I think going with a physical TV makes very little sense to Apple - the actual value they can add to the TV outside of the AppleTV functionality itself, is very minimal. All the functionality mentioned in this article is already possible with a reinvented Apple TV.
I think the way Apple will go ahead will be the following:
- Move Apple TV to iOS, opening up AppStore.
- Cloud based DVR with limited local DVR.
- Built in Video tuner capability to hook up other devices
- Sell cheap iPod Touch as a iControl remote control unit, including IR Transceiver, WiFi, etc.
- Sell motorized iSight camera to be mounted on top of TV - with pan, zoom functions. These functions should be controllable from iControl as well.
- Integrate DVR functionality with MobileMe - so that we can enable and change recordings from anywhere in the planet.
- Integrated SlingBox functionality for place shifting - using Mobile Me - any content available from Cloud will be streamed from Cloud
I do desperately need a totally simple, invisible way of using a central server to backup and serve content among the multitude of Apple devices in my household (one PC, three Macbook Pros, three iPads, three AppleTVs, three iPhones and one iPod).
Currently there are a distressingly large number of repeat purchases each month. It shouldn't matter who ordered what on which device. I need content to automatically be available on all devices in the household without holding training classes.
Thiy is a real need that should be address ASAP. Currently iTunes sync with multiple devices on different Pc's/Macs is a nightmare. They need to give us an easy way to setup an unique itunes server that would sit for example in "Time Capsule" and would served everyone in the house and could combined purchased made from multiple devices. Then we would need an easy way to backup the itunes library to an external HD or the net.
Explain please why anyone would want iOS to escape from the iPhone or iPod or iPad? It's a watered down crippled version of OSX. And it's a walled garden, why in the world would we want another device to have it?
.
With iOS, you have access to the App Store. Without it, you need some sort of weird third-party stuff that probably doesn't work.
With iOS, you can download apps. That is the coolest thing Steve ever invented.
All we really need is a good hookup to Apple's servers. The iPhone really took off when Steve invented the App Store, and I think that He could do it again with TV if he made it really easy to buy content. Subscriptions to all my favorite shows would be CHEAPER than buying those hurting BluRay disks at the end of each season.
I think content is a must, something they couldn?t secure with the original TV, but having an App Store for the TV would set it apart from all other media extenders. Until GoogleTV gets in that game.
His prices on the left are way off, even at Best Buy (who buys electronics there anyway).
Every time I go their I think the same thing. All the checkout lines go on forever. It is inconvenient, which is why nobody really shops their anymore.
Somehow, I belive that if we can think it up, Apple is already past that.
.
Exactly. Steve never gives its customers exactly what they want, but the customers eventually get used to it and then finally realize that Steve was right all along.
Every time I go their I think the same thing. All the checkout lines go on forever. It is inconvenient, which is why nobody really shops their anymore.
If nobody really shops there anymore then WHY all the checkout lines go on forever ?!?
Show me a STB that replaced my Cable, Blu-ray, Surrond sound revicer and Game Console (which i own none since my computer works better for gaming), and i would be curious, but not 100% convinced.
You need to think outside the "box".
What if you could get something from Steve that was just as entertaining as all that put together? Or more?
That is what iTV promises; no less than a complete revolution in home entertainment.
If anyone in their right mind thinks an Apple TV, integrated into a TV or not, could possibly replace that big stack of stuff in the Piper illustration, they're massively deluded.
How will an ATV replace an audio receiver for example? Will it amplify Dolby True HD and DTS Master and have a big row of 7.1 speaker terminals? Somehow, I suspect not. .
I think it depends. You're thinking of 'TV' as a single market. It's not.
My mother is about as technophobic as a person can be. She has TV and VHS, but can't watch DVDs until my sister comes over and plays them on her computer - because Mom is scared to death of adding another box to her system - and worrying about which button to push on which remote. Call it the 'grandma' market. For this market, a single box that did everything (even with lousy sound quality and no flexibility) might do very well.
