Apple TV swings hard but misses by Scott Olster @FortuneMagazine September 2, 2010, 6:44 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The previous version of Apple TV was dubbed “take two.” Will the new model be known as “strike three”? By John Patrick Pullen, contributor By most accounts, Wednesday was a good day to be Steve Jobs. In fact, if you were looking at a box score of Apple’s big game, their CEO’s line might look something like this: ab r h rbi Jobs 5 4 5 4 That’s right — four long home runs and a single. One product after another, Jobs knocked ‘em out of the park. He fixed an old design blunder by popping buttons back onto the iPod Shuffle. He completely revamped the Nano, not only making it smaller but more functional. He finally introduced an iPod Touch that’s a true iPhone without the phone, helping a crippled product live up to its full potential. He also pulled an entire social network out of thin air, with 160 million built-in users all raring and ready to LOL. To be sure, it was an amazing display of Apple’s AAPL hardware and software engineering might. But in his last at-bat, with the announcement of a revamped Apple TV, Jobs swung for the fences again, this time falling short. In an attempt to bring the price of the Apple TV down to a more palatable $99 and simplify the needlessly complex user experience of the previous model, Apple axed the device’s hard drive. The move, which saves on manufacturing costs and reduces the product’s footprint by 75%, will undoubtedly be a hit with users, but will also be Apple TV’s tragic shortcoming in the long run. That’s because for all the benefits of forsaking storage media, having no hard drive also means there’s no place to put downloads from the App Store. And as a result, Angry Birds won’t be screaming their way across your HDTV any time soon. Before unveiling the new device, Jobs said that he talked with current Apple TV users who “love” their Apple TVs. No one from Cupertino ever reached out to me, but every Apple TV user I’ve ever commiserated with has said they wanted to love this set-top box, but just couldn’t get there. Apple TV, or at least the original model released in September 2006, has only seen incremental updates since its launch but oozes potential. Dubbed a “hobby” by Apple, the product was refined by hackers who found a relatively simple way to install third-party software onto the device, finally making it exciting and feature rich. In fact, in a January 2009 quarterly conference call, COO Tim Cook announced that the product saw a three-fold increase in sales over the previous year. Though Cook didn’t give a reason for the lift, it was during the heyday of cracking Apple TVs. One homebrew program, Boxee, which adds MLB.TV, Pandora, Last.fm and other functionality to the device, has even decided to put out a device of their own, likely anticipating that the next Apple TV would lock them out. While it’s understandable that Apple would want to discourage developers from piggybacking on their engineering, it’s surprising that they also turned their back on a stockpile of more than 275,000 apps, not to mention one heck of a revenue stream. Perhaps contentious negotiations with Hollywood studios over video streaming rentals put the blinders on other uses for the device, but that’s unlikely. In fact, with iOS’s new Airplay feature, which allows video, photos, and audio to stream from iPhones and iPads to Apple TV, someone, somewhere in the halls of Infinite Loop must have thought of popping the IMDB app onto their big-screen TV. It’s possible, notes Daring Fireball’s John Gruber, that future updates to iOS could extend the new Airplay features to apps such as MLB At Bat, allowing iPads and iPhones to stream video other than iTunes media through Apple TV onto HDTVs. But there’s a good reason those iDevices go blank when Airplay starts slinging their movies up onto a connected television: latency. It doesn’t matter how smart Apple programmers are or how good your wireless connection is — there will be a delay between what’s on your handheld and what’s showing on your big screen, which means this isn’t a suitable workaround for playing Tap Tap Revenge at a mind-blowing 52 inches. User interface experts will point out that what makes iOS so “magical” is the touchscreen that seemingly eliminates the barrier between people and technology, and you simply can’t do this with an existing television set. But with Apple’s array of peripherals like the Magic Trackpad and Wireless Keyboard, not to mention the Remote App, which transforms your iPhone into a Qwerty when needed, that argument doesn’t pass muster. And if the underpowered Nintendo NTDOF Wii can crush the other consoles with an innovative motion-sensor interface that its competitors are now aping, surely Apple can invent a Magic Wand to bring such interaction to digital home theaters. Oh wait, they already have. The saddest part for existing Apple TV fans isn’t that we’re getting left behind the technology curve — far from it — it’s that we can see the “bag of hurt” (to borrow a Jobs phrase) this new device represents. Without a hard drive, Apple TV is nothing more than a rental box, which is exactly what Rokus, TiVos, Vudus, and many other console devices already are. In fact, by neither upgrading to the new Apple TV nor updating the software on my existing one, I’ll likely have access to many more online media options than if I went out and bought the newest, shiniest thing. Perhaps I won’t have access to Netflix NFLX streaming, but I can live with that; I already have that on my computer, iPhone, TiVo TIVO and Wii, anyway. The ability to view the Weather Channel on my television without having to actually watch the Weather Channel would have changed the game. “No one wants to buy a box,” said Jobs just three months ago. “You just end up with a table full of remotes, a cluster of boxes … and that’s what we have today.” Actually, that’s what we had in June — and today we have one more. Without storage capacity and the ability to add functionality — either through Apple or by other means — the new Apple TV is likely to fall short, too. Yet at $99, it may yet be a hit. But hits are only enough to keep you in the game.