Romil Patel's opinions on the tech industry.


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May 6, 2013
@ 9:53 pm
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Reflection

I wanted to put a post together to reflect on some of my past posts. Mainly to shine light on what my opinions were in the past in relation to various companies and how those opinions stack up to current day. So grab some popcorn, sit back and enjoy.

Post: Elon Musk is the next Steve Jobs

I should actually correct my thoughts here. Elon Musk is not the next Steve Jobs, but instead Elon Musk will be better than Steve Jobs and will have a bigger legacy.

Battery powered cars (Tesla) vs portable mp3 players (iPods)? Launching rockets in to space for exploration (possibly bring back rare earth minerals) {SpaceX} vs touchscreen smartphones {iPhones}? Notice everytime I mentioned Elon, I mentioned a different company he is associated with and everytime I mentioned Steve, I mentioned another product under the Apple brand. Now, I’m not saying Steve wasn’t incredible- he was phenomenal, but Elon is phenomenal on a whole different level since he runs Tesla and SpaceX and is the chairman of SolarCity all at the same time. 

Post: Why Tesla will be a $200B+ Company

Time will tell if this is true, but lets look at the stock from when I wrote the post to this date, it was trading around $27- and some change and as of market close on May 6, 2013 (the date of this post) Tesla was at $59.50 with about a $6.81B market cap.

https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1367438400000&chddm=195678&chls=IntervalBasedLine&q=NASDAQ:TSLA&ntsp=0&ei=IVWIUdinBcWZrAHo4AE

Post: Facebook Post IPO ammunition

Obviously Facebook got off to a rocky start in the public markets, but I stand next to my comment on CNN Money:

Romil Patel, the founder of video messaging app maker SayClip, echoed that view.

"Facebook not popping on IPO day just means that they priced the shares correctly, which rarely happens, and raised the fair amount of cash the company was aiming for," he said

Patel points to Amazon’s 1997 IPO as a similar example. Priced at $1.50 (after adjusting for later stock splits), Amazon’s shares closed at or below their offering price for 6 of their first 14 days of trading. They now trade at around $216.

"Look at the company now," Patel said of Amazon (AMZNFortune 500). “Facebook has the power to do the same.”

http://money.cnn.com/2012/05/23/technology/facebook-ipo-silicon-valley-view/index.htm

Initially Wall St. was hating on Zuck and Facebook, but they’ve come around, even Cramer thinks Facebook had one of the best conf. calls this past quarter.

They are ramping up mobile revenue and I feel they will deliver.

Post: Twitter Upset about Facebook-Instagram acquisition

Fresh off the press in Vanity Fair, first hand accounts by Zuck, Kevin Systrom and comments from Jack Dorsey and Dick Costolo about the whole thing.

Without discussing sources or contacts, lets just take a look at what the Twitter folk think about the whole incident.

After talking a while in front of a campfire over drinks one night, Dorsey and Twitter’s then chief financial officer, Ali Rowghani, proposed to Systrom what they considered a formal offer to buy Instagram. The price was in the mid-$500-million range, a combination of restricted and common stock—but no cash.

Dorsey goes on the comment— 

 “I found out about the deal when I got to work and one of my employees told me about it, after reading it online I got a notice later that day since I was an investor,” he says. “So I was heartbroken, since I did not hear from Kevin at all. We exchanged e-mails once or twice, and I have seen him at parties. But we have not really talked at all since then, and that’s sad.” 

Post: How Zynga will be a $54B+ company

Obviously this hasn’t turned out to be heading in the right direction thus far, but I still believe my opinion remains the same. I’m bullish on Zynga and the real money gambling has commenced! Just read the post if you haven’t.

Post: Facebook Just Killed Snapchat with “Poke” and that is perfectly fine

So this may have turned out not to be accurate. Snapchat is still thriving and Poke is nowhere to be found, even with Facebook’s marketing power. It could be that they just aren’t focused on the marketing of Poke, but apparently Snapchats stickyness, has still stuck with the userbase. 