Then there's the 'aesthetic' market. They are the sort who have a minimalist decorating style and struggle with hiding all the boxes and cables (as well as DVD boxes, etc). They might go for this - and would be quite willing to pay a premium.
Audiophile market (which is what you're talking about) is out. Not a chance in the world, but I can't imagine that Apple would consider for even a second going after that market.
Then there's the college student market. They just need something for their dorm room or apartment. Something to watch football, movies, and TV. Probably not too concerned about sound quality, but the space savings might be important. Would not pay a premium, but if they're heading off to school, they're probably going to be buying all those items on the Piper Jaffrey ad, so it might not cost more to get the Apple solution. I suspect that lack of BR might be an issue here.
I always thought it was a terrible idea, but I wasn't thinking about eliminating all of those things. If you look at it from the perspective of the ad, it's really not so bad of an idea. I would argue for including BR, at least as an option. (I know, not likely to happen). Also, I would like to see a Cable Card slot, but, again, probably not likely to happen.
Thiy is a real need that should be address ASAP. Currently iTunes sync with multiple devices on different Pc's/Macs is a nightmare. They need to give us an easy way to setup an unique itunes server that would sit for example in "Time Capsule" and would served everyone in the house and could combined purchased made from multiple devices. Then we would need an easy way to backup the itunes library to an external HD or the net.
In short we need a home "cloud" solution.
Snow Leopard Server does that. Buy yourself a Mini Server and you get everything you need.
(I'm not sure, but I think you can also do a shared iTunes file without using the server version of Mac OS X, as well).
If anyone in their right mind thinks an Apple TV, integrated into a TV or not, could possibly replace that big stack of stuff in the Piper illustration, they're massively deluded.
How will an ATV replace an audio receiver for example? Will it amplify Dolby True HD and DTS Master and have a big row of 7.1 speaker terminals? Somehow, I suspect not.
Will an ATV replace an Xbox 360 or a PS3? I'm sure it will play casual games and the like, but will an ATV be hosting the latest Halo, GTA, God of War, or Gran Turismo anytime soon? Again, I suspect not. Gaming in particular requires absolutely massive investment and commitment on all fronts which Apple have never shown the slightest bit of interest in. That the iPhone has proved popular for small scale gaming happened by accident, and it's an epic leap to take that up to the level Microsoft, Sony, and even Nintendo operate on.
And then there's the issue of replacing the humble DVR/Cable set-top box. Obviously this will depend on content and pricing, which Apple are currently miles behind on. I realise things are a little better in the US, but here in the UK the iTunes store is barren, grotesquely over priced, and usually not in even 720p, let alone 1080i or 1080p. Even if Apple was committed on this front would the providers play ball? What's in it for them to lessen the appeal of their own TV channels and platforms by offering everything a la carte to Apple?
Jobs was right when he said there was no way to break into this market.
that massive cloud system streaming in from N C . is how .
Personally, I think almost all the responses here are missing something. All of us are earnestly putting thought into this, but it all sounds like conventional thought.
I recall something about a remark that said that Mac market share is a rounding error: conventional thought.
I remember something about Apple can't build any kind of successful phone because they never have and have no idea how to: conventional thought.
I remember a general feeling that no one can build a successful tablet: conventional thought.
Now we're all lumping various combinations of what we see, or want to see, in our living rooms into what Apple should or shouldn't do: conventional thought. We're working with what pretty much already exists. Think outside the box (gad, a pun).
A few posts here did mention things like communication. Mom and dad sitting in the living room seeing the new grandchild via HD FaceTime. Somehow, I belive that if we can think it up, Apple is already past that.
I don't know what Steve and Apple are up to. But I hold a very high expectation that it's not conventional and we'll all wonder how we ever got along without it and why no one ever did it before. I can hardly wait. This is going to be fun and exciting.
I apologize in advance for any repetition - too many comments to do more than speed read.
The appleTV has multiple purposes as it now stands. I use it for some of the obvious ones - rent movies, watch pod casts - but I also use it extensively for audio. I connect to it from my Mac using the iTunes remote speaker feature, but I also have my entire CD collection loaded to it in ALAC. That alone was enough space to make it worth effort to upgrade the HD to 320GB, before it became easier to plug an external drive to the USB port.
