If I accept conventional wisdom, Apple is getting into the TV-making business because:

The living room is the last consumer segment that Apple has yet to completely remake in its image.
Apple creates new markets where none exist, and it isn't satisfied with merely improving upon existing ones.
Steve Jobs allegedly said that he'd cracked the code for creating an integrated TV set.
If the iPad is really "just" a big iPod Touch, and has already sold 55 million units, then a TV that is "just" a big iPad could do gonzo business.
The business of making TVs is broken, and Apple has to fix it.
Cable and satellite providers are evil, and Apple has to liberate consumers.
Tim Cook "needs" a hit.

As I stated in my last post following Apple's gaudy earnings numbers, I don't accept conventional wisdom because conventional wisdom is dead! Apple killed it.

Most fundamentally, all assumptions about Apple seem to stem from a misunderstanding of how differently Apple thinks and operates from everyone else.

For starters, Apple doesn't chase markets just because they're there. Nor do they get sucked into market share battles just so they can say they sold the most units (see: iOS vs. Android).

Further, neither the aggrandizement of the CEO's ego nor the altruistic care-taking of the consumer drive Apple's product strategy.

Rather, Apple pursues markets purely and vigorously based upon a simple logic. Do they believe that their integrated hardware + software + service approach can be applied in a leveraged fashion to create a differentiated offering that delights consumers, appeals to the masses, and can be sold at high margins at a predictable run rate?

If the answer is "yes," then game on. If the answer is "no," then leave it as a hobby (such as the current Apple TV), or avoid the market altogether.

This is the backdrop for understanding the rumors about Apple building a new-fangled television set. Rumors and whispers notwithstanding, in the words of Dr. Hannibal Lecter, the obvious question is:

"Of each particular thing, ask: What is it in itself? What is its nature?"

Top layer = iOS devices; Middle layer = Core device functions; Bottom layer = Noteworthy hardware subsystems.

In the case of a serious living room play, if you check out the above graphic, what stands out most about the Apple TV in its current incarnation is its lack of apps, web, and communications support. These elements are the three biggest game changers that propelled the iPhone, iPod Touch and iPad beyond the impressive media foundation that marked the pre-iOS iPod.

What is also lacking is the mainstream television programming (HBO, ESPN, ABC) that the typical consumer demands. A 'purdy' new TV doesn't remedy that problem, now does it?

But, remember, Apple is long removed from their anti-establishment days, whereby for the company to succeed the incumbent had to fail. Hence, the rebirth of the Mac was predicated on getting into bed with Microsoft; the rise of the iPod was predicated on getting into bed with the music industry; and the rise of the iPhone was predicated on getting into bed with mobile carriers.

When framed that way, who hasn't Apple gotten into bed with yet that they need to get in bed with to succeed in a mainstream way?

You guessed it; the cable and satellite providers. Why? Because as noted venture capitalist Bill Gurley sagely pointed out, "When it Comes to Television Content, Affiliate Fees Make the World Go 'Round."

In other words, for an Apple TV to be free-flowing with first-tier TV content in the same way that an iPod flows with first-tier music, Apple will need DIRECTV and/or Comcast to bless it.

ESPN, after all, earns $4.69 per subscriber household in affiliate fees on each and every cable subscriber. Apple's good friend, Disney, owns ESPN, ABC, Disney Channel and a slew of other channels. Disney simply isn't going to throw billions of dollars away in affiliate fees just so they can help Apple. All of the major TV content players view the world similarly.

So where does that get you when you connect the dots? I'll tell you where it doesn't get you ... to a television-like device that:

Is priced 2-4X the cost of an iPad.
Has sales cycles of one device every 5-10 years.
Has bad margins.
Has a serviceable form factor that for many people is good enough. (Apple challenges industries where the baseline experience is terrible. Television hardware wouldn't seem to qualify.)

Conversely, what if you could buy a set-top box that plugged into your modern, big-screen TV, and:

It just worked.
Had every channel you currently get on cable.
You could run those same channels as apps on your other iOS devices.
Your TV could be controlled by any of those same iOS devices.
You could upgrade to the newest version of the set-top box every 2-3 years (on a carrier-subsidized basis).

Who wouldn't buy this device? And why wouldn't the cable and satellite providers be all over this? After all, does anyone seriously like their set-top box?

As a sanity check, a carrier subsidy on a sub-$500 device is meaningful, whereas a carrier subsidy on a $1,500+ device like a TV set is nothing.

