The existing market for set top boxes is heavily subsidized by cable operators, Jobs said, who "give everybody a step top box for free, or for $10 per month. That pretty much squashes any opportunity for innovation, because nobody's willing to buy a set top box.
"Ask Tivo, ask Replay TV, ask Roku, ask Vudu, ask us, ask Google in a few months," Jobs quipped, taking a pessimistic shot at Google's recently announced plans to put Android in a series of TVs and set top boxes. He noted Sony and Panasonic have already tried as well.
The problem with adding an additional box to users' experience, Jobs said, is that they then end up with a variety of different boxes, each with its own remote and a unique user interface.
"The only way that's ever going to change," Jobs said, "is if you can really go back to square one, tear up the set top box, redesign it from scratch with a consistent UI across all these different functions, and get it to consumers in a way that they're willing to pay for it. And right now there's no way to do that."
Jobs said Apple decided to work on the iPhone over trying to fix television, and again prioritized the tablet with the iPad over television, but that there wasn't any potential to really do anything in the television market anyway.
"The TV is going to lose until there's a better--until there's a viable--go to market strategy," Jobs said. "Otherwise you're just making another Tivo. It's not a problem with technology, not a problem with vision, it's a fundamental go to market problem."
Asked if it made sense to partner with a major cable company the way Apple partnered with AT&T to bring the iPhone to market, Jobs said, "Well then you run into another problem. Which is: there isn't a cable operator that's national. There's a bunch of cable operators.
"And then it not like there's a GSM standard where you build a phone for the US and it also works in all these other countries. No, every single country has different standards, different government approvals, it's very Tower of Bableish. No, balkanized."
Jobs concluded by saying "I'm sure smarter people than us will figure this out, but that's why we say Apple TV a hobby; that's why we use that phrase."