Even my too-many-live-show-ravaged ears can hear the difference between a decent (not esoteric, just decent) receiver and speakers, and most "home entertainment" sound bar or plastic speaker systems. Changing the appleTV to an all-in-one would make little sense. And moving to the cloud presumes a consistent high speed connection, something that's hard to guarantee in a major metro area, let alone most of the US or elsewhere.
What I would like to see - better integration with third party remotes such as Logitech (though that is mostly Logitech's problem to solve); ability to use a Bluetooth keyboard to control it; ease in adding storage for those who want it, while not forcing users to pay for excessive storage they don't need; take the best of what boxee offers and integrate it into appleTV 4.0.
Am so waiting for this. Currently got an old desktop hooked up to the TV, and honestly that is the only TV I watch. I still have cable for the rest of the family and for sports, but other then that I just use Clickr to find what I need and watch it.
The only problem with TV that I can see is that it will be limited to whatever I can get on iTunes. Currently I can browse the net as a whole internet (not just apps or itunes) and can play flash and all, something I don't see TV doing.
You can have this today with a Mac Mini hooked up to your Samsung 1080P HDTV.
I have a solution for this already... I am getting the new MacMini hooked up to my 55" Samsung and a PS3 for Blu-Ray. The internet comes via a DSL, but I am about to switch to fiberoptic that offers 10, 30, 50 MB plans and symmetrical. Once I got that, I can even ditch the cable rip-off plan after I connect a digital antenna in the attic for local broadcast channels.
This way, I can watch 1080P BluRay movies, and some HD streamed content from Netflix, Hulu, You Tube, and over the air HDTV. The cable channels are just too full of garbage and makes no sense to have them. Even financial news can be seen via Bloomberg TV. Got to spend some $moolah and this is not for everybody. I can save $100+/mo in cable subscription per month so the MacMini has quick pay-off, plus I can surf the internet.
I hope Apple does well with iTV, but I do not see where they will fit in the market place. Content is the key and so far they have a hard time getting content. Plus makes no sense cutting the capability and go with 720P. So far it sounds like a MacMini Lite... kind like the PC Jr with the chicklet keyboard, if anybody is old enough to remember that fiasco.
$100/month to your cable company will be small compared to what you'll end up paying for all the internet subscription content. Hulu, Vudu, and even You Tube will all require a monthly expense.
You can add a simple Soundbar. Apple could take their iPod dock of old, make it skinny, and sell it as an upsell item with their new Apple Networked TV. It can decode multichannel audio and virtualize it. Audio would be much better than what is currently available on thin FPTVs. The Soundbar could act as a HUB for your other audio content (Playstation, DVR, BD, etc.).
One thing I didn't see in reading this thread, but which seems obvious to me, is the earth shattering impact of an AppStore for an iOS-based AppleTV device. If this device were $99, was physically small, had an HDMI port and a network connection... and developers could write apps for it... this could solve Apple's TV content problem, and it could revolutionize the TV industry.
Their lack of success with movies & TV on the iTunes Store isn't surprising as the market is huge, immensely valuable, well established, and populated with lots of players. A repeat of what happened with music isn't in the cards, if for no other reason that the content suppliers are already aware of what happened in the music industry. That doesn't mean that the AppleTV can't succeed though... on the contrary, if all the other content providers are able to run their own software on the AppleTV then suddenly the sky's the limit.
Hulu? There's an app for that.
Netflix? There's an app for that.
etc.
Apple will compete in delivering content alongside everyone else (hence their movement toward building a cloud), but they will sell the device and get their cut for each app sold. Big subscription players will give away their apps for free, just like Kindle, Kodo, the various internet radio apps, Skype, newspapers, magazines, etc.
A wild diversity of apps will appear on HDTV displays everywhere, and while Apple could conceivably ship their own line of TVs, I would not expect them to look upon that as the key to their business model... it would be more of a sideline much like their current display business is. Some people just like to buy Apple product, but the real win is that little $99 box that everyone will want when all the content sources make an app for it.