Wait! But, didn't Steve Jobs say that he'd like to make an integrated TV set?

Even if he did say that, do you really think that in his final official act as Apple spokesman, Jobs would telegraph to the world his company's grand intentions in the living room?

Related:

The magic adapter: Apple TV and the battle for the living room
It’s Time to ‘Think Different’ because Conventional Wisdom is Dead: Thoughts on Apple’s Q1 Earnings Call
Apple's Segmentation Strategy (and the Folly of Conventional Wisdom) 
Apple, TV and the Smart, Connected Living Room

If Google was looking for a warm welcome for its Chrome OS and the new Cr-48 laptops it’s currently giving away to select beta testers, well then, it was wrong. The actual hardware has received a reception colder than Scrooge’s heart. Folks at TechCrunch have given it a verbal lashing that would make a drill sergeant proud. For past three days, I’ve been using the Cr-48 and here are my impressions.

The Mini-Review

First, the hardware:

The boot-up is extremely fast, and the log-on process is smooth and speedy, as long as one has a Google Mail account. (Google Apps ID doesn’t quite work.)
The screen is great, but the graphic capabilities are pretty limited.
There is a single USB port and a flash memory card slot. Frankly, having lived with the old MacBook Air with a single USB port, I don’t see much of a problem.
The trackpad is awful.
I love the dedicated Search button and would love to see it on all computers.
The laptop picked up most of the commonly used USB peripherals. Both a Logitech mouse and a Microsoft optical mouse worked just fine, without need for special discovery or driver installs.

Second, the User Interface/Experience:

The Interface is rough around the edges, and what you see is essentially the Chrome web browser.
It takes too many cues from Microsoft Windows, which is understandable, considering they are going after the mainstream and enterprise market.
The OS needs better font support, and reminds me of some early Linux distributions.
The user experience expects us to come to the idea of using browser tabs instead of apps, a weird notion, but not that strange if you’ve used the Chrome browser as your primary browser and are used to cloud-based services.
If you use Google Chat and Google Tasks, then you easily understand the idea of “Panels,” a new feature inside Chrome OS that runs in small, easy-to-access panes at the bottom right of the browser.
Even the best web apps currently available at the Chrome Web Store are a work in progress.
The biggest challenge for Google’s Chrome OS is going to be fighting against many life-long habits of using a desktop OS.

Now for the Cloud-based Services:

Despite being severely underpowered, there’s one thing the device does very well: let you use Google apps, especially Google Docs, Gmail and other cloud services (from Google) without a problem.
The YouTube experience is marginal at best, and Netflix doesn’t work.
Most of your browser-based apps will work, but Adobe Flash on Chrome OS is like a toddler learning to crawl. It will be a long time before it gets to the maturity of Adobe on Windows platform. Adobe has already stated that it plans to improve its integrated Flash performance in Chrome OS, essentially calling it a “work-in-progress.”

Bottom line: Will I use Cr-48 or something like it as my primary computer? It would be tough for me –I admit I have a life-long habit of using a full desktop operating system — to make Chrome OS my primary computing experience. That doesn’t mean I won’t keep an open mind, but for now, it’s a no-go for me. My more portable, 2.13 GHz MacBook Air is the machine I like, and even as I spend a lot of time inside the browser, I prefer a desktop with the Chrome browser and raw power. Plus my Mac has Silverlight, which lets me play Netflix and use third-party, native apps such as Reeder.

As Google stated very clearly, this particular device isn’t going to be sold in the market; its partners are going to make devices that consumers can buy. I hope they do a better job and come up with more attractive hardware.

The real story to focus on is the ChromeOS, what it really means and whom it targets.

So let’s do that instead.

The Rise of the Web OS

The growth of Google has coincided with the shift to the web. Google is a company that has been a believer in networked computing from its very inception. Since 2004, an increasing amount of our focus and attention has been devoted to the browser and what we can do inside the browser. The so-called Web 2.0 concept only helped enhance the inside-the-browser experience, thus slowly replacing desktop as our primary focus of attention.

Thanks to new technologies, ample bandwidth and Moore’s Law, the concept of a web operating system has become a reality. The web isn’t really an OS in the classical sense of the word, but instead is a platform to do things: for making phone calls, playing games, writing documents, sending emails, instant messaging and even photo editing. These are some of the tasks some of us old fogeys still do on our desktop operating systems using desktop software, but slowly and surely that desktop era is coming to an end.

