Online distribution is probably going to be a significant part of the indie landscape over the next decade, so I feel it’s worth saying a few words about one of the products that will likely play a role in making that happen.

Various pundits have recently been proclaiming the failure of the Apple TV, some even going so far as to compare it to the Zune. This is, frankly, nuts. It shows a fundamental misunderstanding of the market into which Apple TV is selling.

People’s media libraries will increasingly reside on the hard drives of their computers, and they’ll want access to that content from their living rooms. These are predictions that are nearly impossible to disagree with. The implication is that the eventual market for products like Apple TV is in the hundreds of millions, at least. However, this market is presently extremely immature.

Is there another consumer electronics market that has emerged in the recent past, that we could possibly use as a guide for what to expect here? Well, there’s the iPod. Let’s see a graph of unit sales for that.

The Apple TV came out about five months ago. I’ve marked the five month point on that graph. You’ll notice Apple hadn’t sold a lot of iPods by then. In fact, Apple now sells more iPods in two days than they sold in the first six months it was on the market.

Of course, you’d expect things to ramp up faster for the Apple TV. It’s part of an established media platform (the iTunes ecosystem), and it was available for Windows from the start. But even the most successful new markets tend to start off with slow growth. Eventually they reach a tipping point, and growth snowballs. It’s extremely unwise to write off a product selling into a new market before that market has had a chance to reach a tipping point. Particularly when there are strong reasons to believe the market will, eventually, tip.

We’ll know the Apple TV is failing if the market for products in its category starts taking off, but the growth is centered around other products, with the Apple TV getting left behind. Or if, four years from now, when all the content and infrastructure is in place, the market still hasn’t tipped, we can call the Apple TV and its competitors failures. Personally, though, I’d consider both of those scenarios unlikely. This is a market with serious volume potential, and Apple is in a stronger position than anyone to become the leading player in it.

This entry was posted on Saturday, June 2nd, 2007 at 05:51 PM and is filed under Apple, Distribution. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.