Apple will likely support an optional subscription payment system through their store as well, taking a small cut for the convenience of using their account system and the slick integration. This might be why magazine subscriptions are having issues with approval through Apple right now -- because Apple wants to move everyone to a unified model. No doubt the business models need to be worked out, but really Apple only needs a really tiny cut of each in order to make huge amounts of money. To all the app developers and content providers, paying a tiny percentage (note that this is different than the 30% cut that Apple takes for apps) is worthwhile because Apple shoulders the various IT tasks and they just get a cheque each month from Apple. Apple is no doubt trying hard to negotiate a good deal for themselves, but the reality is that if they want their platform to succeed, they need to make it attractive to all the providers. So giving the content providers options like "tiny percentage" vs. "flat fee", giving up any say on subscription pricing, and stepping back from policing content will be essential... and I believe inevitable for Apple. Certainly not all content has to go through Apple's servers, although they will happily provide that service to content providers as well.
Games follow naturally from this model just as they do on the iPhone/iPad. An A4 platform is not going to be able to compete technologically with the likes of XBox360 and PlayStation3, but it doesn't have to. Just like with the smartphone, games come along for the free ride. They will be better than PS2/XBox era games (more like Wii), but since the box is already there for other uses then having games available just becomes an added bonus. The biggest question is the control scheme, but if it has bluetooth then a wide array of possibilities opens up for those who want to get a bit more serious. As long as the basic control that ships with it is at least minimally functional then it will take off as a casual games platform. It also becomes an attractive platform for service providers like OnLive.
Other interesting possibilities would be leveraging the presence of a Mac/PC. The AppleTV will require that you have a computer networked to it, and that means there is the potential to use it as a storage cache. Perhaps even as a transcoder. A PVResque app provided by a streaming content provider could be told by the user to download some content to the computer to be watched at the user's convenience... potentially getting around issues with insufficient bandwidth.
Comments
I think going with a physical TV makes very little sense to Apple - the actual value they can add to the TV outside of the AppleTV functionality itself, is very minimal. All the functionality mentioned in this article is already possible with a reinvented Apple TV.
I think the way Apple will go ahead will be the following:
- Move Apple TV to iOS, opening up AppStore.
- Cloud based DVR with limited local DVR.
- Built in Video tuner capability to hook up other devices
- Sell cheap iPod Touch as a iControl remote control unit, including IR Transceiver, WiFi, etc.
- Sell motorized iSight camera to be mounted on top of TV - with pan, zoom functions. These functions should be controllable from iControl as well.
- Integrate DVR functionality with MobileMe - so that we can enable and change recordings from anywhere in the planet.
- Integrated SlingBox functionality for place shifting - using Mobile Me - any content available from Cloud will be streamed from Cloud
Have blogged in great detail about this at:
http://prastalk.blogspot.com/2010/05...einvented.html
That all sounds like, really hard. I think it is way too complicated.
I do desperately need a totally simple, invisible way of using a central server to backup and serve content among the multitude of Apple devices in my household (one PC, three Macbook Pros, three iPads, three AppleTVs, three iPhones and one iPod).
Currently there are a distressingly large number of repeat purchases each month. It shouldn't matter who ordered what on which device. I need content to automatically be available on all devices in the household without holding training classes.
Thiy is a real need that should be address ASAP. Currently iTunes sync with multiple devices on different Pc's/Macs is a nightmare. They need to give us an easy way to setup an unique itunes server that would sit for example in "Time Capsule" and would served everyone in the house and could combined purchased made from multiple devices. Then we would need an easy way to backup the itunes library to an external HD or the net.
In short we need a home "cloud" solution.
Explain please why anyone would want iOS to escape from the iPhone or iPod or iPad? It's a watered down crippled version of OSX. And it's a walled garden, why in the world would we want another device to have it?
.
With iOS, you have access to the App Store. Without it, you need some sort of weird third-party stuff that probably doesn't work.