Google last week announced its much-awaited cloud OS, the Chrome OS, which is nothing more than just a browser running on a stripped down version of Linux to capitalize on the hardware features such as audio and video. In the end, Chrome is about doing things on the web, inside a browser. Apple, of course, has taken a different tack for its cloud OS. The iOS which powers iPhone, iPod touch and the iPad fosters the idea of using small chunks of code for doing specialized tasks and embedding the browser inside these apps.

In a blog post this past week, Google CEO Eric Schmidt wrote:

So we’ve gone from a world where we had reliable disks and unreliable networks, to a world where we have reliable networks and basically no disks. Architecturally that’s a huge change—and with HTML5 it is now finally possible to build the kind of powerful apps that you take for granted on a PC or a Macintosh on top of a browser platform. You can build everything that you used to mix and match with client software—taking full advantage of the capacity of the web.

The Enterprise

As a consumer, one is going to find Chrome OS very limiting, especially since have some pre-conceived notions about what a personal computer is supposed to do. In addition, the availability of smartphones and tablets makes Chrome OS less necessary form a consumer standpoint because they are more consumer-friendly and quite capable devices.

Google’s own Android OS is already in front of the consumers (in form of phones and tablets). It will be sometime next year when the first Chrome OS devices will come to the market, and it won’t be until end of 2011 when (or if) Chrome OS become a viable option in the market place. By then, as I wrote earlier, “who knows where Android will be?” If the early popularity of tablets is any indication, consumer computing is moving towards the tablet form-factor and for Android – that is indeed a good thing.

In comparison, Chrome OS is ideally suited for business environments that need lots of low-cost computers designed to do certain specific tasks cheaply and without much maintenance. Rolling out centrally managed apps minus security problems and maintenance hassles has been the Holy Grail for corporate computing. Chrome OS and HTML5-based web apps that run inside the browser are a perfect solution, as I argued in my earlier post.

Our GigaOM Pro analyst David Card agreed in his research note (subscription required):

Chrome OS also suffers from awkward positioning, both externally to developers and potential customers, and internally within Google’s own product line-up. While it’s true that PCs serve both companies and consumers, the value of the Network Computer premise appeals only to enterprise IT managers. Its manageability and simplified functionality play best in applications like airline reservations, point-of-sale terminals and ATMs, or in limited-application mobile devices used in shipping and store inventory management. Yet at least for now, app stores are purely consumer offerings. The apps Google showed last week all came from media companies (New York Times, NPR, Sports Illustrated), Electronic Arts and Amazon.

Google will be best suited to focus Chrome OS and all its energies on business buyers — call centers, retail outlets and airlines to start with — and forget about the consumers.

Related content from GigaOM Pro (sub. req.):

Report: The Future of Netbooks
Google Takes the Open Battle to Apple on Multiple Fronts
Google Chrome OS: What to Expect

Between packing up to move apartments and keeping an eye on Twitter’s Chirp conference, I’ve been playing around with a new 15-inch Macbook Pro, one of the many new laptops introduced by Apple earlier this week. The 15-inch devices, which use Intel’s i5 and i7 processors while the 13-inch Macbook Pro uses the Intel Core 2 Duo chip, look virtually no different than they did before, with unibody styling and the same screen size, weight and number of ports. The only visible change is in the design of the mag-safe power connector, which is now clearly inspired by the MacBook Air charger. [Digg]

The real change in these new laptops is under the hood — in the stuff you can’t see. It all starts with the integrated( Intel graphics) and discrete (Nvidia’s GeForce 330M GT) graphics chips, which can be found in both the 15- and 17-inch machines. The 13-inch Macbook Pros use the 320m chip. What Apple has done in this most recent update to its line-up is make switching between two graphics modes automatic, depending on the task at hand. For instance, a simple application such as Mail or Safari by default uses the embedded/integrated graphics engine, while more graphics-intensive apps such as Premiere or Aperture automatically switch to the more muscular graphics chips.

So what’s the big deal about this? First, you get a smoother performance. But the big impact is on the battery life of these laptops, especially with the 13 inch Macbook Pros. While the previous generation of MacBook Pros used Nvidia’s 9400M integrated graphics engine, the new line-up uses the new Nvidia 320M. The old chip had 16 cores while the new 320M has 48. And yet the 320M, despite being more muscular (it provides an 80 percent performance gain over the 9400M) is 40 percent more energy efficient. That boosts the battery life of the laptops by as much as three hours, which means Apple is offering total battery life of between 8 and 10 hours on the new MacBook Pros.