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Dec 22, 2012
@ 11:24 am
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4 notes

Facebook just killed Snapchat with “Poke” and that is perfectly fine

As you may or may not know, Facebook recently launched its Snapchat competitor, called “Poke.” With this, I think it is safe to believe Facebook just ate Snapchats breakfast, lunch, dinner and even fourthmeal. Both apps basically do this: let you take a picture or 10 second video and send it to anyone, which self destructs (deletes itself), after a set number of seconds you set (1-10). And lets not even get into the real reason why people use it.

Silicon Valley is voicing their opinions about how Facebook just “cloned” Snapchat and put it out there if you go read the tech blogs, their comments, or tweets that people are posting about the situation. Even the app reviews for Poke have voiced the fact that Facebook replicated Snapchat.

But honestly, it doesn’t even matter. Here is why: Facebook tried to buy Snapchat and most likely offered them $XX millions or possibly $XXXMM. This is for a company that has been around since about May of 2011 (with no revenue). But the mindset of entrepreneurs in the Valley has got so murky lately with valuations in the hundreds of millions and even billions, people are deciding not to accept these “low” offers. That’s completely fine, but you can’t expect to not sell your company and also not (for lack of a better term), get screwed. It also comes back to the VC, Benchmark capital is said to have invested $8MM at a $50MM valuation in Snapchat (I’m not sure if the round has closed or not yet), in my opinion, hoping they can replicate what they did with Instagram. There is no way Snapchat is worth a legitimate $50MM in my eyes. VCs have got the tendency to agree to ridiculous valuations out there these days, driving the price up, so even if someone wishes to acquire said startup, they HAVE to pay ridiculous prices. Going back to the real purpose for the app, it’s kind of odd that a VC would even back the company. Backing companies like this, or even worse, companies like Skout which in turn yield situations like this, says a lot about a VCs morals. It is perfectly fine to want to make crazy money and generate insane returns, but there are many legitimate opportunities to explore. 

Now back to Facebook, since they weren’t able to acquire the team, they built the product. And that is perfectly fine, in my eyes. Why? Because there is nothing special about an app that lets you send a picture that deletes itself after being viewed. In addition Facebook also has the leverage to get people to download the app and use it. In fact, as I’m writing this they are the #1 app in the app store, primarily because they put a huge banner in the Facebook mobile app, asking people to check out their new app called “Poke.” You simply cannot compete with that kind of branding/advertising/whateveryouwanttocallit. People who haven’t heard of Snapchat and don’t care that FB made a similar product, won’t even care about the fact that they weren’t first. It doesn’t matter! Also, I’m not even sure this will be a sustainable product. For the purposed it is being used for (linked above), it surely may be a fad. Some of the reviews in the app store, who probably have never heard of Snapchat, say they don’t get why you’d want your photos deleted. These are probably folks who don’t post questionable things, a.k.a. normal people. IF thats the case, both apps will be irrelevant in a matter of time.

It is safe to say it is over for these feature apps, with dead simple products. If people are building features, without any unique proposition, they’ll definitely get their fourthmeal eaten, and they, and people in the Valley, shouldn’t be bitter about it.

As in poker games, it looks like Snapchat got greedy, overplayed their hand and it came back to bite them. Good luck to both parties. Props to Zuck for fulfilling a fiduciary duty to shareholders and not being swayed into paying more money than realistic and just building out a product that is easily replicated. And you can bet if Facebook was public at the time of the Instagram acquisition the stock would have tanked for spending a billie ($750 millie) on a company without a penny in revenue, on top of being micro-analyzed as a CEO for doing that.


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Nov 18, 2012
@ 8:13 pm
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3 notes

Fixing Silicon Valley before it craters

Its no secret around the valley that valuations of private companies have been cooling off faster than a freshly baked cookie due to the recent botched IPOs of some well known valley companies. Some of my angel friends said they’ve stopped participating in angel deals, even on saying “they’ve hung up their apron for good.” It’s also no secret that Silicon Valley is getting kicked around by Wall St. Wall Street thinks (whether you agree or not), Valley IPOs have gotten heavily overvalued and can no longer take the companies seriously in hopes for revenue. Also to be clear, every single entrepreneur in the valley is doing it for the money, whether they say it or not. “Passion” is something I consider bullsh*t because creating a business is not about flowers and unicorns, it’s about the bottom line…and nobody is going to start a business they aren’t interested in- so can we please stop throwing the word “passion” around like hot potato?