With iOS, you can download apps. That is the coolest thing Steve ever invented.
All we really need is a good hookup to Apple's servers. The iPhone really took off when Steve invented the App Store, and I think that He could do it again with TV if he made it really easy to buy content. Subscriptions to all my favorite shows would be CHEAPER than buying those hurting BluRay disks at the end of each season.
I think content is a must, something they couldn?t secure with the original TV, but having an App Store for the TV would set it apart from all other media extenders. Until GoogleTV gets in that game.
His prices on the left are way off, even at Best Buy (who buys electronics there anyway).
Every time I go their I think the same thing. All the checkout lines go on forever. It is inconvenient, which is why nobody really shops their anymore.
Somehow, I belive that if we can think it up, Apple is already past that.
.
Exactly. Steve never gives its customers exactly what they want, but the customers eventually get used to it and then finally realize that Steve was right all along.
He is like Wayne Gretsky.
Every time I go their I think the same thing. All the checkout lines go on forever. It is inconvenient, which is why nobody really shops their anymore.
If nobody really shops there anymore then WHY all the checkout lines go on forever ?!?
Show me a STB that replaced my Cable, Blu-ray, Surrond sound revicer and Game Console (which i own none since my computer works better for gaming), and i would be curious, but not 100% convinced.
You need to think outside the "box".
What if you could get something from Steve that was just as entertaining as all that put together? Or more?
That is what iTV promises; no less than a complete revolution in home entertainment.
I got one word for you son: Apps.
If nobody really shops there anymore then WHY all the checkout lines go on forever ?!?
They sell a lot of Windows and Android stuff but they don't make any money doing it.
They sell a lot of Windows and Android stuff but they don't make any money doing it.
Those return pretty good profit at the retail level, its the manufacturers that are struggling from stiff competition, not the retailers.
If anyone in their right mind thinks an Apple TV, integrated into a TV or not, could possibly replace that big stack of stuff in the Piper illustration, they're massively deluded.
How will an ATV replace an audio receiver for example? Will it amplify Dolby True HD and DTS Master and have a big row of 7.1 speaker terminals? Somehow, I suspect not. .
I think it depends. You're thinking of 'TV' as a single market. It's not.
My mother is about as technophobic as a person can be. She has TV and VHS, but can't watch DVDs until my sister comes over and plays them on her computer - because Mom is scared to death of adding another box to her system - and worrying about which button to push on which remote. Call it the 'grandma' market. For this market, a single box that did everything (even with lousy sound quality and no flexibility) might do very well.
Then there's the 'aesthetic' market. They are the sort who have a minimalist decorating style and struggle with hiding all the boxes and cables (as well as DVD boxes, etc). They might go for this - and would be quite willing to pay a premium.
Audiophile market (which is what you're talking about) is out. Not a chance in the world, but I can't imagine that Apple would consider for even a second going after that market.
Then there's the college student market. They just need something for their dorm room or apartment. Something to watch football, movies, and TV. Probably not too concerned about sound quality, but the space savings might be important. Would not pay a premium, but if they're heading off to school, they're probably going to be buying all those items on the Piper Jaffrey ad, so it might not cost more to get the Apple solution. I suspect that lack of BR might be an issue here.
I always thought it was a terrible idea, but I wasn't thinking about eliminating all of those things. If you look at it from the perspective of the ad, it's really not so bad of an idea. I would argue for including BR, at least as an option. (I know, not likely to happen). Also, I would like to see a Cable Card slot, but, again, probably not likely to happen.
Thiy is a real need that should be address ASAP. Currently iTunes sync with multiple devices on different Pc's/Macs is a nightmare. They need to give us an easy way to setup an unique itunes server that would sit for example in "Time Capsule" and would served everyone in the house and could combined purchased made from multiple devices. Then we would need an easy way to backup the itunes library to an external HD or the net.
In short we need a home "cloud" solution.
Snow Leopard Server does that. Buy yourself a Mini Server and you get everything you need.
(I'm not sure, but I think you can also do a shared iTunes file without using the server version of Mac OS X, as well).
