Originally Posted by solipsism
My first comment on this thread was a potential move from Apple to work with most, if not all, of the cable companies to supply a a device they could all use. Scientific Atlanta seems to have a monopoly on that market. I think Apple could undercut them while offering a better solution with a better UI and UX. The consumer wins by getting a choice, & cable companies win because they get a choice of boxes, potential low-cost up-front option from profit-sharing, and Scientific Atlanta steps up services and lowers prices to better compete. The only one who really loses here is Scientific Atlanta. If it uses CableCards the customer can still buy their own at full price and use on any cable company in the US as I think this is now a requirement. I think the only issue would be with satellite.
They (Scientific Atlanta/Cisco) don't. The market for STBs is just as balkanized as it is with content providers and service providers. Last year, the top manufacturer in the world was Pace, followed by Technicolor (formerly Thomson), Motorola, and then Scientific Atlanta/Cisco. And Pace only accounted for 7.0% of the market, and the top four manufacturers combined only accounted for 22% of the global STB market. It might seem like a particular box manufacturer dominates the market because a cable company (which has a local monopoly) standardizes around their offerings and that's all you see locally. But, in the big picture, there is no single dominant player.http://www.multichannel.com/article/...009_Report.php
The problem with trying to make inroads in the TV market is that the only truly national players are the satellite companies, and together they control less than 1/4 of the US TV market. Everybody else serves a local/regional monopoly. You can't grant exclusivity to one cable company, because that would completely lock you out of particular markets. The cable operators have effectively locked out regional competition by colluding with one another to horse trade their territories.
For example, Comcast and Time Warner traded their California territories so that now Comcast has a near monopoly on the entire SF Bay Area, and Time Warner controls most of the LA region. You can't serve the Philly market without talking to Comcast, and you won't get a sniff of the New York market unless you play ball with Cablevision and Time Warner.
This is not like breaking into the cell phone market, where Apple had a choice of national service providers to negotiate with -- each of whom could gain Apple significant market coverage at the outset. Apple built the iPhone so that it would work on AT&T's network, and that same GSM standard is used in other markets around the world.
TV is not that simple. The hardware specs are different between different service providers, and broadcast standards vary from country to country. Apple could market their own souped up STB to cable/satellite operators, but how many consumers would take the Apple option (esp if it's more expensive) and are there potential compatibility issues from system to system?
No matter which part of the TV nut Apple wants to crack -- whether it's the content side, the service side, or the hardware side -- there are a lot more market obstacles than existed in the phone market. Even though Apple had to confront an entrenched bureaucratic industry there, they only have to deal with one partner (or overseas, multiple partners that use the same standard).
Jobs did a good job at summing up the current state of the market.