But back to my original thought. Angels have closed their wallets even though valuations are coming down. Why? Valuation isn’t the only problem. It’s the fact that talent is spread too thin and hiring the best talent is becoming a joke alongside the fact that there are too many funded “forced businesses,” where the talent is stuck just because the money is made available to them, leading to a hike in pay packages for remaining “talent.” Can we all take a minute to think about the pre-2006 era? Facebook wasn’t started as a business; it was a project. The whole accelerator/incubator (herein referred to accelebator**) thing is obviously out of control and the rich guys (the angels) are not digging it. Obviously this post is not a jab to any accelebator, but the reality is companies are being forced out like a assembly line and it’s actually freaking people out. In fact, it all boils down to GREED. An angel friend of mine told me and a couple others that an accelebator has been “pimping” startups they know that are garbage (for lack of a better term; or bound to fail), just to secure the next round of capital. This includes companies that don’t even have a MVP (minimum viable product). You may think, who cares? But I’ll get to that point.

All roads lead to an IPO or acquisition. Liquidation is inevitable for companies that have venture capitalists involved. It’s costing startups a pretty penny to hire any and all talent they can find since almost every engineer (leaders or not) has the ability to possibly get accepted into an accelebator or scratch together some funds from someone willing to take the dive. Therefore the juggernauts are raising capital at insane valuations (while having a legitimate business; only being overvalued, because they have to), only to be a bust on an IPO. Back to greed, a lot of VCs are being dousches and wrongly driving up the value of the companies by enabling this all. Everything is resulting in dumb money floating around Silicon Valley. When dumb money floats around, companies start to be given blind values and with the ability of “any” (and I use that term loosely), accredited investor being able to invest in the second market, people are bound to lose their shirts, by unknowingly believing in the hype and some already have. If a company is generating $100MM, since when is that a “small company” or not good enough? Why must we embellish the value and hype it up just to flop an IPO? The public markets WILL ALWAYS correct the value of overhyped companies. And the public markets WILL ALWAYS drive the value of companies who are undervalued up. It’s just how they operate.

If engineers are able to get $any-X MM pre money valuations for their companies coming out of accelebators, the legitimate companies are forced to make them salvate to come work for them instead of attempting their own venture. This means showing the value of the legitimate company is going up like a weed, offering a crazy salary, topped off with all kinds of perks and even acquhires; bottom line these things add up as costs to the legitimate biz, forcing the value to go up in order to raise more capital even though the business doesn’t deserve it. As a private company offering all this, venture investments have are in the hundreds of millions (for all the recent IPOs) at billions in valuation. When the company is only generating a few hundred million or even a few billion, valuating it at xx-xxx billions, seems a little out of hand. This can only result in a negative market value post IPO.

I’m not a story teller, so this post may not be perfectly worded or structured, but I hope you get my point. It’s all a ripple effect. Everything is intertwined. And if the Valley doesn’t check itself, more people are going to continue to lose money, hiring is going to continue to be an uphill battle, and a bunch of “forced businesses” will try to go on like zombies.

Either way, feel free to discuss this post in the comments. Love to hear your thoughts whether you agree or disagree.

**Accelebator is a word I made up. Pronounced ak-cel-e-bait-or. To manufacture then bait and switch forced and unproven “businesses” in tech more often than not.


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Apr 17, 2012
@ 2:28 pm
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3 notes

How Zynga will be a $54 Billion+ company

Yadda, yadda, yadda, Zynga this Zynga that. You’ve probably heard every guy on Wall Street nag on the company. These so called “analysts” are not qualified to judge Zynga in my mind. First of all, they take a traditional approach to judging a company like Zynga, as if it were in the semiconductor space or financial sector. Zynga is in a totally different space. Then on the other hand, they’ll put all internet companies in the same boat. Zynga and Groupon are not the same kind of company. I don’t even consider Groupon to be a ‘tech’ company, it feels more like a sales company to me. So analysts need to stop putting every internet related company under the same umbrella.