If anyone in their right mind thinks an Apple TV, integrated into a TV or not, could possibly replace that big stack of stuff in the Piper illustration, they're massively deluded.
How will an ATV replace an audio receiver for example? Will it amplify Dolby True HD and DTS Master and have a big row of 7.1 speaker terminals? Somehow, I suspect not.
Will an ATV replace an Xbox 360 or a PS3? I'm sure it will play casual games and the like, but will an ATV be hosting the latest Halo, GTA, God of War, or Gran Turismo anytime soon? Again, I suspect not. Gaming in particular requires absolutely massive investment and commitment on all fronts which Apple have never shown the slightest bit of interest in. That the iPhone has proved popular for small scale gaming happened by accident, and it's an epic leap to take that up to the level Microsoft, Sony, and even Nintendo operate on.
And then there's the issue of replacing the humble DVR/Cable set-top box. Obviously this will depend on content and pricing, which Apple are currently miles behind on. I realise things are a little better in the US, but here in the UK the iTunes store is barren, grotesquely over priced, and usually not in even 720p, let alone 1080i or 1080p. Even if Apple was committed on this front would the providers play ball? What's in it for them to lessen the appeal of their own TV channels and platforms by offering everything a la carte to Apple?
Jobs was right when he said there was no way to break into this market.
that massive cloud system streaming in from N C . is how .
Personally, I think almost all the responses here are missing something. All of us are earnestly putting thought into this, but it all sounds like conventional thought.
I recall something about a remark that said that Mac market share is a rounding error: conventional thought.
I remember something about Apple can't build any kind of successful phone because they never have and have no idea how to: conventional thought.
I remember a general feeling that no one can build a successful tablet: conventional thought.
Now we're all lumping various combinations of what we see, or want to see, in our living rooms into what Apple should or shouldn't do: conventional thought. We're working with what pretty much already exists. Think outside the box (gad, a pun).
A few posts here did mention things like communication. Mom and dad sitting in the living room seeing the new grandchild via HD FaceTime. Somehow, I belive that if we can think it up, Apple is already past that.
I don't know what Steve and Apple are up to. But I hold a very high expectation that it's not conventional and we'll all wonder how we ever got along without it and why no one ever did it before. I can hardly wait. This is going to be fun and exciting.
BINGO !!!!!
please post more often dude
9
The appleTV has multiple purposes as it now stands. I use it for some of the obvious ones - rent movies, watch pod casts - but I also use it extensively for audio. I connect to it from my Mac using the iTunes remote speaker feature, but I also have my entire CD collection loaded to it in ALAC. That alone was enough space to make it worth effort to upgrade the HD to 320GB, before it became easier to plug an external drive to the USB port.
Even my too-many-live-show-ravaged ears can hear the difference between a decent (not esoteric, just decent) receiver and speakers, and most "home entertainment" sound bar or plastic speaker systems. Changing the appleTV to an all-in-one would make little sense. And moving to the cloud presumes a consistent high speed connection, something that's hard to guarantee in a major metro area, let alone most of the US or elsewhere.
What I would like to see - better integration with third party remotes such as Logitech (though that is mostly Logitech's problem to solve); ability to use a Bluetooth keyboard to control it; ease in adding storage for those who want it, while not forcing users to pay for excessive storage they don't need; take the best of what boxee offers and integrate it into appleTV 4.0.
Apple plans to launch a connected, full-fledged HDTV in the next 2 to 4 years.
Absolutely will not happen.
Am so waiting for this. Currently got an old desktop hooked up to the TV, and honestly that is the only TV I watch. I still have cable for the rest of the family and for sports, but other then that I just use Clickr to find what I need and watch it.
The only problem with TV that I can see is that it will be limited to whatever I can get on iTunes. Currently I can browse the net as a whole internet (not just apps or itunes) and can play flash and all, something I don't see TV doing.
You can have this today with a Mac Mini hooked up to your Samsung 1080P HDTV.