I’m pretty sure Apple made more tweaks than just that in order to get those 8-10 hours, but graphic chip optimization has to be right up there when it comes to squeezing more out of the battery. Maybe because it makes both the hardware and the operating system it’s able to get more from the batteries on its machines.

These tweaks reminded me of something uber-investor and Sun Microsystems co-founder Vinod Khosla, who will be speaking at our Green:Net conference on April 29, said recently — that by innovating around the internal combustion engine, we can substantially improve car mileage. Others believe that by writing more efficient, smarter software, more life can be squeezed from the current generation of battery technology. Apple is certainly proving that.

Oh and in case you were wondering about the machine itself, it is really really really fast. Much faster than my old MacBook Pro, which has an SSD drive and 8 GB of memory. Apps start in a blink of an eye and even iTunes works as if it was suddenly Barry Bonds. If you want to know anything specific, go ahead and ask me, and I will do my best to answer your questions.

Google is said to be planning a rival device to Apple’s iPad that will be powered by Android. Assuming this is true, what does Google need to do in order to make its slate competitive with the iPad?

Size matters — A “Google Pad” should target the sweet spot of screen sizes, that of 5-8 inches. Any larger and some will complain that the device is too heavy — as is already happening with the iPad — while smaller devices simply don’t offer enough benefit over current smartphones, some of which have displays of 4 inches or larger. Google would have to subsequently adjust how Android and its apps run on larger displays — my own porting of Android to a 7-inch touchscreen computer offered a less-than-ideal experience because the user interface is optimized for small screens.

Fix the Market — Other companies already offer Android-powered tablets, but those devices are mysteriously hobbled by limitations that include not having access to the Android Market for software. Obviously, Google wouldn’t similarly constrain its own product, but it still needs to make finding and installing software from the marketplace easier than it is now. One small tweak that would yield huge benefits is an “update all” function. Users don’t want to have to update software one app at a time.

Sync or swim — Unlike its competitors, Google doesn’t offer software to synchronize data between Android devices and computers. One could correctly argue that the sync solution Google offers is the cloud — mail, contacts, calendars and other data is all available through an over-the-air web connection. But not all consumers are ready for a true wireless data sync. Google should either bundle solutions like DoubleTwist for media and application synchronization or perhaps the Missing Sync for personal data.

Boost productivity — While most people don’t buy tablets to replace the productivity offered by a traditional computer, if it’s making one, Google should leverage its Google Docs platform for it. Currently, Android supports document viewing, but not much in the way of editing aside from limited spreadsheet changes. A native Android application or enhanced Google Docs functionality in the browser for basic document editing would rival Apple’s iWork software for the iPad.

Court developers — Apple has already got the attention of third-party developers, so Google will have to offer an equally if not more compelling development environment in order to have blockbuster applications on hand at launch. Netflix is a fine example — Apple successfully convinced the company to build media-streaming software for the ARM-powered iPad, enabling consumers to watch video wherever a web connection could be found.

As someone who switched from an iPhone to a Nexus One earlier this year — yes, I bought an iPad, too — I find the Apple experience more refined than that of Google. But Android still has much to offer, namely the lack of an ecosystem lock-in, easy integration with Google services and a growing number of software titles. If the company addresses the five areas I’ve outlined above, a Google Pad could be a very worthy alternative to Apple’s iPad indeed.

Related content from GigaOM Pro (sub req’d):

Can Anyone Compete With the iPad?

Thumbnail tablet rendering image courtesy of the Chromium Blog

This article also appeared on BusinessWeek.com

The inner workings of the iPad reveal that Apple has learned much from its iPhone development, using many of the same components and cramming those chips onto a pretty small board behind the device’s 9.7-inch screen. Today, I managed to snag a few minutes with David Carey, VP of technical intelligence at UBM TechInsights, to talk about his experience tearing down the iPad.

He said that so far, the only big surprise was the new processor inside, but he couldn’t yet tell me if it was a new CPU using engineering that Apple acquired via its PA Semi acquisition or a a souped-up ARM Cortex A-8 processor. But he did point out some interesting design choices that Apple has made with its machining, and showed off all the insides. Enjoy.