Now that I’ve said my spiel on Wall St, let me get to the goods of this post. I feel Zynga will be worth $54 Billion or more in the future (a significant gain on their current $7.2B market cap). And for a very good reason: Online gambling, specifically online poker and mobile poker. Just think of how addicted the world is to online poker— even if you know nothing about playing poker, you know poker players love it. Now take those same people and give them an iPhone app, or Android app and let them play poker on their way to work on the subway. That gets even crazier, right?

Poker fans are no doubt die hard gamblers. And Zynga does well with fake poker. The rumors are that Zynga is scouting out a partnership with Wynn, one of the most well known gaming brands in Vegas. And no doubt, there is a lot of red tape and legality issues Zynga and their partner will have to work with. But honestly, what is the difference between someone gambling at a casino and at their house with their laptop? In my mind nothing. And in the minds of poker players —also nothing, except for the convenience. Now I’ve never played online poker, in fact I don’t even know how to play poker, but I know that the revenue stream this could create from taxes is HUGEE (that deserves two e’s).

We all know our economy is in the trenches, and in order to come out of it, we will have to allow innovation like this to create new revenue streams. Good things don’t last forever, so sometimes changes are a great thing. I mean you hear about immigration laws all day from Silicon Valley moguls, telling you the laws are driving innovation outside our country. Why are we letting these opportunities slip away? Because we won’t change. And even if Zynga can’t get things done fast in the US, then there is always the UK, where online gambling is legal. Zynga already has a huge audience they can leverage and an established brand name, so it could be highly disruptive. After all, Zynga is a global brand with offices in more than just Silicon Valley.

Now to the even better part, how do I think Zynga will be a $54B+ company? Simple. Casino brands like Las Vegas Sands ($42B), Wynn ($12B), and others are valued in the billions. These brands operate on business, for the most part, from guests being physically at the locations owned by the casino brands. There is no virtual gambling or anything like that. Now, given that not all of their revenue comes from gambling, but from dining, shows, rooms, etc- I do admit that their value is not solely based upon gambling. But in return Zynga reaches a larger audience when they implement gambling on the internet- everyone, everywhere it is legal (and I believe laws will tip in Zynga’s favor soon) because it will be a huge revenue stream for the government. So to conclude, I take into account the value of these resort enterprises, and feel Zynga will be valued at the combined value of two of the most valuable casino brands, if not more. We also have to take into account the value of their current business; casual gaming. It’s big and no doubt successful.

I don’t think the average stock market investor knows how to analyze Zynga (I’m talking about the guy who lives in Iowa that owns a small business, etc), so they have to make their investing decisions off of what the street analysts say. From that, they are only left to believe what they hear about Zynga, but frankly, the analysts can’t even see the vision—after all what the heck have they ever built? They are not builders, thinkers or entrepreneurs, for the most part they just comment on things they have no domain expertise to comment on.

Disclosure: This article is based upon my opinion. You should make your own decisions and opinions. In no way is this investment advice and I am NOT an investment professional.


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Apr 9, 2012
@ 3:00 pm
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Twitter Upset about Facebook-Instagram Acquisition

So Facebook just announced they acquired Instagram for $1 billion…who knew? Well, Twitter knew - and they are pretty upset about it. I’ll get to that in a minute. But first let me congratulate the Instagram team on creating a product everyone loves and much success. Also, to be honest, the majority of Instagrams popularity and success should be credited to Twitter. Sure there was Facebook where people sometimes shared filtered photos, but Twitter was where people constantly shared Instagram photos- versus say um…Twitpic?

According to someone close to Twitter, Twitter was interested in acquiring Instagram. But why did it not happen? Here’s why: Twitter didn’t have the means. And now they are highly upset about the whole situation.

Obviously they wanted to get their hands on the Instagram property because of the strong user engagement that Instagram users have, in essence creating more value for Twitter shareholders.

The main difference between Facebook and Twitter is that Facebook is going to have an IPO very shortly. This means that their stock is very attractive (and straightforward), Unlike Twitter who’s stock is harder to figure out the real value on. Also the cash reserves for Twitter are nowhere near the reserves of Facebook. Twitter doesn’t really have a healthy stream of revenue like Facebook so the billion they raised in total is about what they are running on.

