Saturday, June 9, 2007

Put Your TV on Your Ipod (My e-mail to Steve Jobs)

From: Robert Seidman
Sent: Saturday, June 09, 2007 4:28 PM
To: Steve Jobs
Subject: Put Your TV on Your iPod!

Dear Mr. Jobs,

I have watched with great interest just how smooth you’re being with your little “hobby”. I’m on to you though!

I think it’s prudent to say exactly what you’re saying for a lot of reasons. Primarily, this time around Apple showed up to the party much earlier than it did with MP3. In the space of “home media servers” or “get your media wherever you want it”, these are very early days. Things with “get your media wherever you want it” are effectively where MP3 was back in 1998 or 1999 (in the dark days before iPods). People are screwing around with home media and streaming, and putting video on their iPods and other devices. There are many products you can buy, but it isn’t sweeping the nation yet. For similar reasons as why MP3 was such a pain in the butt in the late ‘90s– it’s still too complex. There’s much more broadband these days, but on the other hand the file size of an episode of 24 downloaded from iTunes is more than ONE HUNDRED AND FIFTY TIMES LARGER than the file size of your typical 4 minute song(mp3).

I’m the only person I know – and this in the San Francisco Marina district – home of Pacific Catch calamari on Chestnut St (and really, you need to try the chili encrusted calamari at Betelnut on Union St. – way, way better!) and future home of most iPhones/capita – with all that, I am the only guy I know who turned my iPod into an incredible video on demand product with more than a week’s worth of continuous programming. I’m also interested in getting my media wherever I want it and to this end have played with Orb, Slingbox, Location Free player, Tivo, Media Centers, media extenders, etc.

I get that all AppleTV, your little hobby, is today is just another media extender albeit one that was designed to work with iTunes. But I’m pretty sure you’re not being forthcoming at all about your true plans for AppleTV. I think it’s smart, and I don’t see the upside in you fully disclosing. But I’m on to you.

It’s smart for you to say it’s a hobby right now. It lowers expectations, puts the content producers and the Comcasts of the world at ease and allows you to fly under the radar. By the time version 2.0 comes out, the language from you will probably change to “It’s still a hobby, but one we’re very passionate about. Will we replace Comcast? Of course not! We just hope to be able to offer Comcast customers something that will make their Comcast experience even a little bit better! We’ll work with Comcast as much as possible.”

By version 3 of Apple TV (~ 5 years from now) though – it’s no hobby. it will have a DVR, you’ll be able to do pay-per-view on it, you’ll be able to order content directly via the AppleTV (instead of needing to go to iTunes first) and, you will be able to receive, over the internet some kind of television programming package that DIRECTLY competes with the Comcasts and DirectTVs). For LESS money than you pay Comcast or DirectTV. Adding massive bandwidth to support that is much cheaper than launching satellites or laying your own cable. Apple has no legacy infrastructure – a great position to be in.

Even by version 3, Comcast isn’t exactly going to be crapping its pants, but it will be out of the realm of hobby and it will be a real business.

Separately I believe something else will happen. The iPod that is in the forthcoming iPhone will ultimately be released as some sort of stand alone iPod that doesn’t have a phone. It will have the wider screen and wifi though. Probably a bigger hard drive will replace the phone components. I believe this product, to the degree there is a standard for “portable video”, will be the standard.

5 years from now there may well be 10 million of those yet-to-be-released iPods in the world. And one of the selling points of AppleTV by then will be: “Put your TV on your iPod…easily!”

Connecting all the dots, Apple is going to be a major player in the “home media” space and in the space that’s of particular interest to me “all your media, wherever you want it”. I don’t think there are that many people like me today, but in 5 years from now there will be at least a million people like me. A million people who are spending ~$2000 a year for video media between Cable, DVD, movies, etc . -- this does not include the ~$600/year for high speed internet or any of the hardware gadgets..

In 5 years, I imagine I’ll get some kind of e-mail from you saying, “Look, just give ME that $2000 and I’ll give you EVERYTHING you already have, plus – it will automatically be on your iPod either by synching or streaming over Wifi. I’m going to make it all very easy for you!

Where do I sign? That’s what I’ll be asking along with the 999,999 other people like me. And so what, even if I am wrong by one order of magnitude and 5 years…who cares? Not you, I imagine.

And unbelievably, hovering near $125, I want to go LONG AAPL. Word to your mom, that’s bad news at least in the short term for AAPL. If you want to trade, do exactly OPPOSITE of what I say. I shorted AAPL @ $52 last July and covered at $60. With my special brand of Seidman Math, seeing AAPL at $125 I still think I’m a genius for having he sense to cut my losses fast. Should’ve road it up though – duh. But I see the future – my version of it anyway, which can’t be that far off from yours really – and in that future I’d be long AAPL. Since YOU are the one with the special skills for “that vision thing”, I’m sure I’ll ultimately like YOUR version much, much better than my own.**

Hardware products like the iPhone, the iPod and personal computers are great. But monthly subscription revenue streams are very tantalizing. As is getting whatever media I want wherever I want it. Right now I’m the only one who cares. In the late 80s, I was one of the only people who cared that something like “email” existed. Ten years later the world caught up with me. It will catch up with me here too. It’s just a question of when.

I can’t wait.


Robert Seidman
**anyone reading this who is not Steve Jobs: please don't make any investment or financial decisions on the basis of my commentary!! (remember I shorted AAPL @ $52 and it's @ $125!

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