the prices it will command. But, if Apple has put the right hardware bits in there, behind more conventional pursuits such as viewing textbooks and watching movies, the tablet will also turn out to be an even more intriguing gaming device than its smaller, older brother.

If such a strategy works, and there is every reason to expect it will, Apple will be in an unprecedented spot. Walking right through the graveyard of failed attempts to create viable portable gaming platforms, Apple will have two portable gaming options and one of them will be in a league by itself, comparable neither to the small screens of the DS, PSP and iPod touch, nor the large screens of the consoles and PC gaming setups. Few things could do more to solidify Apple’s spot as a major gaming force with a familiar development architecture that game developers are increasingly comfortable and competent with.

In the midst of this, we see the lone poor performer among the major initiatives of the iCEO: the Apple TV. Something is odd about this device. Other than some software facelifts, the system has hardly been touched in nearly three years. Left to grow old by a company that killed its most popular iPod at the height of that popularity to launch something new. In a sense, the TV remains the missing screen in Apple's strategy to be the home media hub.

Meanwhile, Microsoft and Sony provide good alternatives for getting video and music content from one’s computer to the TV in more powerful and nearly as affordable – or even more affordable – packages. They also just happen to be major forces in the gaming world. Much as the iPhone is a great multimedia and communications device that just happens to play games, so too the PlayStation 3 and Xbox 360 are gaming devices that just happen to be very interesting media hubs.

Mightn’t there be something else in the Infinite Loop skunkworks to answer the big screen entertainment challenge better than an increasingly dated Pentium M-based Apple TV?

Many, many companies have tried to get into the console gaming space and you can count the successful attempts on your fingers – the really successful attempts on one hand, even. The situation is similar to portable gaming: those that entered head on have mostly failed, save for the GameBoy/DS empire and the Sony PSP. Apple entered with a Trojan Horse, as we saw, and hence was able to get around the chicken and the egg problem of launching a new gaming platform.

If Apple had launched a full-fledged Xbox 360 or PlayStation 3 competitor without immediate and wide scale developer support, it would have been dead before it ever got on shelves. Moreover anything that even smelled like a Trojan Horse would have likely led to jokes about the late Pippin project and very little else. So, Apple needed a placeholder to give a halfhearted media extender answer, the Apple TV, while it waited for the right timing.

A lot has happened since then. The Wii has shown that increasing graphics horsepower has potentially reached a point of decreasing marginal returns and returned some of the focus to simply having fun. Relatedly, the consoles have started to push major “app store” initiatives for obtaining not only major party massive budget games, but also an increasingly popular selection of indie games. Who do we know that is really good at running an app store full of independent developers?

Hold your horses for a moment. Even now that iPod touch gaming has become a reality, the jump to TV seems a stretch – not many existing iPod touch games could look very good on TV, even if Apple TV was made compatible with them. Apple needs an intermediate step if it is to assure its success — a “missing screen,” so to speak — to get from portable success to credible console. Something like, well, a tablet.

With the tablet launched, imagine Apple quietly updating the Apple TV later this year or early next to run on a supped up version of the tablet hardware, allegedly to benefit from better economies of scale through standardization. But this time, it will launch at a point when developers are already use to producing nearly full size screen games for an Apple tablet. As the existing App Store is a stepping-stone that enables the tablet, so too will be the tablet’s games for a revised Apple TV.

Nintendo, Sony and Microsoft should be scared.

Timothy R. Butler is Editor-in-Chief of Open for Business. Disclosure: Tim owns a small amount of Apple (AAPL) stock.

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