But lets get to the Instagram acquisition. It all comes down to money (and with money- CASH is king). I’m sure if AOL decided to write a check for $1.1 billion or more in cash (digging in to the proceeds of their patent sale to Microsoft today), Instagram might have exercised that opportunity. Twitter just didn’t have the money it needed to persuade the Instagram team to sell to them. Nobody wants Twitter stock when they can get Facebook stock which perhaps will pop on IPO day and is super hot. Obviously Twitter couldn’t write a $1 billion check and call it a day. It’s well understood that the majority of this Instagram acquisition was Facebook stock and not cold hard cash (although some), because Facebook stock is almost as worthy as cash (if not more because of the perceived notion of a IPO pop).

But what’s more interesting out of all this, is that this will force Twitter to ramp up revenue so they don’t let opportunities like this slip away in the future to a cut throat competitor like Facebook.

Oh and you can bet Twitter is going to start aggressive in-house filtering of photos.

I should also note, Jack Dorsey (the creator of Twitter) was an investor in Instagram. Clearly, that had no outcome on the acquirer though.


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Apr 9, 2012
@ 1:08 pm
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FACEBOOK ACQUIRES INSTAGRAM

Breaking! Nobody has covered this yet! Facebook is going to acquire instagram!

https://www.facebook.com/zuck/posts/10100318398827991

Update: Here are the goods. Facebook bought instagram for $1 Billion in cash and stock. And yes, that is for a service with not a penny in revenue. The message: Build great products and liquidation will come?


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Mar 15, 2012
@ 11:00 pm
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SayClip launches on Mac OS X

                             

I’m pleased to say that SayClip has made its way onto Mac OS X. This felt like a natural extension of the platform that started on iOS and the web, moved to Android, and now is part of OS X. The app really has seamless integration to users’ desktop screens because it runs off the menu bar similar to other apps, such as Dropbox. While it is running in the background, the app icon will be dark until you receive a “SayClip” from one of your contacts, at which point it will light up, just like the image above. This is a subtle indicator of a new message which users can respond to on their own time.

The app is quite dead simple to use and there is absolutely no learning curve. In fact, I believe a 5 year old could use it if they tried.

Here is an example of how the app runs, when there are no new messages:

Here is how it looks when there is a new message:

I think the great thing about being able to use SayClip from your desktop or laptop is mainly the ease of use, but the whole experience is much faster than using it from a mobile device. Uploading a message doesn’t take long at all, viewing a message, etc- nothing takes more than a few seconds to do. Since SayClip allows people to group message each other, this is a perfect tool for families to share special moments or even just say “hi” more often, privately- knowing only their recipients will be able to view the content and not anyone on the internet!

The app has been in private beta for the past few weeks and was being used across various continents. Users across these continents have expressed this has changed the way they’ve stayed in touch with family recently. No more waiting for those once a month Skype sessions with 8-12 hour time differences. No more expensive phone calls overseas. Even within the nation, people have expressed the ease of sending a message has made them kind of addicted to the service since they can send a simple “hello” while they are checking emails at work.

So I’ve given you my spiel, now go download SayClip for Mac OS X and let me know what YOU think! Head over to SayClip.com and click the ‘now available on Mac’ badge to download. By the way, it’s free. And there are no ads.

P.S. A lot of companies have forgotten about the desktop! Every tech company that matters has an iOS app and probably an Android app, but many have forgot that people spend the most time behind the screen of their computer when it comes to gadgets. This is one of the main reasons we’ve created a native SayClip Mac OS X app :)


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Feb 3, 2012
@ 9:24 pm
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43 notes

Facebook Post IPO Ammunition

In technology companies, you see a lot of hype pre IPO and even in the first few days of trading, however as time goes by a lot of companies lose the heat and buzz it had in the initial days of trading. We’ve seen Demand Media go as high as 27 and some change to as low as 5 and some change, currently trading around 6 something. Then we’ve seen juggernauts like Zynga who had a struggle out of the gate, but are now doing well- particularly due to Facebook’s S-1 filing stating ~12% of revenues come from Zynga.