I have a solution for this already... I am getting the new MacMini hooked up to my 55" Samsung and a PS3 for Blu-Ray. The internet comes via a DSL, but I am about to switch to fiberoptic that offers 10, 30, 50 MB plans and symmetrical. Once I got that, I can even ditch the cable rip-off plan after I connect a digital antenna in the attic for local broadcast channels.
This way, I can watch 1080P BluRay movies, and some HD streamed content from Netflix, Hulu, You Tube, and over the air HDTV. The cable channels are just too full of garbage and makes no sense to have them. Even financial news can be seen via Bloomberg TV. Got to spend some $moolah and this is not for everybody. I can save $100+/mo in cable subscription per month so the MacMini has quick pay-off, plus I can surf the internet.
I hope Apple does well with iTV, but I do not see where they will fit in the market place. Content is the key and so far they have a hard time getting content. Plus makes no sense cutting the capability and go with 720P. So far it sounds like a MacMini Lite... kind like the PC Jr with the chicklet keyboard, if anybody is old enough to remember that fiasco.
$100/month to your cable company will be small compared to what you'll end up paying for all the internet subscription content. Hulu, Vudu, and even You Tube will all require a monthly expense.
Their lack of success with movies & TV on the iTunes Store isn't surprising as the market is huge, immensely valuable, well established, and populated with lots of players. A repeat of what happened with music isn't in the cards, if for no other reason that the content suppliers are already aware of what happened in the music industry. That doesn't mean that the AppleTV can't succeed though... on the contrary, if all the other content providers are able to run their own software on the AppleTV then suddenly the sky's the limit.
Hulu? There's an app for that.
Netflix? There's an app for that.
etc.
Apple will compete in delivering content alongside everyone else (hence their movement toward building a cloud), but they will sell the device and get their cut for each app sold. Big subscription players will give away their apps for free, just like Kindle, Kodo, the various internet radio apps, Skype, newspapers, magazines, etc.
A wild diversity of apps will appear on HDTV displays everywhere, and while Apple could conceivably ship their own line of TVs, I would not expect them to look upon that as the key to their business model... it would be more of a sideline much like their current display business is. Some people just like to buy Apple product, but the real win is that little $99 box that everyone will want when all the content sources make an app for it.
Apple will likely support an optional subscription payment system through their store as well, taking a small cut for the convenience of using their account system and the slick integration. This might be why magazine subscriptions are having issues with approval through Apple right now -- because Apple wants to move everyone to a unified model. No doubt the business models need to be worked out, but really Apple only needs a really tiny cut of each in order to make huge amounts of money. To all the app developers and content providers, paying a tiny percentage (note that this is different than the 30% cut that Apple takes for apps) is worthwhile because Apple shoulders the various IT tasks and they just get a cheque each month from Apple. Apple is no doubt trying hard to negotiate a good deal for themselves, but the reality is that if they want their platform to succeed, they need to make it attractive to all the providers. So giving the content providers options like "tiny percentage" vs. "flat fee", giving up any say on subscription pricing, and stepping back from policing content will be essential... and I believe inevitable for Apple. Certainly not all content has to go through Apple's servers, although they will happily provide that service to content providers as well.
Games follow naturally from this model just as they do on the iPhone/iPad. An A4 platform is not going to be able to compete technologically with the likes of XBox360 and PlayStation3, but it doesn't have to. Just like with the smartphone, games come along for the free ride. They will be better than PS2/XBox era games (more like Wii), but since the box is already there for other uses then having games available just becomes an added bonus. The biggest question is the control scheme, but if it has bluetooth then a wide array of possibilities opens up for those who want to get a bit more serious. As long as the basic control that ships with it is at least minimally functional then it will take off as a casual games platform. It also becomes an attractive platform for service providers like OnLive.
Other interesting possibilities would be leveraging the presence of a Mac/PC. The AppleTV will require that you have a computer networked to it, and that means there is the potential to use it as a storage cache. Perhaps even as a transcoder. A PVResque app provided by a streaming content provider could be told by the user to download some content to the computer to be watched at the user's convenience... potentially getting around issues with insufficient bandwidth.