This leaves a question, and a huge one at possibly $100B market capitalization; will Facebook be steamy enough for the public market post IPO? My thoughts are yes, it will be- here’s why:

  • Facebook might do search
  • Facebook might start their own ad network- “FaceSense and FaceWords” if you will.
  • Facebook might get into entertainment

These are some thoughts I have and I think Facebook will get aggressive with these after their IPO. Lets take search first. 

Search is huge if it’s done right. That’s why Microsoft has invested billions into Bing and a lot of small startups try to do search. Search is also hard. Why? Because people naturally think Google when they think of search. Microsoft has the money to blow on Bing and so far, it hasn’t turned out all that bad, but you see a lot of startups come and go because search is also costly if you can’t attract and audience. It’s mainly hard for people to make the switch because in order for them to see a real benefit of leaving the big G, the search experience and results have to be more than 10-30% better. However, Facebook would not have this be a huge problem because people naturally spend time on their site for other reasons and there is a white bar just waiting for users to type something into. Currently, FB uses bing for their web results, but having a in house engine could be a huge cash cow, even if the results are not more than 10% better than Google. But those are the nitty gritty details of the outcome, shareholders will just be optimistic off the fact that they are taking a go at search in general because Google has built this huge empire off of it.

If Facebook did an ad network, that would also be a huge cash cow. This would go hand in hand with search. They already sell ads in house for their own inventory, so why not expand it to third party inventory? There’s no reason not to. Google has AdSense and AdWords, and Facebook could definitely take a jab at that business if they wanted to (which I’m pretty sure they will.) Given that Google makes a couple billion a quarter (don’t quote me on the exact number) from AdSense partners, this type of model would boost FB revenues significantly on an annual basis. And getting people to switch wouldn’t be that difficult if they made it lucrative and juicy for publishers, but even beyond- “cooler” with the “Facebook factor.” Instead of traditional ads, Facebook can essentially bring the whole Like system and more to third party ads. If you buy likes within Facebook right now, can you imagine buying likes on keyword specific sites? For example, say you are ShoeDazzle and you are targeting shoe maniacs; imagine the ability to buy new likes through Elle.com or some other fashion site. The problem with internet advertising is that you cannot always get people to convert to a sale, and if they  click and come over to your site and leave without buying, they are gone- forever! Instead, the ability to buy a like and then gradually convert them into a lifelong customer seems more valuable, especially when done outside the Facebook ecosystem on a third party fashion (or whatever else) portal.

Lastly, I think there is some level of expectation for Facebook to get into some kind of content business. Entertainment is huge online, whether it is through Netflix, iTunes, Hulu, etc. But people hate having to maintain multiple accounts on various platforms- it’s just too much work. Since people already spend a boat load of time on FB, If Facebook can figure out how to tie all this together and deliver content through FB accounts they can quite possibly disrupt Hollywood in a positive way. Getting people to rent on the platform through credits would be an ideal play in my mind. Rewarding people with credits initially to rent movies and then letting them pay for credits once they are into the idea of renting movies via Facebook. How much more targeted can it get? I think a reason why Facebook might increase the rate of rentals over sites like YouTube or even iTunes is for the simple fact that users spend more time on site, potentially swaying them to spend more money.

Anyways, these are just some thoughts I have on their future and I could be wrong.


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Jan 27, 2012
@ 10:54 pm
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4 notes

What’s next for Apple? Gaming. No, not casual games on the App Store, an actual console called iGame.

Besides the obvious, iTV, iPhone 5, iPad 3, what’s the next big market Apple will enter? Gaming. A bird might have hinted to me, Apple will build real consoles like Microsoft has for Xbox and Sony has done for Playstation.

A gaming console from Apple, iGame (if you will), makes perfect sense if you think about the model Apple uses, which is disrupting a large existing market with a way better product that anyone out there. They’ve done gaming for regular folks to enjoy on their iDevices, but now for the real gamers will come an actual gaming console where they can enjoy playing hours of Call of Duty, Madden or whatever else they please. And I wouldn’t be surprised if Apple integrated the iGame experience into their iTV. Imagine not having to buy a console, just popping games into your iTV, like you do DVD’s into your iMac, and kicking back for hours scoring three pointers.

An integrated gaming experience would surely give the iTV the “wow” factor no other tv has, but will definitely give the massive gamer market a damn good reason to actually take the dip and buy a new television set, despite all the other goodies of the iTV like a la carte subscription based programming.

But there’s more to it. I feel Apple will take gaming a step further, by possibly eliminating the need to buy physical discs. Just log into your iTunes, type a title, and click purchase- and download directly to your iTV. No scratched discs, no breaking them, no friends borrowing and never returning, no hassles. All you gamers out there, can you imagine getting the next title of your favorite game instantly, instead of having to wait in line and hope that you’ll be early enough in line to actually make the cut for limited quantity?

There’s no doubt the gaming market is a huge market and people don’t always give new gaming devices a chance, but gamers are usually geeks, and geeks usually use Apple products, and if Apple makes a gaming console- integrated into iTV or not- I feel they will be able to penetrate the market.


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Jan 26, 2012
@ 6:59 pm
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2 notes

What the Apple TV or “iTV” will be like…

Apple just came off of a smoking hot quarter, but now everyone is thinking what the future holds for the technology juggernaut. There are talks about the obvious- iPhone 5 and iPad 3, then there are talks about new Macbooks, and lastly talks about Apple’s physical TV set or iTV as I like to think of it.

I’ve been meaning to comment on it for awhile now, but what better time to discuss the potential of iTV than now?

It’s obvious that Apple won’t just put out a tv set to say they have one and compete against the dominant players like Samsung and Sony in the space. Knowing the Apple we know, they’ll put out something truly unique and disruptive to say the least, to which all of our jaws will drop to the floor.

So what do I think the key features of iTV will be? Here’s what I think:

  • iTunes will be integrated
  • You will be able to download apps on it
  • You will have an a la carte style of programming selection (more below)
  • The tv itself will come with hard disk space (or flash memory) to record shows, which will eliminate the need for a separate DVR
  • Ability to use your iPhone/iTouch/iPad for the remote

I’m sure there will be more features than I mentioned and while some of the listed features are probably obvious, the one thing I’m really betting Apple will introduce is a la carte programming.

For years, television programming has never changed. Either you have cable, satellite, or something free over the air. Now we have options like Netflix, Hulu, Amazon prime, etc- but those don’t count.

I have a feeling that Apple will introduce a way to subscribe to individual channels for individual subscription costs. Meaning if you want to watch ESPN, CNBC, and CNN for example, you pay for only those channels through iTunes or something connected to the iWorld. Americans pay a lot for cable or satellite and yet we only watch a small handful of the hundreds of channels we pay for. What a waste- it’s like buying dinner for 4 when all you are feeding is yourself. Why pay $40, $60, $100 or more per month for things you don’t even care for? Instead why not pay for individual subscriptions say $1.99, $2.99 or even $4.99 per month, depending on the channel? Imagine the subscriptions for a middle aged businessman versus a young high schooler versus a grandmother. The options are limitless.

I think Apple would have introduced the iTV by now, if they could get these content deals in place, but the major thing holding up the announcement of the iTV is probably structuring these deals. I’ve heard of reports saying they’ve been working on the iTV for multiple years and unless they’re making a tv set that projects a virtual hologram, I don’t think the technology would take them “years” to refine.

Just think about it for a minute, “cutting the cord,” all the hype in the media these days, but actually doing it with the sense that you are saving money and only paying for what you want. A nice clean bill for your favorite network of channels.

Think about the cash flow from something like this. Suits everything they’ve done in the past. Reoccurring revenue from iTunes after you buy an iPod, reoccurring revenue from the App store once you buy an iPad, a cut from all cellular plans once you buy a subsidized iPhone.

I made an interesting comment among my group of friends recently, stating my opinion of Apple being the first company ever that will reach a trillion dollar market cap. I guess we can start by taking Comcast’s and Time Warner’s and give Apple another $94B to pad that $414B as of writing this article. Maybe add a little Sony dollars in the mix. :)

Sounds like an Apple kind of thing to me. Of course, this is all my opinion and it’s not like I spoke to Steve Wozniak about it.